AI Job Replacement Fears in Minnesota

AI's Impact on Minnesota Jobs

Minnesota workers are increasingly concerned about the possibility of AI replacing their jobs, particularly in a challenging labor market. Despite being aware of the potential risks, a growing number of employees are utilizing AI technology at work. Supporters of AI claim it boosts work efficiency.

Travis Hart, a 34-year-old from Monticello, Minnesota, noticed that many job postings listed ChatGPT skills as a requirement. This trend emerged after he lost his job at a small e-commerce firm due to the company's increased reliance on AI. Hart stated, “It was scary going through all these jobs, and people are listing it as a skill. There’s a trick to it, but it’s being observed as a skill, which — it’s not the same thing.”

AI's Rapid Infiltration

Generative AI platforms such as ChatGPT are quickly becoming commonplace in American workplaces. Companies across various sectors, including health care, financial services, and communications, are making substantial investments in AI adoption, AI-related job creation, and employee retraining. Walmart intends to invest nearly $1 billion in training by 2026 and has formed a partnership with OpenAI. Bank of America is allocating $4 billion, about a third of its tech budget, to AI this year.

This rapid expansion of AI is intensifying worker anxiety, which was already heightened by the slowing labor market. Similar to the automation and offshoring trends of the late 20th century, AI promises greater efficiency but at the cost of human positions. However, unlike those trends that primarily affected blue-collar workers over decades, AI is advancing more rapidly and impacting white-collar jobs as well.

Some business leaders have exacerbated these fears by suggesting AI will replace many office jobs entirely. Ford Motors CEO Jim Farley predicted at the Aspen Ideas Festival that AI “is going to replace literally half of all white-collar workers in the U.S.” A Resume.org survey indicated that 40% of U.S. companies plan to replace staff with AI by 2026.

Economic Impact

Despite hiring hesitancy due to economic uncertainty, businesses are investing in AI, which Oxford Economics senior economist Makoto Tsuchiya identifies as “one of the few areas propping up the economy.” Federal Reserve Bank of Minneapolis President Neel Kashkari noted this shift as a reallocation “away from labor-intensive industries to less labor-intensive industries,” citing the significant investment boom in technology like data centers for AI.

While mass layoffs haven't occurred, more job seekers are experiencing unemployment durations exceeding six months, and the national unemployment rate is rising. University of Miami economics professor Stefania Albanesi suggests that AI could disrupt a typical recovery if a recession occurs, as employers may invest in technology to replace laid-off workers. “If we have a recession where firms lay off a bunch of workers, and then in three years, this technology has improved a lot, that’s going to be a little bit of a catalyst for a deployment more at scale of that technology,” she said.

Uncertain Future

The ultimate impact of AI remains unclear for both workers and employers. Its capabilities have expanded rapidly, ranging from answering questions and writing emails to creating presentations and reviewing resumes. A Deloitte survey revealed that over a third of consumers now use AI for work, a significant increase from 6% in 2023, with many independently integrating these tools.

Lou DiLorenzo, who leads the U.S. tech, AI and data strategy practice at Deloitte, noted, “The pace of this is dramatically different than other experiences we’ve collectively had. The contribution [gen AI] can make to solving different problems is evolving rapidly and continues to show no signs of slowing down.”

James Holmberg, co-owner of Minneapolis-based Vilas AI, which began conducting workplace AI training in 2023, believes AI will not necessarily replace jobs but make them more intense. Software engineer Daniel Martelly from Minneapolis has gone through a full cycle of emotions about AI, from skepticism to acceptance. While he still worries about potential job replacement, he sees clear limitations in the technology. Martelly is concerned that younger colleagues might rely on AI without grasping fundamental concepts: “It’s important to understand what’s happening to truly not just get it working, but understand why it’s working. And then what that means is, when it’s broken, you can understand why it’s broken and really get to the correct answer.”