AI Impact: Jobs and the Economy

As described in our previous article, A Brief History of Artificial Intelligence, AI has infiltrated many parts of American society. This article will explore AI’s impact on jobs and the economy, including the tech billionaires’ goals for the workforce, the responses and solutions to unemployment being proposed by Senators Mark Warner and Bernie Sanders, and AI job disruption.

This article is part three of our AI Impact series.

The state of American jobs and the economy

The affordability crisis means Americans are struggling to stay within their budgets. To make matters worse, Trump Administration policies have suppressed wages and weakened the bargaining power of workers. Then House Republicans planned to vote on three anti-labor bills in January 2026 alone (one failed, and they scuttled the other two).

Despite economic growth, employment rates are stagnating. Some are describing this job market slowdown as the “The ‘No Hire’ Economy” because sinking hiring rates has zeroed out U.S. job growth. This trend affected low-income/young workers the most.

The December 2025 job report revealed the overall unemployment rate dropped to 4.4%. Even so, more workers were forced into part-time jobs; long-term unemployment continued to rise, and women ages 25-54 experienced a higher unemployment rate. And recent college graduates face an unemployment rate of 9.3%.

The overall economic outlook is one of uncertainty, and that’s without the questionable intentions of tech billionaires in the mix.

Tech billionaires want AI to “replace all jobs”

Tech billionaires like Elon Musk think AI will advance so much that robots and AI will reshape the workforce, “replace all jobs,” and make salaries irrelevant. Is that good news for people who earn six-figure salaries?

In response, Senator Bernie Sanders wondered how people will feed their families without jobs and questioned if tech billionaires would fund Universal Basic Income (UBI) to compensate for job income loss.

Musk’s desire to replace all jobs with AI is far-fetched, unsustainable, and callous. Does he envision robots replacing surgeons? Pharmacists? What about caregivers who perform intimate tasks such as helping clients with toiletries and feeding?

Can AI provide mental health counseling? A case where a ChatGPT app allegedly became one man’s “unlicensed therapist” with deadly consequences says otherwise.

Will robots replace the unpaid, invisible labor of homemakers? If that’s the case, we’re looking at expensive robot maids, one of which trashed the home it was supposed to clean.

Is the answer to AI job disruption AI-enhanced jobs?

AI hasn’t replaced all jobs, but many employers have bought and adapted AI tools of one kind or another, resulting in a significant amount of job displacement.

Some companies unleashed mass layoffs based on their belief that agentic AI could not only replace humans but also increase customer service productivity. Salesforce executives “admitted, both internally and publicly, that they massively overestimated AI’s capabilities.” And studies have shown that AI doesn’t boost productivity or revenue growth as expected.

Senator Warner grappled with the problem of AI job disruption during his last group media veil in 2025:

I even think AI will create some additional jobs. But there’s going to be five years, I think, of enormous job disruption. And where this is going to be particularly acute is those folks getting out of college that, you know, have those starter jobs at a bank, at a firm, you know, because all the big firms are cutting their first year hires in half and they’re going to cut them in half again next year.

We’ve got 9% recent college graduate unemployment right now. I think that number could go to 25% within the next two to three years…

…But you’ve also got to have an awful lot of parents that are appropriately pissed off that they’ve spent hundreds of thousands of dollars financing their kids’ education and there’s no job out there.

A 25% unemployment rate is a possibility because some companies are using AI to mask cost cutting. They fire employees to ostensibly replace them with AI, only to outsource the jobs to other countries for the cheap labor. How can recent college graduates compete with that?

Warner shared his plan for addressing the problem:

So I am working with the AI community saying you got to help us fix this…So my ask to them is all right, you help figure out how we better train or equip, particularly those folks coming out of college, with the skills they need to get AI enhanced jobs. You design the program but you also got to help pay for it. There is more wealth concentration in AI than any industry we’ve seen…So this question of job dislocation is going to be something I’m going to focus a lot on next year.

An AI-enhanced job is one that involves using AI tools to help one complete tasks (tech CEO’s also call it “upskilling”). This ranges from coding to creating verbal prompts for marketing emails or graphics for advertisements. This Forbes article explains more.

Warner’s solution for AI job disruption is for Big Tech to help solve the problem with training so recent college graduates can do AI-enhanced jobs, ones possibly unrelated to their degree.

Yet tech billionaires envision AI/robots replacing all jobs. A big reason they’re wealthy is because they’ve been selling AI products to companies who then fire employees and replace them with AI.

Warner’s Pollyannish solution is for the AI community to help solve the problem it created. Yet the problem’s severity demands solutions one way or another lest job growth suffer any further.

What’s a college student to do?

The high unemployment rate for recent college graduates needs to be addressed, especially if Big Tech designed AI tools to be anti-labor in nature. A recent study revealed employment in AI-exposed fields for recent college graduates declined by 13% during a three-year period.

78% of companies use AI in at least one part of their work. If entry-level jobs that align with students’ academic and professional goals are dwindling because of AI job disruption, what are students being advised to do regarding their employment path? How can colleges give them a competitive advantage in AI-enhanced jobs?

At a time when traditional job preparation isn’t enough, academia may need to incorporate strategies to prepare college students to leverage AI in a way that makes them appealing to employers. Here are a few possible solutions:

• Using a training model, college-employer partnerships could connect students with paid jobs that include training to build AI-career-relevant skills; professional mentorship; tuition assistance; and hands-on experience, all towards creating a path to future employment.
• To increase responsible AI use, colleges could integrate AI literacy and hands-on training into career preparation.
• Colleges could train students to become “adaptive problem solvers who can collaborate with both humans and AI tools.”

Other solutions include a systemic approach to stimulating job growth:

• Strict AI regulation to help prevent job outsourcing
• Make billionaires pay their fair share of taxes to help fund job training programs and college education
• Raise the minimum wage
• UBI and stronger social safety nets
• Fast-track green energy to create more jobs

No matter what type of job we have, we need a stable environment in which to do them. The next article in N4C’s AI Impact series will address AI’s impact on energy and the environment.d mitigate intimidation.