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The conversation around the impact of artificial intelligence on employment has quickly gone from apprehension to apocalyptic.
In 2025, Dario Amodei, the chief executive officer of Anthropic – maker of the AI chatbot Claude – predicted AI would displace half of all entry-level, white-collar jobs in the next one-to-five years. Ford CEO Jim Farley suggested it would wipe out half of all white-collar jobs within a decade. In a recent survey, 70 per cent of Americans said they believe AI will reduce overall job opportunities for humans. Thousands of workers have already been cut at technology giants such as Amazon.com Inc., Meta Platforms Inc. and Microsoft Corp., with leaders citing AI as the reason to make the cuts.
Here at home, Shopify Inc. CEO Tobias Lütke announced a year ago that leveraging AI was a “baseline expectation” for his staff and that “before asking for more headcount and resources, teams must demonstrate why they cannot get what they want done using AI.” Since then, the company has undergone two rounds of layoffs.
“How many roles essentially consist of processing information and then presenting it to someone to make a decision?” wrote American entrepreneur, author and former presidential candidate Andrew Yang in a blog post earlier this year. “Now not only the process and report will be automated, but perhaps the decision as well. This will result in the great disemboweling of white-collar jobs.”
In that post, Mr. Yang suggested “mid-career office workers will be fired in droves,” leading to significant household financial strain, hollowed-out cities and widespread social unrest.
“It’s clear to me that AI is going to be to office buildings what robots and machines have been to factories,” Mr. Yang told The Globe in an e-mail . “We are pretending that the current version of work is going to continue, but for millions it won’t.”
Mr. Yang stands behind the premise of his February post, adding that leaders of public companies will be forced to adopt AI and cut staff or risk being replaced themselves.
“Where this leads is pretty obvious,” Mr. Yang wrote. “America will become a land of haves and have-nots, with the latter group vastly outnumbering the former.”
Subhead: Why Canada’s AI future looks different
Such warnings from well-respected leaders must be taken seriously. However, the future they describe is far from inevitable, especially in Canada.
Though there is some concern about the impact AI will have on jobs – especially those at the entry level – Canadian labour market economists say there’s nothing in the data that points to a “great disemboweling.” At least not yet.
According to a recent Mercer survey of human resources and talent professionals at 170 Canadian companies. 7 per cent say AI has caused a decrease in hiring in the last 12 months, while 9 per cent report increases because of new technology roles.
“AI is changing how the work gets done, but at this point, it doesn’t look like it will eliminate jobs en masse,” says Elizabeth English, a senior principal in Mercer Canada’s career products business. “Companies have told us that they haven’t really changed their entry-level hiring due to AI but, at the same time, about a third of Canadian companies have started to shift tasks more toward automation and AI.”
The study says jobs most affected are administrative and clerical roles, followed by corporate functions and customer service roles. Most of those surveyed were unable to predict their future hiring needs, but 29 per cent did anticipate a moderate reduction in their workforce over the next three years, and 4 per cent projected an increase owing to new AI-related roles.
“At the end of the day, it’s going to be a gradual transformation for the Canadian economy as a whole,” Ms. English says. “Some pockets are going to move very fast, other pockets are going to move very slowly.”
Both the doomers and the doubters acknowledge that the technology is incredibly powerful, advancing rapidly and capable of creating huge value. Where they differ is in how businesses will utilize these new capabilities.
Those who subscribe to the more catastrophic vision for human employment point to market forces that pressure corporate leaders to cut costs. Skeptics tend to believe that the technology will increase returns on human capital investment and, in turn, inspire more hiring.
“They both start from the same premise; that AI makes people more productive, and that can either have a negative effect on jobs or a positive effect,” says Ajay Agrawal, chair of entrepreneurship and innovation at the University of Toronto’s Rotman School of Management and founder of its Creative Destruction Lab. “Some people will say, ‘I can do the same amount of stuff with 20 per cent the people, so I’ll get rid of 80 per cent.’ Others will say, ‘My return on every employee has tripled, so I want more employees.’”
The impact of AI on the Canadian workforce ultimately comes down to three factors, according to Mr. Agrawal. First is Canada’s ability to adopt the technology relative to its peers, as falling behind could make domestic goods less competitive than those from countries better leveraging AI, thus leading to job losses.
The second has to do with an economic principal called the “price elasticity of demand,” which measures the relationship between a product’s availability and its cost.
“Let’s say we reduce the price by 10 per cent and demand goes up by 20 per cent, then we increase jobs because, at this lower cost, many more people want the widget,” Mr. Agrawal says. “Let’s say we drop the price by 10 per cent but the demand only goes up by 1 per cent, we’re able to build twice as many widgets, but people don’t want twice as many widgets, so the factory ends up reducing [its] workforce.”
The third factor that Mr. Agrawal says will determine AI’s impact on jobs is the number of roles that can be automated compared to those that can’t. He explains that even if organizations cut from departments where AI has proven itself a suitable replacement, it may reallocate those funds to other areas of the business, thus keeping overall employment steady.
Mr. Agrawal gives the example of an AI tool someone built to take satellite imagery and identify homes that don’t currently have a backyard pool but have space for one, then creates a custom flyer for those without showing how a pool would increase their property’s value. That, in theory, would increase demand for pool installers and reduce demand for sales professionals.
“In economics, we call it factor repricing,” he says. “It’s repricing the value of the skills related to pool lead generation and the skills of pool installation; pool installation values go up and lead-gen skills value goes down.”
Canada needs to stay on top of AI to compete
Whatever the long-term impacts of the technology on the labour market, Mr. Agrawal emphasizes the country can’t afford to fall behind peers with AI adoption.
“It’s hard to be a follower once an AI gets ahead,” he says.
Canadians’ relatively slower approach to AI adoption and investment, however, may also prove a saving grace to its labour market, as a more gradual integration could give displaced workers time to reskill.
“Canadian firms, because they’re slower to adopt new technologies compared to the U.S., that will play a role in how labour market outcomes are affected by AI,” says TD economist Marc Ercolao. “If we look at any recession or slowdown between the two economies, the Canadian economy tends to not see as deep a downturn, but they’re also slower to recover.”
While Canada is seeing a slowdown in job growth, Mr. Ercolao says there’s little evidence to suggest AI is a primary force.
“Canada’s employment is slowing across the board, but that’s not necessarily an AI story; that’s just a function of the slower economy,” he says.
Even if the most pessimistic scenario plays out south of the border, Mr. Ercolao says it doesn’t necessarily mean the impacts of AI will hit just as hard here.
“We’re taking it at our own pace and the story will likely play out a little bit different between both economies over the medium term” he says.