Successful people recognize crisis as a time for change. ~ Edwin Louis Cole
…And so do successful communities.
Many of our communities are already in crisis. In our larger cities, too many men have given up, spending their days in drugs and isolation. There are too few opportunities for them – even for college graduates – to begin or to restart their careers. Many cities are being hollowed out by companies and residents fleeing grime, crime and poor governance. Falling birth rates (“Peak population”) and corporate flight have left behind empty homes, schools and commercial buildings.
For some cities, this flight has become a vicious cycle. People leave because of a declining quality of life – increased crime, deteriorating schools, limited opportunities. The local government’s tax base shrinks; business revenue becomes spotty and some businesses leave or go under. This causes more people to leave; and the cycle continues until there’s no one left who can leave.
In my last post, I looked at the potential impacts of AI on individuals. In this post, I look at the potential threats to communities inherent in AI. I’ll also suggest steps a community can take to prepare for AI’s impacts.
Impacts
Communities with large job losses due to AI will see losses in all of their community capital portfolios. These will be similar to those already being experienced in our larger cities. Local government will see immediate loss of income and sales tax revenue. Since many of the displaced workers are high earners, the tax revenue lost will be greater than the fraction of jobs lost. Businesses – especially small businesses like restaurants and shops – will struggle. Eventually property taxes will also fall, leading to less funding for schools and ultimately a poorer quality education.
The diminished need for commercial real estate may lead to a deteriorating downtown. Most seriously, the community’s social fabric will begin to unravel. More anti-social behavior and crime; more drugs; fewer volunteers for those things that enrich and enhance a community’s character. And on top of it all, an increased demand for those services that make up a community’s safety net, especially mental health services.
One other somewhat more speculative impact: AI may accelerate the drop in birth rate. It appears likely that more men will lose their jobs than women. Women – especially college graduates – are already having problems finding suitable partners; it is a recognized cause of the falling birth rate. This potentially could be the most severe impact of the AI revolution on our communities and society.
But let me quickly add that some communities will be relatively unaffected, or at least will not feel much pain for years, if at all. Communities whose economy is concentrated on “high-touch” jobs are unlikely to see much impact. Communities whose economy is reasonably diversified may be “safer” as well – there will likely be some jobs available in non-AI impacted industries to buffer some of the AI job displacement.
Communities whose businesses tend NOT to be early adopters of new technologies may also fare better. As with any new technology, AI’s first impact is to destroy old jobs. However, history suggests that eventually new jobs are created. Organizations which wait to adopt new technologies can then move their most valuable assets – their employees – from the old no-longer-needed jobs to the new ones. Those communities that will fare best are those that prepare. If well-prepared, they may even prosper.
Diffusion of AI
The job losses at software firms and others immersed in the “digital economy” have been well-publicized. Communities with clusters of these firms are already feeling AI’s impacts. However, according to the National Bureau of Economic Research, overall AI is primarily being used as a tool to support normal business processes, i.e., a productivity enhancer.
Despite strong substitution at the task level, overall employment effects are modest, as reduced demand in exposed occupations is offset by productivity-driven increases in labor demand at AI-adopting firms.
Thus, most communities have not yet had to face AI’s impacts, but just how much time do they have to prepare? Answering that is a little complicated – there are a few factors to consider.
- Knowledge. As I noted in my last post, massive amounts of data are often needed for to develop an AI “bot” to replace a human. As I know from my own experience, the necessary data are often stored in various forms and various places, not least of which is in workers’ minds. And sometimes the data is contradictory. Extracting, rationalizing and codifying all of this can be a daunting, time-consuming – and expensive! – task.
- Implementation and other costs. Often lost in the hype, there are real costs associated with using AI to replace humans. The most obvious is the cost of developing the AI “bot.” It has been relatively easy to develop AI to replace programmers and some others in the digital world: the AI developers have had access to virtually all of the data they needed and know the business. Development of algorithms is simple when you’re expert in the domain.
But when you don’t know the business, it becomes much more costly and difficult to implement an AI solution. There is a translation step, converting domain-specific knowledge and jargon to something the AI developer can use. And the AI bot will also have to be able to translate its knowledge back into domain-specific jargon to be useful to humans. This requires at least some human involvement, and specialized expertise probably not available in most organizations.
There must also be extensive testing to ensure that AI is not “faking it to make it.” For example, a recent news report spotlighted a legal case in which a lawyer had submitted an AI-prepared legal brief which had references to non-existent precedents. Anthropic is being honest when it says “Claude is AI and can make mistakes. Please double-check responses.”
