Artificial intelligence is transforming the U.S. economy, but not necessarily in the grim manner industry leaders have warned it could affect livelihoods, experts say.
From the “Godfather of AI” to Bill Gates, Big Tech leaders have issued alarms about the detrimental impact the technology could have on the markets.
However, with unemployment numbers going down this year, some experts in the field are questioning such predictions. Cato Institute policy analyst Juan Londono told the Washington Examiner that overall, the AI jobs landscape has turned out far more positive than many have been forecasting, “even for those industries that were considered AI-sensitive.”
White-collar jobs in the tech industry, such as software engineers, are actually having a “huge surge,” he said, because businesses are recruiting new “forward-deployed engineers,” or FDEs, to help them adapt AI to their systems. FDE job postings exceeded 7,300 in the first nine months of 2026, up from fewer than 200 in 2023. Amazon alone has committed $1 billion to its FDE initiative.
Other positions considered at risk, such as court reporters, are also seeing a renaissance due to the technology, because it enables employees to be more productive, allowing them to take on more cases and jobs, Londono said. Meanwhile, the construction of data centers required to power AI is propelling blue-collar jobs.
“You’re gonna have a lot more HVAC technicians that are gonna be taking care of these facilities, making sure data centers are properly cooled. You’re gonna have electricians that are gonna make sure that this thing is connected to the grid reliably,” Londono said during an interview.
“In general, when you talk about a general-purpose technology, it’s going to start transforming the whole economy.”
Londono suggested that the United States is uniquely positioned to absorb AI innovation as a “very risk-taker society.” The Cato analyst argued that in the “cutthroat, adapt-or-die” business environment, companies aren’t just incentivized to use AI. They are also incentivized to “do it right,” he said, swiftly innovating to adapt for issues and enhance capabilities.
“Sometimes when we complain about like, oh everyone’s doing AI now in their business even if they don’t need to, but because it’s kind of like a culture of throw anything off the wall and see what sticks, and if it doesn’t work, we pivot again,” Londono said. “It’s part of our entrepreneurial spirit.”
As AI hits the U.S., Dr. Vahid Behzadan, a professor at the University of New Haven’s Department of Electrical and Computer Engineering and Computer Science, said the fastest changes are occurring in software development, customer support, marketing, data analysis, and parts of legal and financial services. For now, entry-level coding, paralegal work, copywriting, and customer support face more immediate exposure than plumbing or electrical work, he believes. Longer term, he expects major transformations in healthcare, education, logistics, and eventually manufacturing and skilled trades as AI advances into robotics.
Dr. Allen Mendenhall, a senior adviser for the Free Enterprise Initiative at the Heritage Foundation, similarly said the biggest changes in jobs right now target work done at a keyboard: customer service, software, sales, and back-office finance. Over the long term, he expects the biggest effects in medicine, law, finance, and education, arguing they are the fields where high prices and regulation have kept costs inflated, allowing for the “most room to get cheaper and better.”
Industry leaders have warned that the public could face sweeping fallout from such transformational changes in the marketplace, arguing that sweeping new “guardrails” are necessary for the government to put in place to keep the public safe.
In 2025, Geoffrey Hinton, the scientist widely known as the “Godfather of AI,” warned it was “very likely” that AI will cause “massive unemployment.” The same year, Anthropic CEO Dario Amodei said that half of all entry-level white-collar jobs could be wiped out by AI within five years, possibly driving the unemployment rate up to 20%. In January, Amodei published another essay, claiming AI’s “cognitive breadth” meant it wouldn’t affect one industry but could simultaneously wipe out jobs in multiple sectors. He said the technology is “not replacing a single job but acting as a ‘general labor substitute for humans.’”
Likewise, Microsoft founder Bill Gates suggested in August 2025 that massive job replacement could take place between one and 10 years. Over the summer, Gates reiterated alarms that the technology would disrupt white-collar jobs, and said he believed it could start displacing the construction and hospitality industries by the end of the decade.
Mendenhall suggested the industry chiefs have a shortsighted outlook, arguing they “made the oldest mistake in economics.” He called it the “lump of labor” fallacy, or the idea that there’s a fixed amount of work, so whatever a machine does is a job a person loses.
“We see the customer-service rep replaced by a chatbot. We don’t see the new business launched because software got cheaper, or the family that spends its savings on something new,” he said. “Human wants are unlimited, so there is never a shortage of work, only a shortage of knowing what the next work will be.”
Behzadan suggested that just because mass layoffs aren’t happening and unemployment is going down doesn’t mean the market isn’t seeing some losses. The mistake doomsayers made was assuming that automating tasks would immediately eliminate entire jobs, when the true disruption may be showing up in jobs that never get posted, with some employers hiring fewer junior workers in AI-exposed occupations, he told the Washington Examiner. That could have troubling implications for young people trying to grow in their field, Behzadan said, pointing to recent research from Stanford that found a roughly 19% relative employment gap among young workers in highly AI-exposed occupations compared with their less-exposed peers.
“AI isn’t necessarily responsible for the entire gap, but the pattern is concerning,” he said. “If entry-level roles disappear, where do the experienced professionals of the 2030s come from?”
“Unemployment statistics don’t tell the whole story,” Behzadan added. “They don’t capture disappearing entry-level opportunities, changing hiring requirements, or workers accepting positions below their qualifications.”
While some industry chiefs lean doomsday on AI’s impact on the economy, others have sounded wildly optimistic notes. Amazon’s Jeff Bezos recently said he believes it could enhance productivity levels to the extent people can have a three-day workweek. Nvidia CEO Jensen Huang said in August 2025 that AI could trigger a four-day workweek, saying “every industrial revolution leads to some change in social behavior.” He painted it as a positive development, arguing that the more productive society is, “the more opportunity we get to go pursue new ideas.”
Steve Hanke, a professor of applied economics at Johns Hopkins University, contradicted such predictions, arguing that data indicate that AI does not yet appear to be making the economy fundamentally more efficient.
“Hundreds of billions of dollars are being poured into AI, yet total factor productivity (TFP), which measures how much output the economy produces from a given quantity of labor and capital, shows no acceleration,” he told the Washington Examiner in an email. “The AI productivity boom remains a forecast, not an observation.”
But Mendenhall said the fingerprints of AI are already all over the country, from bank fraud alerts, doctors’ imaging scans, the logistics that get packages to the front doorstep, or even at the fire department, where first responders are using the technology to make rescues twice as fast, route trucks, read thermal images, and predict where a building will collapse.
He pushed back on the idea from industry chiefs that AI should be more strictly regulated, rebutting concerns from Big Tech leaders like Gates, who worry “there is no plan to ease the entry into the AI era.” In the last century after the Industrial Revolution, Mendenhall said, the economy saw gains amid sweeping shifts, with the workweek falling from about 60 hours to about 40, not just because of government intervention, but because the market operated in freedom.
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“That’s how markets work: millions of small, practical improvements that nobody planned from the top,” he said.
“Of course there’s no plan. There can’t be one. Nobody in Washington or Seattle knows which jobs AI will make obsolete, which it will create, or what millions of workers and entrepreneurs will do with these tools,” Mendenhall added. “That knowledge is spread across the whole economy, and only markets can bring it together. Turbulence is what discovery looks like from the outside.”
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[ H/T Washington Examiner ]
