Recession-Driven Automation
From The AI Survival Guide by Ace Eddleman
Recession-driven automation is a pattern I keep coming back to: during an economic downturn, companies lay workers off and automate their jobs, and when the economy recovers they keep the machines and never rehire. It doesn’t take superintelligence. Ordinary automation is enough.
The oil rig lesson
In 2016, oil and gas prices crashed into a mini-recession, and energy companies laid off workers in droves. Some cuts were expected after a boom. The surprise came later: when prices recovered in 2017, the rigs came back and the jobs didn’t. The industry had spent the downturn on an automation spree, and once the bleeding stopped it had no reason to go back. (Scott Santens tells the full story, chart included, in The Real Story of Automation Beginning with One Simple Chart.)
None of the machines involved were remotely intelligent. They were robots doing repetitive, dangerous work. That’s arguably good for society, since fewer people risk their lives for energy products. It means nothing to the workers who can no longer provide for their families.
Why it only goes one way
Recoveries used to force businesses to hire again, and owners and workers prospered together once conditions improved. That link is breaking. Every downturn now gives owners a reason to find efficiencies, and current technology gives them the means. A job lost in a recession may be gone for good, even after the company can afford to pay you again. Your old salary goes into upgrades and optimizations instead.
What to do with this
Don’t wait. If you feel safe now, remember that new waves of AI keep arriving, and the next downturn is when the cuts happen. The warning covers business owners too: AI can become an existential threat to a successful company faster than you’d think. Assume the worst and prepare for it, instead of hoping everything stays the same.
Common questions
Do companies rehire workers after automating during a recession?
Often not. In the 2016 oil downturn, energy companies automated during the slump and didn’t rehire when prices recovered in 2017.
Does AI need to reach AGI to cause mass job losses?
No. Ordinary automation, deployed during economic downturns, is already enough to remove jobs permanently.