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AI is currently falling short of its promise to boost productivity, according to insights from JP Gownder, vice president and principal analyst at a global market analytics firm. Despite significant investments in AI and data centers, the expected increase in productivity remains elusive.
Gownder emphasizes that the data does not support the notion of an AI-driven productivity surge. He states, “You begin to get the picture that information technology isn’t measured always in as linear a way into productivity as people assume.” This observation echoes the Solow Paradox, which suggests that transformative technologies may not immediately reflect in productivity statistics.
Historical data from the US Bureau of Labor Statistics reveals that productivity growth was higher before the widespread adoption of personal computers, with an annual improvement of 2.7 percent from 1947 to 1973, compared to just 2.1 percent from 1990 to 2001, and a further decline to 1.5 percent from 2007 to 2019.
Research indicates that many AI implementations are not achieving their intended outcomes.
An MIT study found that 95 percent of companies integrating AI reported no significant revenue growth. Additionally, AI tools designed for coding tasks have been shown to slow down programmers rather than enhance their efficiency.
Also, tests conducted by the Center for AI Safety revealed that AI agents struggled to complete even basic remote work tasks, with none achieving more than three percent completion. The introduction of AI in workplaces has also negatively impacted employee relations, leading to lower quality outputs as employees rely on AI-generated work.
Gownder concludes that while generative AI has potential, it is not currently delivering tangible benefits, with 95 percent of projects failing to yield a return on investment. This context suggests that we are not at a stage where widespread job losses due to AI are imminent.
These jobs are lost structurally, like they’re gone for good, because they’ve been replaced,” Gownder told The Register. “That’s not an insignificant hit to the economy.”
Forrester’s research does predict that AI and other automation tech, like physical robots, will see a hefty six percent of jobs replaced by 2030, amounting to some 10.4 million roles.