Goldman Sachs has more bad news for employees facing AI layoffs; says: Losing your job to AI could be more costly as it may mean years of …

Goldman Sachs has warned that losing a job due to artificial intelligence (AI) could have long-term financial impact, with workers facing lower earnings and slower career growth for years. In a new report, the Wall Street bank said its analysis of 40 years of labour market data shows that workers displaced by technology often continue to face challenges long after losing their jobs. “Our analysis suggests that, similarly to previous waves of technological change, AI-driven displacement could impose lasting costs on affected workers, worsening labor market outcomes for several years,” analysts said. They added that the impact could be even worse if job losses happen during a recession.

Pay cuts and slower growth due to AI

According to Goldman Sachs, workers who lost jobs due to technological changes saw an average 3% drop in real earnings compared to those displaced from more stable roles.The impact also lasts over time. In the 10 years after losing a job, such workers saw earnings growth that was 10 percentage points lower than those who remained employed. Their earnings growth was also 5 percentage points lower than workers who lost jobs for other reasons.The report said workers displaced by technology take longer to find new jobs. On average, they spend about a month more searching compared to others. Even after getting a new job, the risk of facing another period of unemployment remains higher for up to 10 years.

Career setbacks and skill mismatch

Goldman Sachs said one key reason for these outcomes is “occupational downgrading.” This means workers often move into roles that require fewer skills than their previous jobs.“The same technological shifts that eliminated their positions also eroded the value of their existing skills,” the report said. The bank added that this can also affect long-term wealth, including delays in milestones like buying a home.

AI impact on hiring already visible

The report said AI is already affecting hiring trends. Goldman Sachs estimates that AI-related changes have reduced job growth by around 16,000 jobs per month over the past year. The bank has also previously estimated that up to 7% of US workers could be displaced by AI over the next decade.Despite the risks, Goldman Sachs said retraining can improve outcomes for workers. Those who gained new skills after losing their jobs saw a 2 percentage point increase in wage growth over the next 10 years. Their chances of unemployment also dropped by around 10 percentage points.“Encouragingly, our analysis suggests that retraining programs could help to mitigate some of the negative effects of AI-related job displacement,” the report said.