Governor Gavin Newsom to Sign Executive Order Targeting AI Job Losses

California Gov. Gavin Newsom plans to issue an executive order Thursday to explore a sweeping overhaul of labor policy in an attempt to counter the potential mass displacement of jobs caused by artificial intelligence.

Mr. Newsom, a Democrat, will sign an order that directs state agencies to work with academics, labor groups and the artificial intelligence industry to study how to subsidize companies that retain employees rather than replace them with technology.

The regulation calls for expanding job training programs, especially for white-collar workers such as customer service representatives, software developers, and marketers and salespeople whose roles should be eliminated by AI. Mr. Newsom also ordered a study of universal capital stock, which would give all residents shares in assets such as company stocks, bonds or mutual funds.

Unemployment insurance and other traditional guarantees won’t be enough, Mr. Newsom said. AI officials have warned him of rapid and sweeping changes in employment, where entire job categories are at risk of extinction — especially for white-collar workers.

“California has never sat back and watched the future happen to us — and we won’t start now,” Mr. Newsom said in a news release. “But we have to think bigger. This moment requires us to reimagine the whole system — how we work, how we govern, how we prepare people for the future.”

Mr Newsom’s executive order, the first of its kind signed by a US governor, reflects growing global anxiety. Concerns about artificial intelligence have sparked a fierce debate about how best to help individuals transition to new careers or help those facing long-term unemployment.

On Wednesday, Meta cut its workforce by 10 percent, or about 8,000 people, citing another shift in the company’s strategy toward AI.

Dario Amodei, co-founder of AI start-up Anthropic, predicted that roughly half of white-collar jobs could disappear in the next five years. While other tech leaders disagree with Mr Dario’s prediction, almost all say the technology will replace humans in fields such as communications, law and engineering in the near future.

Governments around the world are responding to AI-related job losses with a series of actions and experiments. In China, which currently has 17 percent youth unemployment, courts have ruled in favor of workers who sued their former employers for compensation after being displaced by AI.

England, Japan and South Korea are considering a universal basic income, a policy that regularly provides residents with cash to make up for disruptions to the labor market. In the United States, some Democratic lawmakers have also introduced legislative proposals for similar pilot projects.

Tech leaders including Elon Musk of Tesla and SpaceX and Sam Altman of OpenAI have said that a universal basic income may be needed. Mr Musk said productivity from artificial intelligence equates to an increase in funds available to governments, which can be used to compensate individuals who lose their jobs to the technology.

“Universal HIGH INCOME via checks issued by the federal government is the best way to deal with unemployment caused by AI,” Musk said in a post last month.

While Mr. Newsom’s order directs policy exploration instead of specific actions, California is a leading state in artificial intelligence regulation. The state was the first to pass a comprehensive security law for large language models such as OpenAI’s ChatGPT, Google’s Gemini and Anthropic’s Claude. Mr. Newsom recently issued an executive order to scrutinize all companies that have artificial intelligence contracts with the state for privacy protections and security guardrails.

California and other states have helped fill a void in federal regulation in which the White House has largely given companies a free pass in the global AI race with China. That may change in the wake of Anthropic Mythos’ new power model, which has prompted White House officials to consider an executive order mandating security testing of the new models.

In a speech this week at a conference hosted by the Center for American Progress, a left-leaning think tank and advocacy group, Mr. Newsom said he was concerned that companies were getting tax breaks while workers were burdened with taxes on their wages. Tax breaks for companies that automate and displace workers will enrich the companies but doubly harm the workers who are still subject to taxation.

The governor’s order does not specifically mention an overhaul of tax policy, but that could be seen as state agencies developing new work frameworks related to artificial intelligence, the governor’s office said.

Mr. Newsom’s executive order predicts a widening gap between AI companies and workers as the industry explodes in profitability and workers are increasingly left behind. In his order, the governor asked state officials to focus on ways that labor group collective bargaining can help bridge the gap.

“Businesses make fortunes, and that’s why you can’t continue to have a payroll tax system that taxes jobs and then subsidizes automation,” Mr. Newsom said in a speech this week.