Artificial intelligence is beginning to reshape parts of the labor market, Federal Reserve Governor Lisa Cook said.
The technology may displace workers before creating new jobs, she said last month at the 42nd annual National Association for Business Economics Economic Policy Conference in Washington, D.C.
“This outcome could cause hardship for many workers and their families,” she said.
Cook said early evidence of the transition is already appearing in labor data. “Evidence that the transition has commenced has emerged, even if it is too soon to see the effects in the aggregate,” she said.
Don’t Miss:
Cook pointed to declining demand for labor in some occupations, including coding, where AI systems now perform tasks once done by entry-level programmers.
She also referred to rising unemployment among recent college graduates even as the broader unemployment rate holds at 4.3%. She said the transition could bring “job displacement” in some occupations.
As companies rethink how work gets done in the AI era, startups like Rad AI are using data-driven intelligence to help businesses create and optimize content more efficiently — a shift that reflects the broader workplace transformation policymakers are now warning about.
Cook also discussed AI’s influence on business investment at the conference.
Companies are investing heavily in AI infrastructure such as data centers and advanced chips even as interest rates remain elevated compared with much of the past 20 years, she said.
Trending: Skip the Regrets: The Essential Retirement Tips Experts Wish Everyone Knew Earlier.
According to Cook, that surge in spending is contributing to strong aggregate demand and could influence how economists estimate long-term interest rates. “To recall, the neutral rate is a long-run concept that articulates the equilibrium level of interest rates that is noninflationary and consistent with maximum employment,” she said.
Cook said the wave of AI investment may suggest the neutral rate currently sits higher than it did before the pandemic.
She also referred to “creative destruction,” the term popularized by economist Joseph Schumpeter that links innovation to economic growth and job disruption.
Other remarks at the conference addressed labor-market conditions.
