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• The most responsible thing to say on the topic of AI and job market disruption is that no one knows what will happen long-term when attempting to forecast net job losses or new job creation.
• But former U.S. Commerce Secretary Gina Raimondo is certain that if U.S. corporations and the government do not carefully plan the coming AI transition period, layoffs are likely to mount in the short-term with drastic repercussions for society.
• She tells Julia Boorstin in the first episode of Season 2 of the “CNBC Changemakers” podcast that it is reasonable to expect tens of millions of job losses and a long, deep recession, “If we put our blinders on and just unleash the new technology without a plan to bring every American along.”

watch nowVIDEO03:27Worst-case scenario for AI job losses: Former US Commerce Sec. Gina RaimondoCNBC Changemakers with Julia Boorstin

Gina Raimondo considers herself to be an AI optimist. She wants her children to live in an America where jobs we can’t even think of today will be created, and where the benefits of AI spread: “Better healthcare, better technology, better data,” she says.

So why is it that the former U.S. Commerce Secretary and Rhode Island Senator is so worried about the threat of mass layoffs ripping apart the fabric of U.S. society?

Lack of planning, she says.

“I think the worst-case scenario is that we don’t have a plan to make sure that every American can have a good job in the age of AI,” Raimondo told CNBC’s Julia Boorstin in the first episode of Season 2 of the “CNBC Changemakers” podcast.

“Tens of millions of Americans will be put out of work or underemployed, and in that instance … I worry deeply. I think you could have an economic recession that is deep and long. I think you could have rioting in the streets. I mean that sincerely. I wouldn’t have said that 10 years ago, but in the past 10 years, economic inequality is through the roof, and our democracy is fraying every day,” Raimondo said in the podcast interview conducted in late August.

That kind of outcome would be doubly bad, she says, because it would lead to regulators stepping in to stop AI innovation, potentially ceding the technology lead to China and other nations.

“If we just let AI loose, and wake up in, I don’t know, three or four years with a 10-11% unemployment rate, 20% unemployment rate among young people, people in their 20s, I think we’re screwed,” Raimondo said. “It’s a non-technical term … So let’s get ahead of it.”

The truth is no one can know for sure what will occur in the job market and anyone claiming to know is going too far. Right now, many jobs are booming due to AI, while preliminary studies on the impact of AI on jobs and wages remain educated guess work, as their own authors caution. Meanwhile, some of the leading figures in the AI revolution have done a less than convincing job in recent attempts to explain why a job creation boom is all but assured.

Raimondo says she is a believer in long-term net job creation from AI — jobs that we cannot imagine today. “I believe in some number of years AI, like every other technology, will create new jobs, more jobs. I really do, but we need a planned transition. Otherwise, if we put our blinders on and just unleash the new technology without a plan to bring every American along, then I think you’ll see what we just talked about, … I don’t have faith in the market to lead us through this transition without a major disruption,” she said.

Her fears about a troubling AI transition period for the labor market stem at least partially from conversations she has had with CEOs after leaving her post as President Biden’s Commerce Secretary. “When I got out of the government, CEOs of major U.S. corporations started to call me, saying that they were worried about massive job losses that could be coming because of AI and robotics. Not one or two CEOs, but a number would call, and almost as if to say, what are you going to do about that?”

The recent fears of an AI-triggered existential crisis for humanity brought about by a widening set of breaches by rogue agents from leading frontier labs isn’t detached as an issue in Raimondo’s thinking from the risks in the job market. In her mind, all the dangers are potential signs of moving too fast without enough planning.

In a recent LinkedIn post after the revelations from OpenAI and Anthropic, Raimondo wrote that “we’ve seen too many dangerous incidents across a range of models.” 

“If we don’t take all the potential harms of AI seriously – and do a lot more work to figure out what policies and programs are most effective – we will lose. As these capabilities develop faster than we thought, we have to make sure they are safe to adopt and do not lead to massive unemployment or we will irreparably damage our democracy and social fabric,” she wrote.  

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Raimondo co-founded Raise Us with former Indiana Governor Eric Holcomb to bring about the “best-case scenario” for this period, connecting private capital to government to create solutions for workers ahead of potential displacement. Amazon, Anthropic, Microsoft, AMD, ADP, Bank of America, Blackstone, Cisco, Eli Lilly, GM, IBM, Mastercard and UPS are among companies initially involved with the effort.

“Bring employers to the table and convince them to implement AI in a way that ensures the bottom doesn’t fall out overnight among tens of millions of Americans,” she said. “We get governors to the table to change policies so that we have a planned transition to an AI economy.”

To date, the organization is working with business and governors in four states — Arkansas, Utah, Maryland and Connecticut.

“Maybe today it’s call center workers. Maybe two years from now it’s something else. But we just have to kind of reset our policies of incentives, of training, of severance, of payroll taxes. … We have to get them ready for an agentic economy.”

The ideas being tested at the state level include year-of-service programs for young Americans not sure of their career path in their early 20s as a gateway to a full-time position, new models of unemployment insurance, new forms of salary support and retraining for the jobless and in particular for workers in their 50s who may be at risk of losing jobs and in a poor position to transition into new careers with comparable pay. And it will take a look at how we tax labor. “Right now, if you’re an employer, you pay a payroll tax for every employee. You pay nothing for an agent, so your incentive is to get rid of your employees, not pay that payroll tax. And use agents. … That’s my point about changing incentives,” Raimondo said.

Raimondo previously told CNBC at the time of the launch of Raise Us last June that older workers displaced from jobs are of personal interest to her based on her father’s experience after a great career as a manufacturing worker being blindsided by outsourcing and lacking a bridge to a new career.

“America’s workforce system is old. It is old-fashioned. Unemployment insurance was created 100 years ago in the Great Depression and hasn’t been changed. The college system. Think of how much money this country spends to subsidize attendance in college. Pell grants, college subsidies, college loans. College mostly doesn’t work for most American students, but yet we keep shoveling money into that. It worked for the GI Bill after the Second World War. Hasn’t been changed since. So what do I want to do? I want to use the fact that AI is changing everything to start changing these policies so that every single American can thrive and have a place in an AI economy.”

While Raimondo concedes that it’s “a monster problem,” she says that in the immediate years ahead she has little faith in Congress or the CEO class alone to solve the problem.

“Congress isn’t going to do a damn thing. Congress does nothing. There’s not a lot of things about which I’m confident, but I would bet you a lot of money that Congress won’t pass effective bipartisan legislation helping American workers in the next three years. It’s just not going to happen,” she said.

And while some CEOs “get it,” she says there are plenty of others who don’t.

“I’m building a coalition of the willing. … These are CEOs and boards that have said we know what’s coming, and we want to experiment and be innovative and do the right thing,” Raimondo said. “Many CEOs you call say ‘No, no, I’m just gonna do what I always do, which is maximize short-term profit and short-term share price.’”

“The incentive now is to hit the layoff button.”

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