The article examines how the evolution of Artificial Intelligence could reshape work, productivity, and economic growth, moving beyond narratives that cast the technology as either a passing fad or a dystopian job destroyer. Joseph Davis, global chief economist at Vanguard, and his team used a proprietary data set spanning the last 130 years to build the Vanguard Megatrends Model, which suggests that Artificial Intelligence has the potential to operate as a general purpose technology that lifts productivity and augments human work. Their research supports a middle path in which Artificial Intelligence is neither marginal nor overwhelmingly destructive, but instead transforms industries by combining automation, augmentation, and the creation of new sectors.
Davis contends that the status quo scenario, where the economy continues largely unchanged, is actually the least likely outcome, and he projects that Artificial Intelligence will have an even greater effect on productivity than the personal computer did. He notes that while the potential for job loss exists in upwards of 20% of occupations as a result of Artificial Intelligence driven automation, the majority of jobs, likely four out of five, will see a blend of automation and innovation that shifts workers toward higher value, more human-centric tasks. The team’s analysis of over 800 occupations shows how Artificial Intelligence can serve as a copilot, handling repetitive responsibilities while amplifying human skills, a dynamic that traditional growth models often miss because they do not link short-term productivity shifts with deeper structural changes in technology.
The research also challenges the idea that recent low productivity growth proves that Artificial Intelligence will be marginal, arguing instead that there has been too little automation in services such as finance, health care, and education. The services sector accounts for more than 60% of US GDP and 80% of the workforce, yet has seen some of the weakest productivity gains, and Davis believes this is where Artificial Intelligence will have the largest impact. Demographic headwinds from aging populations, slowing immigration, and declining birth rates are increasing the need for automation, and Davis estimates that Artificial Intelligence tools could increase nursing productivity by as much as 20% by 2035, while within five to seven years, Artificial Intelligence’s ability to automate portions of work will be roughly equivalent to adding 16 million to 17 million workers to the US labor force. He projects that more than 60% of occupations, including roles such as nurses, family physicians, and teachers, will benefit primarily from augmentation rather than replacement, and he argues that the biggest stock market winners will be the users of Artificial Intelligence across sectors like health care, education, and finance. While he sees the United States and China in a “virtual dead heat” in the Artificial Intelligence race, Davis stresses that the true transformation depends on how broadly businesses in many regions invest in and experiment with the technology.
