Illustration by Tag Hartman-Simkins/Futurism. Source: Getty Images
While AI companies control the global economy and invest billions of dollars in building data centers, it is still unclear whether their products can deliver on one of their core premises: increased productivity.
A big skeptic on the technology’s economic promises is vice president and principal analyst at global market analysis firm JP Gounder, who says we “are not seeing” an AI-driven boost in productivity in any available data.
“You start to get the picture that information technology is not always measured in productivity in the linear way that people believe,” he said told register in a new interview. “It’s not there.”
This is not a statement about how transformative AI can or cannot be. This can have massive impacts without necessarily yielding economic benefits, a phenomenon known as the Solow paradox, named after Nobel Prize-winning economist Robert Solow, who correctly predicted in Gunder’s analysis that “by 1987 the effects of the PC revolution could be seen everywhere except in productivity statistics.”
He points to data from the US Bureau of Labor Statistics showing how productivity improved by 2.7 percent annually between 1947 and 1973 – before the advent of PCs, but only by 2.1 percent between 1990 and 2001, when PCs became mainstream.
“So despite all those PCs, it was very low,” Gunder said. “And (from 2007 to) 2019 it was 1.5 percent.”
A plethora of research, as well as cases of AI deployment in the workplace, have suggested that the technology is far from ready for primetime. One Notable MIT studies found that 95 percent of companies that integrated AI saw zero meaningful growth in revenue. For coding tasks, one of the most widely publicized applications of AI, another study showed that programmers who used AI coding tools actually became slower at their work.
AI designed to automate entire tasks doesn’t seem to be very popular: When researchers at the Center for AI Safety tested the ability of AI agents to complete remote work tasks, no model was able to complete more than three percent of their assignments. Another study shows that the very introduction of AI into the workplace appears to be destructive to employee relations, finding that AI resulted in employees undergoing low-quality “workshop” with the expectation that someone else would later polish the AI’s shoddy output.
“A lot of the generative AI stuff isn’t actually working,” Gunder pointed out. register. “And I’m not just talking about your consumer experience, which has its own gaps, but the MIT study suggested that 95 percent of all generative AI projects are not delivering any tangible (profit and loss) benefits. So there is no real (return on investment).”
“It’s just further context that says we’re not at a place where a lot of people are losing their jobs right now,” he said.
That said, Forrester’s research predicts that AI and other automation technologies, like physical robots, will replace six percent of jobs by 2030, which would equate to about 10.4 million roles.
“These jobs are structurally lost, like they’re gone forever, because they’ve been replaced,” Gunder said. register. “This is no small hit to the economy.”
There may come a point where employers realize AI isn’t working, Gunder said. Some bosses who fired employees in favor of AI agents have already eaten crow and re-hired their human grunts. But “AI” may just be a way to file paperwork on other forms of cost-cutting.
“Outsourcing is very popular,” he said. register. “They’re laying off people because of AI, and then three weeks later they hire a team in India because labor is so much cheaper.”
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