Burning Glass Institute Chief Economist Gad Levanon joins Yahoo Finance Live to discuss concerns over job displacement from advancing artificial intelligence.

Levanon says generative AI's ability to absorb knowledge and generate content is "more likely to impact white-collar jobs" rather than manual or service roles requiring human skills.

He notes that within "a matter of time," simple coding and other routine digital tasks could lose value as large-language models replicate them. This may gradually result in "overstaffing" and necessitate "a reduction in workforce" in some white-collar areas.

However, Levanon emphasizes generative AI cannot replace jobs requiring building personal relationships and emotional intelligence.

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Editor's note: This article was written by Angel Smith

Video Transcript

[AUDIO LOGO]

- A new report out from the Burning Glass Institute and SHRM suggests white collar jobs in fields like finance and tech will be impacted, the most by gender AI. Joining us now is Gad Lebanon, Burning Glass Institute Chief economist. Gad, thank you so much for joining us.

GAD LEVANON: My pleasure.

- So the report suggests, Gad, that GenAI which is for example behind chat bots like ChatGPT is going to have a big impact potentially on white collar jobs. How Gad, and which job sectors particular?

GAD LEVANON: Sure. Well, generative AI is all about large language models. So it's all about using language to both get knowledge and create content out of that, generate content out of it. So those functions or abilities are more likely to impact white collar jobs that deal with language and less more physical abilities that most, let's say, blue collar workers have. It turns out that human bodies are a completely-- a very sophisticated machine. After millions of years of evolution in its pretty hard to completely automated.

But language is actually much easier.

- Surprisingly, perhaps. It's interesting that this report coming out now. There's also a post from Paul Donovan who's an economist over UBS where he talked about the concept of stranded assets, assets that lose their value more quickly than anticipated. And he suggested a skill like coding, for example, or other STEM skills could end up being stranded assets. And it's amazing because coding was the job to have.

So how should people think about the impact that this is going to have on the workforce and the economy?

GAD LEVANON: Well, coding is a good example. I think sophisticated coding is likely to remain a hot skill. But simple coding, I think, that's in, it's a matter of time. And in some cases already exists that you can code with simple English. Like you don't need to learn a specific programming language to do that. So people who work mostly in simple coding, they-- I think, their skills are going to lose their value to some degree.

- And guy, when you say-- when you talk about GenAI potentially impacting these white collar jobs, what do you mean by impact? Are you suggesting, you mean people could lose their jobs or, no, people will just use this tech to help them do their jobs more effectively?

GAD LEVANON: I think both. But the bottom line is that even if it doesn't replace everything that white collar workers do, it impacts some of it. And so they will become more productive and they can do much more in a given amount of time. And typically, the demand for their services is not going to grow as rapidly. So in many cases, there will be over staffing in those types of jobs.

And that will lead to a reduction in workforce. But I should say, the reduction in workforce doesn't necessarily mean massive layoffs, it could-- a company could decide to just stop hiring for that type of job. And then natural attrition would do it job over time and lead to a reduction in workforce even without layoffs.

- One of the other things that stood out to me in the report is that you say there will be potentially more demand for more mature workers or experienced workers. Can you explain that a little bit?

GAD LEVANON: Yeah. Some of the things that generative AI cannot replace is, for example, relationships and trust. And those things that you build over your career over time. And so I think when that is important, generative AI is less likely to impact.

- And again, what should be listen the people who are running some of the companies, they're involved in the sectors you're talking about that could be impacted? I mean, surely they're aware of this potential as well. What should they be doing to prepare for that impact in your opinion?

GAD LEVANON: Well, I think the impact for them is mostly going to be positive. They are going to be able to do more with less and less labor cost. And as a result, profits are going to go up. I think things that they should be preparing for is those jobs that may go away, what can you do to keep those workers in the company? How can you reskill them for other positions in the company because some of them are very good and you don't want to lose them?

So that's one example.

- I noticed how journalists were mentioned in the report as well, but we don't have time to get into that one. Fortunately or unfortunately, I don't know, Gad. Thank you so much, Gad Levanon. We'll definitely keep an eye out for some further research from you guys. Appreciate it.