Will AI cause an extinction level event for white collar jobs?
When we look at an emerging technology like artificial intelligence (AI), many of us immediately fear that this innovation will replace millions—if not tens of millions—of jobs. The white-collar worker making six figures will supposedly be relegated to a manual labor job at a fraction of their previous salary simply because their skills are no longer applicable. For those who have spent time experimenting with AI tools, this conclusion seems plausible and even logical. White-collar jobs, particularly those that involve repetitive or analytical tasks, seem poised for a mass extinction event.
However, history provides a compelling counterpoint to this anxiety. A particularly relevant analogy is the introduction of the personal computer and the internet. Suddenly, workers had instant access to a vast repository of global knowledge, the ability to solve significantly more complex problems, and the capacity to produce far more work (documents, spreadsheets, emails, analyses, computations, etc.). Imagine being an accountant filling in ledgers by hand in the late 1980s—wouldn’t it have been terrifying to think that the entire profession might disappear, replaced by digital spreadsheets capable of instantly updating financial models that once took weeks to prepare?
Yet, accountants did not vanish. In fact, the opposite happened. Today, the U.S. has approximately 1.5 million accountants, a 200-300% increase in accountants per American employee compared to the pre-computer era. If modern companies are not demonstrably more profitable or well-run than their pre-digital counterparts, why didn’t we see a massive reduction in the need for accountants? The reason is complex but provides critical insights into what might happen with AI and its effect on employment:
1. Parkinson’s Law and the Expansion of Work
A well-documented phenomenon known as Parkinson’s Law states that "work expands to fill the time available for its completion." This principle explains why, even with vast technological advancements, the number of workers needed in various professions has not necessarily declined. For example, if a company employs ten accountants without computers or the internet, one might assume that after adopting these technologies, only two or three accountants would be necessary to handle the same workload. Yet, in reality, the same ten accountants continue working the same number of hours and perhaps you even have fifteen accountants now. Instead of being streamlined, processes become more complex, incorporating additional analyses, reports, and bureaucratic requirements. Organizations, rather than cutting staff, often expand their workload to fit available resources.
Anyone who has managed a team in the workplace knows that workers tend to advocate for more resources (staff, budget, tools) rather than seek ways to do more with less. As a result, rather than leading to significant gains in productivity, advancements like the computer and internet often produce a net-zero impact or even negative effects due to added complexity and inefficiency. They can even have a substantial negative knock on effect where other parts of your organization start to reduce in productivity as they adopt the additional complexities too - everyone is doing it!
2. Political and Regulatory Capture
Another significant factor affecting productivity is the political and regulatory capture of professions. As industries grow, they tend to accumulate bureaucracy and unnecessary layers of complexity. This is why a startup with a dozen employees can sometimes outcompete a corporation with 100,000 workers. Accounting again is a great example (I am not picking on accountants!). The expansion of financial regulations over the last few decades has necessitated more accountants, not fewer, despite the increased efficiency provided by computers. Take the example of changes in accounting rules for leases: these regulatory adjustments offer little to no practical benefit to businesses but create vast amounts of additional compliance work. This phenomenon isn’t unique to accounting. Similar trends are visible in law, healthcare, human resources, and education, where technological progress has paradoxically led to more employees, more paperwork, and more inefficiency rather than fewer jobs and streamlined operations.
3. The Arms Race of Technological Advancement
Technology often functions as both an offensive and defensive tool. Consider email: the computer allowed individuals to send thousands of emails per day instead of dozens of handwritten letters. However, the recipient of these emails now needs email filters, AI-driven spam detection, and prioritization software just to manage their inbox effectively. Ultimately, the human limitation remains: an individual can only process a certain number of messages per day, no matter how efficiently they are delivered. This leads to an arms race, where technological advancements create problems that must then be solved by additional technological advancements. As a result, overall productivity does not necessarily improve at the rate one might expect.
What This Means for AI and the Future of Work
The argument that AI will replace millions of jobs assumes that employers will fully capture and implement the efficiency gains AI provides. However, the historical example of computers suggests that workers will absorb these gains by expanding their work and responsibilities rather than being replaced. AI will undoubtedly introduce new efficiencies, just as the personal computer did. However, history suggests that organizations will use these efficiencies to create more complex workflows, additional bureaucratic layers, and increased regulatory compliance burdens, ensuring that the net impact on employment may not be as dramatic as many fear. Additionally, AI itself will generate entirely new industries and job roles—many of which we cannot yet foresee. Just as the rise of computers led to software development, IT management, and cybersecurity, AI will bring forth new professions centered around prompt engineering, AI auditing, data ethics, etc.
While it is tempting to envision AI as an apocalyptic force that will wipe out jobs en masse, history suggests a different reality. Now whether that reality is a good thing is a completely different question. Imagine a world where companies all actually increased productivity substantially because of the computer. Just as the personal computer failed to eliminate accountants, AI is unlikely to lead to mass white-collar unemployment. Instead, it will reshape industries, introduce new complexities, and create unforeseen employment opportunities.
Thus, rather than fearing AI’s impact on the workforce, we should focus on how organizations, workers, and regulators respond to this new technology. Those who adapt and leverage AI effectively will thrive—not because AI eliminates jobs, but because it makes certain jobs more valuable than ever before. However, I can tell you that if you are at the forefront of AI and actively adopt it as a business or as an individual, you will eat your competitors lunch! Get in touch with our team at NJII to discuss your AI needs.
