Study: AI Could 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 with a total wage value of $1.2 trillion in the U.S. labor market, which constitutes 11.7% of total wages in critical sectors including finance, healthcare, and professional services.

The study, released on November 26, utilized a unique simulation tool known as the "Iceberg Index," developed in collaboration with the Oak Ridge National Laboratory. This index aims to simulate the interactions of 151 million American workers and assess their responses to artificial intelligence technologies and related policies.

Prasanna Balaprakash, director of the Oak Ridge National Laboratory (ORNL) and co-leader of the research, explained the project's goal, stating: "Essentially, we are creating a digital twin of the U.S. labor market." He noted that the index conducts population-scale experiments, revealing how artificial intelligence is reshaping tasks, skills, and workflows before these changes manifest in the real economy.

The findings challenge traditional forecasts, indicating that the most significant impact of artificial intelligence is 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."

The greatest risk, the invisible part, lies in administrative and routine jobs that are often overlooked in automation discussions. AI threatens a total wage value of $1.2 trillion in fields such as human resources, logistics, finance, and office management.

The threat posed by artificial intelligence extends beyond coastal tech hubs, affecting all fifty states, including often marginalized rural and interior regions.

The "Iceberg Index" provides an unprecedented perspective, treating 151 million workers as individuals, each with unique skills, tasks, and locations. The index identifies over 32,000 skills across 923 professions in 3,000 counties, allowing for precise assessment of the tasks that current AI systems can perform.

To bridge the gap between analysis and application, the team has developed an interactive simulation environment that enables policymakers and business leaders to test the impact of various policy tools, such as training and reskilling programs, before investing billions in their implementation.

The report concludes that the "Iceberg" project allows decision-makers and business leaders to identify risk areas, prioritize training and infrastructure investments, and test interventions before allocating billions of dollars for their implementation, thus providing a proactive roadmap for addressing labor market transformations.