With major companies such as Meta and Amazon announcing huge layoffs that they tie to the efficiencies AI is making possible, you might be thinking that you, too, should be looking to cut head count.
Maybe belay that thought, at least for the time being.
Many of the layoffs actually stem from a whole series of factors, even if companies choose to use AI as the blanket explanation. Meanwhile, economic data suggests that AI has not led to widespread job cuts, and companies are increasingly reporting great successes by using AI to make employees' jobs easier and to enhance customer service.
Insurance, as the ultimate digital industry, stands to benefit from generative AI's efficiencies as much as any, but let's look at what's realistic and what isn't.
Elon Musk said earlier this year that AI will take on so much work that in 10 to 20 years jobs will be optional. If you don't want to work, you can just sit at home and let the AI and the money it generates take care of you. But Musk says a lot of things, including that he would land humans on Mars by 2025 and have them start building a colony for 1 million people and that he would have 1 million fully autonomous robotaxis on the road in 2020. (The total currently stands at two or three dozen.)
Meanwhile, OpenAI CEO Sam Altman has retracted his claim that generative AI will massively reduce the number of entry-level jobs, and Anthropic CEO Dario Amodei has withdrawn his prediction that AI would eliminate 50% of white-collar jobs. He now says, “If you automate 90% of the job, then everyone does the 10% of the job.. And the 10% kind of expands to be 100% of what people do and kind of 10-times their productivity.”
In "A Reality Check on the AI Jobs Hysteria," the MIT Technology Review reports that "there’s scant evidence that AI has yet had any large-scale impact on the US labor market. Analysis of the data gathered for the US Bureau of Labor Statistics (BLS) shows that the unemployment rate for the jobs potentially most affected by AI is actually lower than that for occupations less exposed to the technology. And, critically in the mind of economists, there are no signs that large numbers of people are shifting from jobs threatened by AI to supposedly safer ones, such as those involving mostly manual labor."
Why, then, are so many companies announcing job cuts related to efficiencies they're achieving with AI? In my experience, companies will always glom on to a convenient excuse when announcing bad news. Even a flimsy excuse is better than saying, "We screwed up."
But many companies did screw up. Lots hired too freely as the economy rebounded post-COVID. Some are just poorly managed, because there are always companies that are poorly managed.
An article in the New York Times, "Is AI Replacing Tech Workers or Providing an Excuse for Job Cuts?", provides any number of examples. Meta is my favorite. As a columnist in the Times put it, "From 2021 to 2026, [CEO Mark Zuckerberg] poured $80 billion into the Metaverse in the firm belief that we would all want to don headsets and hang out in a virtual world populated by legless avatars." That flop [predicted here, in 2021, I note immodestly] is why he's having to cut 10% of his work force — but he hopes to save a little face by citing AI.
None of this is to say generative AI isn't have a massive impact. It is. Legendary venture capitalist John Doerr recently told the Wall Street Journal that AI is "underhyped." Doerr, 74 years old, said AI is the biggest of all the tech tsunamis he's seen in his long career.
The gains are, at least as of now, showing up in improvements in efficiency and service — and even in new types of jobs.
Box, which makes software for storing and managing data, created 13 new kinds of roles, with titles such as AI architect, AI solutions manager and AI platform leader. The New York Times reports: "With the proliferation of these positions, Box expects to have more than 3,000 employees by early next year, up from 2,900 at the start of this year."
Schneider Electric made its call centers and manufacturing facilities more productive, without elminating workers. Costco, Delta and IBM did much the same.
Insurers are already seeing major opportunities for efficiencies in gathering documents and triaging cases for claims representatives and underwriters, and companies are moving toward AIs that provide recommendations and can act as agents, or at least produce drafts of communications and reports. Insurers are seeing great opportunities for AI to handle routine inquiries from customers and to provide at least rudimentary service during off hours. And much more.
Insurers should continue to pursue all available opportunities and think big about what breakthroughs might be out there via AI but, at least for now, should focus on removing the burdens on employees and enhancing customer service and not on reducing head count.
Cheers,
Paul