AI is New. The Challenge of Mass Unemployment Isn’t.

_{Please note that this policy brief represents the perspectives of its author, and not necessarily those of NELP, its officers or Board.}

Introduction

As employers begin to use artificial intelligence (AI) to replace significant segments of the workforce, policymakers and advocates need to seriously consider what an effective response to the next economic downturn should look like.

We do not have to know what the scale and pace of AI displacement might be to act. Workers may be laid off, their work might change substantially, while other dislocations could shutter entire industries or occupations.

We are already seeing jobseekers struggle to find reemployment in this economy, and AI could only exacerbate these challenges. Preparing for this possibility requires that policymakers ensure that workers maintain economic security while they are unemployed and have quality assistance to successfully transition back into the workforce.

The pandemic unemployment crisis offers a recent test of whether our unemployment insurance (UI) system can respond when mass job displacement happens, and a warning against waiting until a crisis is underway to build the systems we need to aid people affected by that crisis.

Years of neglect and sustained attacks aimed at reducing workers’ access to UI led to the threadbare system we have in most of the United States. Any response that offers merely a patchwork of partial solutions will be akin to building a house on a broken foundation. If AI causes mass job disruption, we will need a fully functional UI system ready to go. We still have a narrow window where we can break the cycle of never fixing UI outside of a crisis. The current system excludes far too many workers, particularly those who are already the most vulnerable.

In 1980—nearly 50 years ago—the bipartisan National Commission on Unemployment Compensation published recommendations to fix UI. Similar findings were published by another bipartisan commission in 1996. Federal legislation has been introduced that adopts most of these ideas—if Congress were to pass it, we could avoid the otherwise inevitable catastrophe for workers in the event of another major economic downturn.

This policy brief makes the case for comprehensive UI reform by looking at why layering a new system on top of the existing one won’t work. By examining our response to mass unemployment during the COVID-19 pandemic, when lawmakers introduced a patchwork of new programs instead of undertaking the challenging work of fundamental UI reform, we can see how a piecemeal approach is not the answer.