Billionaire investor Vinod Khosla sees an AI-powered labor transformation so massive it will eliminate the need for today’s five year olds to have jobs.
In an interview with Fortune Editor in Chief Alyson Shontell on the Titans and Disruptors of Industry podcast, Khosla said AI will be capable of performing 80% of all jobs—from physicians to radiologists, accountants to salespeople. This massive AI displacement would essentially narrow labor costs to zero, also making goods and services much less expensive. Ultimately, Khosla said, today’s youngest generation would not need to acquire a college degree to find a job—or even need to find a job at all.
Khosla bet early on AI, and his venture capital firm Khosla Ventures was one of OpenAI’s first institutional investors in 2019.
“It’s pretty unlikely a five year old today will be looking for a job,” he said.
“The need to work will go away,” Khosla added. “People will still work on the things they want to work on, not because they need to work.”
The shift is a massive one, but Khosla appeared excited and optimistic about these economic and societal changes. Over the next decade, Khosla predicted an overhaul in how the economy works as a result of AI, beginning with the technology practically eliminating labor costs.
“What happens when all labor is free?” Khosla asked, adding that $15 trillion of U.S. GDP would mostly “go away.”
In Khosla’s eyes, GDP will become a less meaningful metric to measure economic success. While plummeting employment would reflect a deflationary economy, that isn’t such a bad thing, he suggested. Cheap automated labor, in part thanks to a billion bipedal robots he thinks will arrive in the next decade, would drive down production costs, meaning goods and services would be far cheaper and require far less spending—good news for a hypothetically large slice of the population no longer working.
“The abundance of goods and services will be very, very large. Prices will be very, very low,” he continued. “So I would suspect by 2040, $30,000 will buy—and maybe $10,000 will buy—much more than you can buy if you have $100,000 income today. So the level of income you need in a deflationary economy will be very different.”
Mixed messages on the future of AI
Khosla’s vision for an AI-powered future adds to two conflicting narratives that have emerged from the AI race. On one hand, bullish tech CEOs envision AI taking the majority of jobs within the decade. But outside of tech, executives and economists are more skeptical. In a recent study analyzing survey results of thousands of C-suite executives on AI use in the workplace, 90% said the tech had no impact on employment or productivity in the last three years. They modestly predicted AI will increase productivity by 1.4% and output by 0.8% through 2029.
“AI is everywhere except in the incoming macroeconomic data,” Apollo chief economist Torsten Slok wrote in a blog post reflecting on the lack of scientific consensus on AI’s economic impact. “Today, you don’t see AI in the employment data, productivity data, or inflation data.”
That scrutiny is in stark contrast to the predictions of Khosla or SpaceX and Tesla CEO Elon Musk, who similarly envisions a world a decade or two from now where work is optional and money is less relevant. Musk imagined specialized robots outnumbering human physicians and surgeons, with a universal high income supporting a population that no longer needs to have jobs.
These changes may already be taking hold. Last week, Block CEO Jack Dorsey cut 40% of the staff for his financial technology company, citing an opportunity to capitalize on AI.
“The core thesis is simple. Intelligence tools have changed what it means to build and run a company,” Dorsey said in a letter to shareholders.”
Khosla’s imagined future
Khosla similarly sees a future aligned with Musk’s forecasts of AI specialists that will remove the requirement to hold a job.
Before AI displaces the majority of jobs, there will be an interim period of human professionals having AI interns they are training to one day complete their specialized work, Khosla said. Meanwhile, while educational institutions may still exist because people like them, they will no longer be necessary to attain job-qualifying degrees like engineering. Instead, education, except for very specialized fields like heart surgery, will be free, and labor will become free as a result of AI’s ubiquity in workplaces.
“You won’t even need the engineering degree, except if your passion is learning,” Khosla said. “Whether you’re talking about farm workers or assembly line workers or retail workers or accountants, that’ll be all free in a competitive economy. That means declining prices.”
This new era of option work will be transformative for the future for today’s young people, Khosla said. It will mark a departure of older generations’ attitudes toward work as something that must be done to make ends meet, instead of something existentially fulfilling. He says a five year old today will likely not need to find a job when they are an adult.
“In 15 years from now, you will say, what is bad advice today or used to be….follow your passion,” Khosla said. “Follow your passion comes second to surviving. I think that surviving part will go away and you’ll tell every five year old kid ‘follow your passion.’”
Khosla indicated this transition would be much easier for the younger generation than older people. Older generations who have had to work to earn a living have felt limited by jobs taking away time to spend with their kids or aging parents, Khosla said. Without the need to work, the coming generations will not only have more time to focus on what matters to them, but also more expansive ideas of what their passions could be.
“The room for creativity is very, very large, but we are drilled into a narrow vision of what we are supposed to do, and I think that’s the fundamental thing that will change about humanity,” Khosla said. “AI will free us to be more human, in my view.”
