Sacramento’s Ai Question: Protect Jobs Or Soften The Blow?

Rampant automation. Soaring unemployment. Extreme wealth concentration at the top.

The prospect of that grim AI-driven future is reshaping the political debate across the country, as the technology advances quickly and policymakers struggle to catch up.

In California — where homegrown AI is being rapidly deployed and many of its workforce impacts are appearing first — some lawmakers want to stymie the technology’s intrusion in the workforce to stave off mass layoffs and protect people from AI’s negative effects. They’re pushing proposals in the Legislature to block the technology from some sectors, including trucking and parts of health care.

But some of those efforts have faced pushback from Gov. Gavin Newsom, who’s sided with industry on some tech policy fights. His likely successor next year, Xavier Becerra, is promising to cushion the blow of AI’s workforce impacts and prioritize workers, while also boosting an AI sector that’s a major asset for the state budget.

“If millions of people end up getting displaced in short time frames … the No. 1 thing people will be demanding from their legislators are jobs,” said Assemblymember Chris Ward, a San Diego Democrat behind a stalled effort to bar companies from using certain worker data to train AI systems to replace them.

In Ward’s view, new laws should prevent sudden, disruptive shocks for workers who have spent years building careers in a profession. Otherwise, he said, voters will look to their leaders and ask: “A million of us just lost our jobs. Where the hell were you?’”

But while Ward and his allies push to insulate workers from some AI-driven job losses, California politicians are also advocating other approaches: taxing tech, cutting checks to residents, and expanding a set of retraining and insurance programs — measures critics say could amount to accepting mass job cuts as inevitable.

It’s a dilemma vexing policymakers across the country: Should they block AI from taking over U.S. jobs, or use industry profits to cushion the blow for displaced workers? Or some mix of the two?

California’s powerful unions are backing a wide range of AI legislation, including requiring human oversight of AI at work and cracking down on workplace surveillance.

“Before we accept catastrophic job loss, we need to have the conversation about where AI doesn't belong,” said Lorena Gonzalez, president of the California Federation of Labor Unions, which has fought automation in heavily unionized industries like trucking.

But, she added: “We’re not against taxing companies to retrain workers.”

The AI jobs question is one Newsom has grappled with for years. His response more recently has focused less on restricting AI in the workplace than on preparing workers for its effects.

Last month, Newsom issued an executive order directing California’s labor agency to consult unions and review how AI is addressed through collective bargaining, and how to involve employees in tech adoption decisions. The order also calls for plans to boost AI literacy and employment insurance programs, while studying the technology’s impact on the labor market.

Asked about responses to AI-driven job displacement and disruption, Newsom’s office pointed to the order and his previous comments expressing skepticism that some proposed remedies, like expanding unemployment insurance benefits, would be enough.

“You think that’s going to work and hold up? That doesn’t work for clerical workers anymore,” Newsom said during an event in May. “I'm thinking about public equity funds and dividends; I'm thinking about ownership.”

Newsom hinted he’s supportive of giving workers more early warnings about AI-induced job losses, an idea captured in a bill currently moving through the Legislature. “I’m thinking about the fact that we’re entitled to a transition. It’s not just a severance in a LinkedIn post,” he said.

While some union leaders in California did not initially support Becerra, they’ve put their weight behind him going into the general election in November.

The former California attorney general and Biden Cabinet secretary, who has advanced to the November runoff against Republican Steve Hilton after surging late in the race, has called for tracking the impact of AI on jobs and the workforce while building programs that prepare Californians for a more AI-driven economy.

On the campaign trail, he’s taken a more middle-of-the-road position on AI compared to some of his Democratic rivals. But his campaign says protecting workers and ensuring they have a voice through the transition will be a top priority.

“Governor Newsom has taken important steps to prepare California for the opportunities

and challenges AI presents, and Sec. Becerra would continue efforts to responsibly deploy AI

and invest in workforce readiness,” Becerra campaign spokesperson Jonathan Underland said in a statement. “Where Sec. Becerra will go further is ensuring workers have a stronger voice in the transition.”

Underland said Becerra would “continue investing in workforce training, community colleges, and apprenticeship programs,” while cautioning that “training alone is not a complete workforce strategy.”

Labor leaders who were initially wary of Becerra nevertheless secured commitments from him and other Democrats to protect union truck driving jobs from autonomous vehicles, even while Newsom’s administration rolls out new regulations to allow the testing of AV trucks.

