Elon Musk predicts artificial intelligence will become smarter than humanity and eventually make traditional work largely optional. Michigan may face the economic consequences long before his most radical predictions come true.
ANN ARBOR – Michigan companies don’t have to replace all their workers with artificial intelligence to dramatically disrupt the state’s economy.
They simply have to discover they don’t need as many of them.
Imagine a Michigan company with 100 employees discovers that AI allows 90 workers to produce what previously required 100.
Productivity rises. Costs decline. Profits could increase.
But 10 fewer Michigan workers are collecting paychecks, buying cars, paying mortgages, eating at restaurants and paying state taxes.
Multiply that across thousands of companies and artificial intelligence stops being merely a technology story.
It becomes an economic question:
What happens to Michigan’s economy when companies no longer need as many Michigan workers?
Musk Predicts AI Will Become Smarter Than Humanity
Elon Musk raised that possibility during a recent wide-ranging interview with The Economist Editor-in-Chief Zanny Minton Beddoes.
Musk predicted AI could exceed the combined intelligence of humanity within roughly five years.
Looking toward 2036, he described a world in which enormously intelligent AI combined with humanoid robots could produce such an abundance of goods and services that conventional work becomes optional and money eventually becomes far less important.
Musk even acknowledged that humans may no longer remain meaningfully in control once artificial intelligence becomes vastly smarter than they are.
Historian and author Yuval Noah Harari, appearing separately on The Economist’s Insider program, is far less comfortable with assuming humanity will successfully control increasingly powerful AI.
But Michigan doesn’t need Musk’s extraordinary vision of 2036 to come true to face an economic disruption.
AI merely has to make workers significantly more productive.
Michigan Workers Are Already Exposed
Michigan has roughly 4.4 million workers, and state workforce officials estimate about 10% currently work in occupations considered highly exposed to artificial intelligence.
The surprising part is where many of those workers are employed.
Michigan’s AI workforce research identifies more than 88,000 general office clerks, nearly 69,000 customer service representatives and more than 42,000 secretaries and administrative assistants among large occupations with high AI exposure.
Human resources specialists, medical administrative workers, receptionists and billing clerks also make the list.
That suggests Michigan’s first major AI employment shock might not occur on an automobile assembly line.
It could happen inside offices, hospitals, banks, insurance companies, dealerships and corporate headquarters.
And jobs don’t necessarily have to disappear through mass layoffs.
Ten Workers Become Eight
Consider an accounting department with 10 employees.
AI software begins performing research, preparing reports, analyzing spreadsheets and handling routine accounting work.
The company doesn’t fire anyone.
Instead, two accountants eventually retire or leave for other jobs.
Management discovers that eight accountants equipped with AI can handle the workload previously performed by 10.
The positions simply aren’t filled.
Repeat that process among programmers, customer service representatives, financial analysts, marketing departments, insurance workers and engineers.
No company announces that artificial intelligence eliminated thousands of jobs.
But gradually fewer people are required to produce the same amount of work.
That is the economic scenario Michigan needs to consider.
Then Come The Robots
Michigan faces another vulnerability because of its dependence on manufacturing.
The state still supports hundreds of thousands of manufacturing jobs and has nearly twice the national concentration of production workers.
Today’s generative AI can’t install a transmission, move an engine block or repair factory equipment.
Robots can.
Musk argues that the next step is connecting increasingly powerful digital intelligence with increasingly capable humanoid robots.
If that happens, Michigan could face two overlapping automation waves.
Artificial intelligence reduces the number of workers required to perform cognitive work.
Robotics reduces the number required to perform physical work.
Michigan’s manufacturing heritage could make the state unusually vulnerable to that combination.
It could also make Michigan a major winner if Michigan companies build the robots, software, factories and other technologies powering it.
But Workers Are Also Customers
There is another side to the productivity equation that gets much less attention.
Employees aren’t simply expenses on corporate balance sheets.
They are customers.
Michigan workers buy Ford and GM vehicles.
They purchase homes, groceries, restaurant meals, healthcare, insurance, clothing and entertainment.
They pay income, sales and property taxes.
A company can become more profitable by producing more with fewer employees.
But what happens when thousands of companies simultaneously become more productive with fewer employees?
Who buys everything those increasingly efficient companies produce?
Michigan doesn’t need mass unemployment for that problem to emerge.
Even relatively modest employment reductions spread across millions of workers could eventually weaken consumer purchasing power.
That could create an extraordinary contradiction:
Michigan businesses could become more productive while Michigan households become less prosperous.
Three Possible Michigans
Nobody knows how quickly AI will develop or how businesses will ultimately deploy it.
But Michigan appears to face three broad possibilities.
Scenario One: AI Becomes The Ultimate Worker Assistant
This is the optimistic scenario.
AI eliminates tasks rather than occupations.
Engineers design products faster. Doctors diagnose illnesses more accurately. Small businesses operate more efficiently. Factory workers use intelligent machines that increase output.
Companies grow because productivity improves, creating new occupations that replace many of the jobs technology eliminates.
Michigan becomes more competitive and workers become more valuable because AI amplifies their abilities.
Previous technological revolutions largely followed this pattern.
Scenario Two: AI Becomes A Labor Substitute
This scenario is more complicated.
AI doesn’t eliminate human workers. It simply allows companies to operate with fewer of them.
Ten accountants become eight.
Twenty customer service representatives become 12.
A software team of 15 becomes 10.
Eventually increasingly sophisticated robotics produces similar changes in warehouses and factories.
Businesses become more productive and potentially more profitable.
But employment grows slowly or begins declining.
Then Michigan confronts a problem that productivity statistics and corporate earnings don’t measure very well:
What happens to consumer purchasing power when fewer workers are receiving paychecks?
Scenario Three: Musk Is Right
This is the most radical possibility.
AI eventually becomes more capable than humans at almost every intellectual task while advanced robotics increasingly replaces physical labor.
Human labor stops being the primary engine of economic production.
Musk believes that could produce extraordinary abundance — robots and AI generating more goods and services than people could possibly consume.
In that world, he argues, work could become optional and money itself could eventually become less important.
Whether that vision is technological optimism or science fiction remains impossible to know.
But it creates an enormous unanswered question.
If machines produce most of the economic value, how do humans obtain the purchasing power needed to participate in that economy?
Michigan Doesn’t Need Musk To Be Right
Michigan doesn’t need to reach Scenario Three for its economy to change profoundly.
Scenario Two could be enough.
Imagine Michigan companies eventually producing 20% more goods and services while requiring 10% fewer workers.
Productivity could soar.
Corporate profits could rise.
Economic output could increase.
Yet hundreds of thousands of Michigan households could find themselves competing for fewer jobs.
And Michigan government could eventually confront another problem: fewer workers paying income taxes and spending money subject to sales taxes at precisely the time displaced workers might need more public assistance.
That is the transition Musk’s vision of technological abundance largely skips over.
There may ultimately be answers.
Shorter workweeks. Higher wages. Worker ownership. Profit sharing. Universal income. New industries and occupations that don’t exist today.
Each comes with enormous economic and political complications.
Those are questions for tomorrow.
Because before Michigan decides how to distribute the extraordinary wealth artificial intelligence might create, it needs to confront a more immediate possibility:
What happens if Michigan can produce more than ever before — but needs fewer Michigan workers to do it?
Sunday: If AI Takes The Jobs, Who Gets The Money? We examine the choices Michigan and the nation could face if artificial intelligence creates enormous wealth while reducing the need for human labor.
