If artificial intelligence (AI) is the game changer many think it is, then there's no denying that AI's impact will trickle down to all aspects of society. The labor market could potentially see some significant changes.
Language models like ChatGPT could have the most immediate impact. Companies across industries are already experimenting with ChatGPT integrations, and the technology hasn't even been out for a year.
Investors must pay attention to how the tea leaves are blowing. Here are some potential areas where artificial intelligence could have the biggest impact and how it could affect investors.
Casual dining and fast food
Nearly 5.2 million people work in the fast-food industry in America, making it a tremendous employment contributor to the economy. But the fast food and casual dining landscape could soon change as AI enters the picture.
McDonald's had already headed in that direction, implementing self-order kiosks in 2015 and opening an automated restaurant in late 2022. Management noted that this automated store still required staff to operate, but it opens the question of how far McDonald's could take this as AI technology improves. Wendy's is testing AI in its drive-thrus, using a Google-based language model to take orders.
It doesn't seem like a stretch that many of America's fast-food and beverage restaurants will begin factoring in AI and automation to reduce headcount or drive efficiency to get more out of human labor. Starbucks is using AI to increase efficiency; its Deep Brew platform is optimizing store labor schedules and inventories.
Big tech
Many of Wall Street's biggest companies also have the deepest pockets -- especially in the technology sector. Ironically, that's where some of the sharpest cuts have been made as tech companies lay off workers to rein in spending. So far, in 2023, tech companies have laid off more than 141,000 employees, more than all of 2022 combined.
Hiring ebbs and flows with the economy, but some tech companies may hesitate to bring jobs back due to AI. For example, International Business Machines' CEO noted that the company would freeze hiring in specific roles where AI could replace an estimated 7,800 jobs over time.
Language models have shown an ability to write software code, which could lead to a decline in demand for low-end programmers, ceding those tasks to AI. Big tech companies could play a big part in developing and powering AI for non-tech businesses, and using that tech in-house to cut costs only seems logical.
Customer service
There are millions of customer-facing employees in the economy today, whether it's a customer service rep in a call center or an insurance agent. Language models are threatening to replace these roles. Language models like ChatGPT could be trained on a company's policies, procedures, and customer data. Generative AI can synthetically voice dialogue.
The combination could be customer-facing software bots that can respond to customer requests in a natural-sounding dialogue without human input. You see this to a degree with Lemonade, which uses AI chatbots to handle customer claims and service without needing a human involved.
Change might not happen overnight, but there are a lot of situations where AI bots make sense. Investors might see simple roles automated first, but the potential disruption could spread as language models become increasingly advanced.
The bullish takeaway
Fearing that AI will hurt labor and the economy is logical; this rise-of-the-machines mentality has been around since the Terminator days in Hollywood. However, technology has continually raised economic output for humanity throughout history, and it could happen again.
According to PwC research, AI could add as much as $15.7 trillion to the global economy by 2030. That is about 1.2% in annual growth to global gross domestic product yearly. Human labor displaced by AI could be repurposed to new roles, just as when automation machines replaced manual labor in factories.
Technology can progress quickly. It might feel like AI, such as ChatGPT, has changed everyday life in just a matter of months, and there's no telling what AI's capabilities will be even five years from now. Investors, however, should be excited about the potential growth AI offers and what it could mean for the stocks they hold.
