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Artificial intelligence is transforming the U.S. labor market in complex ways. While headlines often focus on job losses from automation, Goldman Sachs Research reveals a more nuanced picture: AI is simultaneously destroying some jobs and creating others.

By distinguishing between roles where AI replaces humans and those where it enhances human capabilities, economists have uncovered a modest but meaningful net drag on employment alongside significant sector-specific shifts.

According to Goldman Sachs Research economist Elsie Peng, AI has reduced monthly payroll growth by roughly 16,000 jobs over the past year and increased the unemployment rate by about 0.1 percentage point. However, this overall negative effect is partially offset by job gains in areas where AI complements human workers. W

hen AI augments labor, it boosts productivity, lowers production costs, and often increases demand for goods and services — ultimately supporting higher employment in those fields.

This dynamic highlights an important economic principle known as the Jevons paradox. Just as greater efficiency in coal use during the 1800s actually increased total coal consumption by making it cheaper and more widely used, AI-driven productivity gains can expand demand enough to create more jobs than they eliminate in certain occupations.

Substitution vs. Augmentation: Two Sides of AI’s Impact

Goldman Sachs Research combines traditional AI displacement scores with an International Monetary Fund-developed index of AI complementarity. This approach provides deeper insight than previous studies, which often treated AI exposure as uniformly negative.

In roles with high substitution risk, AI directly replaces human tasks. These positions typically involve repetitive, rule-based work that can be automated with high accuracy. Occupations most vulnerable include telephone operators, insurance claims clerks, bill collectors, and certain data entry or administrative support roles. Companies adopting AI in these areas have reported lower operating costs and reduced job postings.

Conversely, AI augmentation occurs when technology handles routine tasks while still requiring human oversight, creativity, judgment, or physical presence. Here, AI makes workers more productive without fully replacing them. Occupations showing strong augmentation potential include education professionals, judges, construction managers, and interior designers. These roles often involve unstructured problem-solving, interpersonal interaction, or on-site presence that current AI and robotics cannot fully replicate.

For example, customer service representatives and interior designers both face significant AI exposure. However, interior design demands site visits, client collaboration, and creative customization — factors that give it a much higher augmentation score. AI tools can generate designs or manage data, but the human designer remains essential for final decisions and relationship-building.

Who Is Most Affected?

The research indicates that younger, less-experienced workers are bearing the brunt of AI’s negative effects. Entry-level positions in administrative and routine cognitive tasks are being automated first, making it harder for new graduates to gain initial footholds in the job market.

On the positive side, sectors experiencing AI augmentation have seen increased productivity, more job postings, and stronger hiring. AI is particularly beneficial in complex professional services, healthcare decision-making, creative industries, and skilled trades where human-AI collaboration creates value that neither could achieve alone.

Peng notes that the true net impact of AI may be even smaller than the 16,000 jobs-per-month figure suggests. The analysis does not fully account for new employment in data center construction, AI infrastructure development, or broader economic growth driven by productivity and income gains from AI-powered products and services.

Looking Ahead: Preparing for an AI-Driven Labor Market

The findings suggest that AI’s effect on employment will not be a simple story of mass unemployment. Instead, it will drive a significant reallocation of jobs across sectors and skill levels. Workers in substitutable roles will need to transition toward positions that emphasize uniquely human skills such as emotional intelligence, strategic thinking, creativity, and complex problem-solving.

For businesses, the message is clear: strategic AI adoption should focus not only on cost-cutting through automation but also on using AI to amplify human capabilities. Organizations that successfully integrate AI as a collaborative tool are likely to see stronger growth in both productivity and employment.

As AI technology continues to advance, its labor market impact will evolve. Current augmentation-heavy roles may face greater substitution pressure in the future, while entirely new job categories — many of which we cannot yet imagine — will emerge around AI development, ethics, training, and maintenance.

The key takeaway from Goldman Sachs Research is optimistic yet cautious. AI represents both disruption and opportunity. By better understanding where it substitutes and where it augments, policymakers, educators, and workers can make more informed decisions to navigate this transformation successfully. Those who adapt by developing complementary skills and embracing AI tools will be best positioned to thrive in the evolving economy.

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