MIT Study Highlights AI's Potential to Displace $1.2 Trillion in U.S. Jobs
A recent study from the Massachusetts Institute of Technology (MIT) suggests that artificial intelligence has the potential to replace jobs valued at $1.2 trillion in the U.S. labor market, which represents 11.7% of total wages in critical sectors including finance, healthcare, and professional services.
The study, released on November 26, utilizes a novel simulation tool known as the "Iceberg Index" (Iceberg Index), created by MIT in partnership with the Oak Ridge National Laboratory. This index simulates the interactions of 151 million American workers and evaluates their exposure to AI technologies and associated policies.
Prasanna Balaprakash, director at the Oak Ridge National Laboratory (ORNL) and co-leader of the research, described the project's goal: "We are essentially creating a digital twin of the U.S. labor market." He emphasized that the index conducts population-level experiments, revealing how AI is transforming tasks, skills, and workflows before these changes are visible in the actual economy.
The results of the study challenge conventional predictions, showing that the most significant effects of AI are not confined to the tech sector, which accounts for only 2.2% of total wages (approximately $211 billion), representing the visible part of the "iceberg".
In contrast, the hidden risks lie in administrative and routine jobs that are frequently overlooked in automation discussions. AI threatens a total wage of $1.2 trillion in fields such as human resources, logistics, finance, and office management.
The potential impact of AI is not restricted to coastal tech hubs; it spans all fifty states, including rural and inland areas often excluded from these conversations.
The "Iceberg Index" offers an unprecedented forward-looking perspective, treating 151 million workers as unique individuals, each with distinct skills, tasks, and locations. The index identifies over 32,000 skills across 923 occupations in 3,000 counties, accurately determining which skills current AI systems can perform.
To facilitate the transition from analysis to practical application, the research team developed an interactive simulation environment that enables policymakers and business leaders to assess the impact of various policy tools, such as training and reskilling programs, before committing substantial financial resources to their implementation.
The report concludes that the "Iceberg" project allows policymakers and business leaders to pinpoint risk hotspots, prioritize investments in training and infrastructure, and evaluate interventions prior to allocating significant funds for implementation, offering a proactive strategy to address shifts in the labor market.
