{"id":530900,"date":"2026-07-03T10:06:17","date_gmt":"2026-07-03T10:06:17","guid":{"rendered":"https:\/\/www.newsbeep.com\/ie\/530900\/"},"modified":"2026-07-03T10:06:17","modified_gmt":"2026-07-03T10:06:17","slug":"why-the-labor-market-is-not-actually-like-a-game-of-musical-chairs","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/ie\/530900\/","title":{"rendered":"Why the labor market is not actually like a game of musical chairs"},"content":{"rendered":"

Right now, a good chunk of Americans feel threatened by artificial intelligence. A recent Reuters\/Ipsos poll<\/a> found that more than half of Americans are worried that AI could put them or someone in their household out of work. <\/p>\n

One economic concept that can help explain how new technologies tend to impact the labor market is known as the \u201clump of labor fallacy.\u201d<\/p>\n

\u201cThe lump of labor fallacy is simply the notion that there’s a fixed amount of work to be done,\u201d said Edouard Wemy, an associate professor of economics at Clark University. \u201cAnd if one person [were] to gain one job, then it must be at the expense of somebody else.\u201d<\/p>\n

Catalina Amuedo-Dorantes, a professor of economics at the University of California, Merced, said in that scenario, the economy would be like a big game of \u201cmusical chairs,\u201d where one player equals one worker and one chair equals one job. \u201cSo if one more worker is going to enter the labor market, someone else must lose a seat.\u201d<\/p>\n

But history tells us that the economy is not, in fact, a game of musical chairs. \u201cTechnology does not simply eliminate labor; it changes basically what workers do, and it can raise productivity, lower cost, and create new products, firms, and occupations in general,\u201d said Amuedo-Dorantes. <\/p>\n

That\u2019s the fallacy part of the \u201clump of labor fallacy.\u201d <\/p>\n

If you think about the new technologies of the past, like mechanized agriculture, sewing machines, or word processors, those technologies did not lead to mass unemployment. Instead, they freed people up to work in other industries, create new businesses, and make new jobs. <\/p>\n

\u201cIt’s actually that they bring more chairs,\u201d Amuedo-Dorantes said. \u201cSome jobs will be lost,\u201d said Wemy. \u201cBut more jobs overall are going to be created in terms of total employment.\u201d <\/p>\n

Over time, the total number of jobs in this economy tends to grow<\/a>. <\/p>\n

That is the lump of labor fallacy in action. But that thing about some jobs being lost when a new technology is introduced matters too. \u201cIndividually, it’s gonna hurt,\u201d said Wemy. \u201cBut on a macro level, more jobs are going to be created.\u201d<\/p>\n

So let\u2019s bring it back to artificial intelligence.<\/p>\n

\u201cAI, as a technology itself, is different from technologies in the past,\u201d said Nigel Melville, an associate professor at the University of Michigan who studies the socio-technical implications of AI. He said agentic AI\u2019s capacity to mimic human behavior does separate it from previous technologies, but it\u2019s hard to know how that will impact the labor market.<\/p>\n

A new report from Challenger Gray and Christmas<\/a> found that companies cited AI in more than 100,000 layoff announcements this year. <\/p>\n

\u201cI call it \u2018the gap,\u2019\u201d Melville said. \u201cSo this is the difference between the people that are being laid off or being let go because of AI, and then the new jobs that are created because of AI.\u201d<\/p>\n

According to the Stanford AI Index<\/a>, 88% of organizations now use artificial intelligence for at least one business function. \u201cWe don’t know exactly what the gap will be,\u201d Melville said, \u201cbut we do know that we’re approaching level four or level five rapids.\u201d<\/p>\n

It hurts when a new technology takes your job. But the lump of labor fallacy tells us that, eventually, the economy will adjust and the total number of jobs will grow. <\/p>\n

\u201cSo I would not say that history proves that AI will have no negative employment effects, but I would be skeptical of the claim that every automated task translates directly into a permanent lost job,\u201d Amuedo-Dorantes said.<\/p>\n

\u201cThere will be more chairs,\u201d said Wemy. The big question is how long it will take, and whether workers will have the skills they need to sit in those new chairs when they arrive.<\/p>\n

Related Topics<\/p>\n","protected":false},"excerpt":{"rendered":"Right now, a good chunk of Americans feel threatened by artificial intelligence. A recent Reuters\/Ipsos poll found that…\n","protected":false},"author":2,"featured_media":530901,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[218,72,113,61,60,138115,150,1685],"class_list":["post-530900","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-artificial-intelligence","tag-business","tag-economy","tag-ie","tag-ireland","tag-job-automation","tag-jobs","tag-labor-market"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts\/530900","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/comments?post=530900"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/posts\/530900\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/media\/530901"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/media?parent=530900"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/categories?post=530900"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ie\/wp-json\/wp\/v2\/tags?post=530900"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}