If you are a hardcore Democrat, you are saying that we are in a “Jobpocalypse.” If you side with this administration, you are saying AI will unfold like the First and Second Industrial Revolutions.
The truth is that there is no credible evidence yet to support a concrete conclusion either way.
Who can argue with 200 years of economic history? Two centuries of economic thought, consensus, and the mathematical relationship between Gross Domestic Product (GDP) and employment are rock-solid and unassailable: when GDP goes up, employment goes up. When GDP goes down, employment goes down.
Okun’s Law says so, and it has never been wrong.
The graph below shows Okun’s Law in effect across both the First and Second Industrial Revolutions:
Figure 1. U.S. real GDP and employment, 1820–1914, indexed to 1820 = 100 (log scale).[1]
Once mass production and the assembly lines of the Second Industrial Revolution were in place, the hockey-stick growth of U.S. GDP began, and true to Okun’s Law, employment rose alongside it. The correlation between significant GDP gains and employment growth held continuously from the 1820s through the 2020s.
Then, starting in 2023, the IT sector began widely adopting AI.
This is why examining the impact of increased GDP on employment in the tech sector has become a matter of national significance. Consider the graph below:
Figure 2. Tech sector employment (actual and Okun-predicted) and share of GDP, 1947–2025. Source: Humanrace Capital’s Substack; annotation updated.
What the graph makes clear is that from 1947 through the early 2020s, productivity in the tech sector increased, and so did employment.
From the dot-com era onward, productivity in the tech sector increased significantly, but employment fell below its prior peaks. This foreshadowed what would happen to tech employment after the dawn of the AI era.
For the first time in more than 200 years of U.S. economic history, the IT sector, the sector that has most widely adopted AI, saw GDP and productivity increase while employment dropped.
AI adoption in the tech sector has begun to break Okun's Law. But AI has not yet penetrated other sectors to the same degree, which is why the broader narrative around economy-wide job losses has not fully materialized yet.
Okun’s Law serves as a key barometer for the Federal Reserve in setting interest rates. If it breaks down, the result could be a widening gap between rich and poor — and significant political unrest.
Given the heavy reliance of social and healthcare programs on payroll tax revenue, new revenue streams will need to be identified as AI adoption accelerates and spreads across sectors.