Goldman looked at 40 years of the ‘scarring’ effects of tech and finds Gen Z isn’t the most at risk

Key Points:

• Goldman Sachs economists analyzed four decades of data and found that U.S. workers displaced by technology face long-term earnings losses, with real earnings growing nearly 10 percentage points less over ten years compared to never-displaced workers.
• Displaced workers take longer to find new jobs and often move into lower-skill, more routine roles, leading to persistent wage penalties and delayed wealth accumulation, especially for those displaced early in their careers.
• Economic recessions exacerbate the negative effects of technology-driven job loss, increasing unemployment duration and the likelihood of exiting the labor force, highlighting increased risks amid current AI adoption and economic uncertainty.
• Contrary to common concerns, younger, college-educated workers adapt more flexibly by switching occupations and upgrading skills, experiencing smaller cumulative earnings losses than older displaced workers.
• Participation in retraining programs within three years of displacement significantly improves wage growth and reduces the chance of returning to unemployment, emphasizing the value of skill development in mitigating technology-related job displacement.