'Jobless boom' | Federal Reserve chief warns rapid AI adoption could leave many 'essentially unemployable'

Federal Reserve Governor Michael S. Barr has warned that artificial intelligence could produce a “jobless boom” that sidelines large segments of the workforce, even as productivity accelerates.

Speaking to the New York Association for Business Economics, Barr described three possible labor market outcomes as generative AI embeds itself in the workplace. While current indicators suggest gradual integration, he warned policymakers against complacency.

“We should be clear-eyed about how painful these changes could be for affected workers and how challenging it would be for the government and the private sector to successfully manage the fallout,” Barr said.

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Rapid growth and concentrated gains

Barr outlined what he called a “scenario of rapid growth,” in which AI agents replace a broad range of professional and service roles while robotics automate manufacturing and transportation. Under that model, labor demand would narrow to highly skilled trades and positions requiring human interaction. Economic gains would accrue largely to capital holders and “AI superstars.”