Another important cost is the loss of capital when turning people out the door. Last year, American companies spent over $100 billion on new employee training, about $1000 per new employee. We are seeing AI reduce hiring of new employees, but more experienced employees are being retained. These people have not only been trained to do a job, but also to do it in a way that “fits” the rest of the company. Procedural knowledge can be gained to develop a bot to do a job (at a cost!) but cultural “knowledge” is much more difficult to capture. - Return on investment. In the short term, the benefit of AI is a reduction in cost. Salaries and benefits are always an organization’s major cost; reducing them helps an employer’s bottom line. But that return may be fools’ gold if AI cannot do everything the human could.
In the longer term, AI may begin to pay larger dividends in terms of developing more effective corporate strategies. However, this requires that an organization’s AI becomes more attuned to its corporate structure and culture. We still don’t know how rapidly this can happen.
Suggestions for communities
Vulnerability. The most important first step for a community is to develop an understanding of possible impacts. Tufts University working with Digital Planet have developed a useful resource for this (https://digitalplanet.tufts.edu/ai-and-the-emerging-geography-of-american-job-risk-page/). They have determined vulnerability to AI by job, by industry and geographic region. The report itself has several interesting graphs and tables, and links to an interactive map. However, communities should concentrate on the Excel data sheet (e.g., there are some transition errors between the spreadsheet and the map).
But don’t use the report blindly. The spreadsheet has three different projections based on how rapidly AI is penetrating a community’s economy. If the community is already feeling the “AI Monster’s” bite, it would be wise to use the Median or Fastest Time data. Communities should also temper its projections based on local knowledge. For example, my community is becoming a center for cyber security study and practice. The Excel sheet predicts a 5% loss of jobs due to AI (Median time progression) but doesn’t consider the jobs that are coming in. Thus, my best guess is that AI will have relatively little negative impact on my community’s workforce in the next five years and may boost productivity.
Response and recovery planning. If the community believes it’s highly vulnerable, it should treat this as a Wild Thing – an extreme event similar to a natural disaster, or a pandemic, or a Recession. That should prompt emergency planning for response and recovery.
For extremely vulnerable communities AI’s bite can become an existential problem. A Whole-of-Community problem requires the entire community to solve it. The first step in planning should be to get all of the stakeholders working together. These may include:
- The business community. Some businesses need to be involved because they are laying off people; some because layoffs will impact their business; and some because they may be able to hire those laid off. The latter are especially important: the specific qualifications they’re looking for should be articulated.
- Educators. One of the most important unknowns right now is how to retrain and re-employ those laid off. This is a very different mission from traditional education of the masses (This is summarized nicely in https://dcjournal.com/to-prepare-for-a-future-with-ai-we-must-educate-differently/). Institutions of higher education that are in close contact with local industry are probably best equipped to build bridges between workforce reskilling and the needs of local businesses who may be able to hire those displaced by AI.
Educators can also act as a source of information about best practices. Many of them are tuned into professional networks and have personal contacts spread across the country. They can provide innovative ideas that the community can include in plans. - Local government. As noted above, local government has a great deal to lose to the AI Monster’s bite. It should act as a convenor of meetings and facilitator of plan development.
- Workforce representatives.
- NGOs. Those laid off will eventually have to rely on the community’s safety net. NGOs are a large part of that in every community. However, many communities have NGOs that can play a part in reskilling or that can help the displaced to find new jobs.
Strengthen the safety net. Early on, vulnerable communities must determine what “safety net” services are going to going to see increased demand from displaced workers. Once known these communities need to determine what they can provide. And if they find insufficient capacity to meet demand, they should prepare for the consequences.
Education becomes an important of this safety net. This requires rethinking our approach to education; moving from a “once-and-done” model to life-long learning. I’ve written a lot about education over the years: it is essential that we prepare our kids to be able to learn and to want to learn even after they finish their formal schooling. Even before the advent of AI we were told that new workers were going to switch jobs several times over their working life, putting a premium on old dogs’ ability to learn new tricks. AI’s coming provides a crisis that spotlights the need for this change to happen.
I don’t know enough to go beyond this … and I’m afraid no one else does either. But what I believe is that every community can and must determine its own vulnerability and then develop its own plan. What we’ve seen from the federal government and some state governments is erection of barriers – a lot like old King Canute ordering the tide not to come in. And about as successful. But I also believe that a community that works together can weather the storm of layoffs and eventually reap the benefits of the new jobs AI will create. Successful communities will recognize the need for change and adapt to what’s coming. Some others will muddle through. And – I hope only a few – some communities will not recognize the approaching monster until they are devoured.



