AI & Job Displacement: Actions the U.S. Can Take to Navigate the Turbulent Times Ahead

The Challenge We Face

Artificial intelligence is referred to as the fourth industrial revolution, ranking alongside revolutionary changes caused by manufacturing automation, the invention of electricity, and the computer and software revolution. According to an International Monetary Fund (IMF) report, almost 40% of global employment is exposed to AI, with advanced economies having 60% exposure due to the prevalence of knowledge-oriented jobs.

This truly has the potential to produce massive gains and losses at the same time. The American government must analyze what must be done, given the range of impact this technology can have—not only to livelihood, but also to social order and peace, as an increase in inequalities might mean a further widening gap between the rich and poor.

Lessons from History

This is not the first time the United States has confronted fears of job displacement due to technology. Since the post-World War II automation boom, to the IT revolution of the 1980s, to the 2000s, there have been numerous occasions where the federal government has intervened during mass job disruption.

In 1964, President Lyndon B. Johnson established the National Commission on Technology, Automation, and Economic Progress. The commission's 1966 report recommended creating government jobs, guaranteeing a basic income for families, and improving education—recommendations that remain relevant today.

Despite such initiatives, the federal government has historically failed to match the speed of technological change. Many workers, especially those without specialized skills, struggled to find stable employment. The government's inability to maintain these initiatives highlighted the need for better, more sustainable strategies.

Recommended Policy Actions

1. Trade Adjustment Assistance for AI (TAAAAI)

The government should implement a job adjustment support initiative modeled after the TAA for Automation Act. This program would cover expenses for retraining and compensation for job loss for a reasonable amount of time. The funds needed would be paid for by a small fee imposed on companies that heavily leverage AI to save costs and make profits.

2. Incentivize Retraining Over Layoffs

Companies could get tax credits for employment training of impacted employees, just like bankruptcy loss allows companies to negotiate loan repayments. Labor laws should allow employers to declare their intent to restructure their workforce and negotiate lower salaries for impacted employees on the promise that they will be retrained in newer occupations—such as creating training data for AI systems, maintaining AI systems, and higher-skill work that uses AI.

3. AI Impact Assessments

The government should implement regulations requiring companies to assess the impact of mass automation, similar to environmental impact assessments today. A modification could be made to the WARN Act—which mandates a 60-day notice to the Department of Labor on mass layoffs—to extend the notice period to 120 days or longer for AI-automation-driven layoffs, giving all parties time to consider retraining options.

4. Education System Reform

AI and technical literacy should be introduced at all levels of education on an urgent basis. At K-12 level, education should include two major components:

• •Uniquely human abilities: creativity, critical thinking, teamwork, communication, conflict resolution
• •AI systems knowledge: training, managing, and utilizing AI systems efficiently so that AI knowledge becomes as basic as math and reading

5. Universal Basic Income (UBI) Pilots

A bolder, longer-term approach is ensuring a universal basic income where citizens derive an income to live their lives without having to work a job. This idea might be costly and hard to implement, but it has been recommended by various leaders as a way to ensure no one is left behind. This could be tried out in small pilots at the city and county levels before being rolled out more robustly.

The Path Forward

The above recommendations point to a simple fact: we, the American people, need to treat the Artificial Intelligence Revolution not as a threat, but as an opportunity and a change that needs to be managed well. This requires government intervention where market forces alone would produce unjust outcomes for a large portion of the population.

If this change is managed well, the United States economy will evolve to an advanced state where artificial intelligence handles routine work, allowing humans to focus on using AI in creative, high-level, groundbreaking work.

The United States faces intense competition in the AI race from China and other nations. Having the measures and programs in place to manage the disruption is precisely the safety net required to allow the United States to move faster in this race, both in the short term and long term.