One of America’s top financial regulators has sounded an alarm even as the world’s tech giants are celebrating record-breaking AI breakthroughs. Michael S. Barr, governor of the Federal Reserve, issued a warning about the potential for artificial intelligence (AI) technology to create a “jobless boom”. He said that AI may help in the rapid growth of economy, but a significant portion of the population may find themselves “essentially unemployable” as AI agents and robots take over everything from office work to transportation.“We should be clear-eyed about how painful these changes could be for affected workers and how challenging it would be for the government and the private sector to successfully manage the fallout,” Barr said, as per a report in Fortune. Speaking before the New York Association for Business Economics on Tuesday (February 17), Barr outlined three possible ways AI could reshape our world.

‘AI agents to replace professional services’

Barr described a future where AI agents replace a wide range of professional and service occupations, while robotics automate manufacturing and transportation. “Layoffs soar, leading to widespread unemployment in the short run and declines in labor force participation over time, as a large share of the population is essentially unemployable,” Barr said. He added that such a future would require a complete rethinking of workforce development.He says that similar to the invention of the light bulb or the internet, AI will slowly become the part of life. Some jobs are lost, but new industries are created, and wages eventually go up. He cautioned that early warning signs are already visible as early-career workers in AI-related fields, such as software development, are already seeing declines in employment relative to other sectors.“For these workers, the short run may have long-term consequences,” Barr said.Third is the Stalled Boom – a “dot-com” style crash where energy shortages or a lack of data cause the AI industry to bust, which may lead to financial stress. As per Barr, the private and public sectors are ill-equipped to handle the potential speed of the transition. He warned that the “historical record on meaningful efforts to help workers in such a transition is not encouraging.”“Society will need to be nimble and bold to reduce the pain of short-term dislocations. Widespread AI adoption will very likely lead to dramatic and sometimes difficult changes in the way many of us work and live,” Barr said.