As finance and insurance lose jobs, AI gets most (but not all) of the blame

Friday's jobs report surprised a lot of economists who'd been thinking there was no way this economy created more than a 160,000 jobs in August. But that's exactly what the report showed.

At the same time, jobs disappeared from a couple of sectors, including what the Bureau of Labor Statistics calls finance and insurance. That category shed 11,000 jobs in August; so far this year it's lost 99,000. Artificial intelligence has been a major reason for these cuts.

The conversation about jobs in the insurance industry reminds University of South Carolina finance professor Robert Hartwig of the early days of the internet boom.

“If I went back to 1999, I could have been doing this exact same interview with ‘Marketplace,’” he said.

The first online sales portals for insurance worried the industry, he said. People thought insurance agents would become obsolete.

“Now here we are, 30 years later, and we still have insurance agents,” Hartwig said.

He thinks that’ll continue. Probably fewer claims adjusters working on fender benders — an AI could handle those. But Hartwig said the industry will still need people to handle more complex situations.

“We hear about, you know, AI’s being tested in a sandbox and managing to escape. Is there a way that insurers can provide insurance protection against those types of rogue behaviors by AI?” he said.

We don’t know yet. Some people are working on it, and they’re the ones banks and insurers want to hire.

“Jobs that require special skills, especially in the cybersecurity area, those are still in high demand,” said Yelena Shulyatyeva, senior U.S. economist at The Conference Board. She said demand isn’t as hot for researchers at banks, which is what she used to do.

“I see that there's a trend, so it’s a smaller research shop. Because you could do much more with fewer people,” she said.

But AI may not be the culprit in some of these job losses. Julie Hill, dean of University of Wyoming College of Law, has observed the contraction in banking jobs since 2022.

“That coincides with a rise in interest rates. And so some of it, we think, is probably just pressure on the interest margin and profit margins of these types of businesses,” Hill said.

And that isn’t likely to let up — especially if the Federal Reserve hikes interest rates later this month.