Asked if there were other sectors AI should be kept out of, Underland did not specify one, but said Becerra would focus on protecting workers and ensuring human oversight of AI.

Hilton, meanwhile, has argued that California should focus on maintaining its status as the global center of AI development, backing deregulation and investments in the electricity and infrastructure needed to support the industry.

Before failing to advance from the state’s June top-two primary, billionaire Tom Steyer had championed a sovereign wealth fund that would tax AI profits and redistribute the money to Californians — an idea also embraced by progressive standard-bearers Sens. Bernie Sanders and Elizabeth Warren.

The idea of wealth redistribution in the AI era has also featured in the tech platform of state Sen. Scott Wiener, the odds-on favorite to succeed Rep. Nancy Pelosi to represent San Francisco in Congress. Wiener has suggested shoring up unemployment insurance programs and passing Medicare for All nationally, a longtime progressive priority, as a way to get ahead of potentially seismic changes in the labor market — while taxing companies profiting from AI to more broadly distribute its economic benefits.

“It cannot just be the people who build a small number of companies or are in a certain position economically [who] extract 99.9 percent of the benefit and everyone else is left struggling or eating cat food in a gutter,” Wiener told POLITICO.

But state lawmakers should be wary of treating an AI-driven tax windfall like “a slot machine” and creating new long-term spending commitments in California, said Peter Leroe-Muñoz, general counsel of the Bay Area Council, which represents many Silicon Valley tech companies.

“We can't just say we're going to redistribute the pie here,” Leroe-Muñoz said. “We have to say ‘What are the opportunities created by this industry going forward?’” he added. “I would like to see a more balanced approach that takes into account the training and the workforce development side of things.”

For some lawmakers, however, the debate is not just about helping workers adapt. California state Sen. Steve Padilla, a Southern California Democrat who has authored laws regulating AI and studying workforce issues, believes there are certain sectors where the technology should be curtailed.

“Some jobs will be replaced,” he said in an interview. “But there are jobs that shouldn't be replaced.” Padilla is authorizing legislation this year to prohibit AI from providing or advertising therapy, and to set rules for practitioners’ use of the technology.

“You can't just pull the rug out from folks without having made the right investments,” he said. Padilla talked about protecting the social safety net while providing workers with opportunities to level up their skills. “People handing out checks … I don't know how strategic that is,” he added.

Major AI companies are weighing in on the workforce debate. While OpenAI CEO Sam Altman has cast doubt on the idea his technology will lead to a “jobs apocalypse,” the company’s nonprofit foundation has plowed a quarter-billion dollars into studying AI’s economic impacts. OpenAI announced another effort Monday to research AI’s impact on workers, companies and the broader economy.

Anthropic leaders have also been studying the issue, and have warned the tools could displace half of white-collar workers in the coming years.

“I think we've been pretty open about this idea that [wealth created by AI] should be redistributed in some fashion,” Daniela Amodei, Anthropic’s president, said during a recent event in San Francisco. “AI, like many technologies, will probably widen the gap of inequality and disparity. That's not what we want to see.”

The company announced an economic policy framework Wednesday that includes $350 million for research and fellowship programs.

Both OpenAI and Anthropic declined interview requests on their efforts.

Polls show a majority of Americans are worried about AI’s increasing penetration into the workplace. And voters this election season are sending high-profile, tech-backed candidates packing.

Tech companies, meanwhile, argue AI could produce a raft of new jobs. Meta recently announced a skilled-trades initiative the company says will give free training and guaranteed jobs to program graduates. Other economic experts say the technology could be a jobs producer.

“So far we have seen mostly AI, generative AI, be used to augment workforce rather than replace workforce,” said Mary Daly, president of the Federal Reserve Bank of San Francisco, during a recent appearance in San Francisco.

California leaders are currently eyeing AI as a major boon to the state’s budget. They’re betting AI will fuel economic growth and generate billions in new tax revenue.

But Teri Olle, vice president of the nonprofit Economic Security Action California, worries policymakers could underestimate how quickly the technology could upend the labor market.

“We have a bit of a risk here that we will wait too long for the exact contours of what AI disruption and displacement, what that looks like,” Olle said. “The point at which it starts to be a tidal wave, we will then be really behind.”