There was a lot of angst a few years ago when many people in the tech industry first started talking about AL and ML and were speculating it would lead to widespread job losses with some saying the US would need a basic minimum income to protect unemployed workers. We think there are good reasons to push back against this “narrative” and that the net benefit will likely be positive. Rather than just replacing workers, in many instances these technologies will be applied as assistants to make employees more productive since adding more employees will become less and less of an option. Declining worldwide fertility will reduce the available number of workers in the future and will offset some of the previously forecast displacement of workers from AI and ML particularly for the more developed economies that already are experiencing declining populations.

Here is the basic data to know on future demographic trends:  

The replacement fertility rate needed to maintain a population’s size is 2.1 births per woman and is projected to fall below that number worldwide by 2070according to a recent Pew Research Center study.  

But several of the world’s highly developed countries are already below 2.1 and are facing labor shortages. South Korea’s fertility rate fell to just 0.72 in 2023. The birth rate in Japan fell to 1.26 and 1.9 in China and the US.  These countries are among the approximately 90 in the developed world where populations are not growing independent of immigration. The reasons for the trend include greater access to contraception and more women being educated and pursuing careers.

Too many people and businesses are not factoring in demographics as they plan for their future because a fertility rate below replacement has never happened in recent history. As late as1963, women worldwide were having 5.3 children in their lifetime but by 2021, that had more than halved to 2.3. During the same period, the global population rose by around 150 percent from 3.2 billion to 7.9 billion. The fact that populations kept growing despite falling fertility is primarily tied to longer life expectancy.

But now that growth is rapidly slowing in many countries, we are seeing new automation technologies being adopted to overcome the negative affect of declining population on those countries’ economic growth.

This will gradually be a net positive for workers as parts of dangerous or boring, repetitive task blue and white-collar jobs will be replaced by AI and ML outright and AI and ML assist will make workers more productive. It is productivity that leads to higher worker incomes just like hard capital investments have historically led to higher productivity and worker incomes.

A business owner only has two ways to invest to increase productivity and grow their business other than hiring more people, hard assets like physical plant and capital equipment or investing in automation that makes workers more efficient. If the people are not available because of demographic trends, businesses are going to be forced to invest in AI and ML and employee education programs so they can use these new software applications that will make the workforce more productive.

This new investment pattern will require a “Constant Learning Mindset” on the part of employees and a new partnership between businesses and postsecondary schools that includes aligning and expanding traditional postsecondary education to provide the skills needed, investing in reskilling incumbent workers, and expanding accelerated learning for career certifications not just degreed college programs so people can quickly move into these new, enhanced positions.