Resilient by Design: Dual Safety Nets for Workers in the AI Economy

What policies should we consider to help workers affected by AI and make sure the benefits of AI are broadly shared? Policymakers often worry that generous support could discourage work. Yet research suggests such effects are generally limited, and the concern becomes less relevant if AI leads to durable, economy-wide job scarcity. Given the uncertainty about AI’s labor market effects, it is important to consider flexible approaches to worker support. In a scenario where AI only causes short-lived increases in unemployment, the focus is on insuring workers against income loss while promoting employment and worker reallocation across sectors. At the other extreme, in a scenario where AI causes large-scale and persistent joblessness, the focus of worker support is on an income guarantee rather than insurance, with less emphasis on employment promotion. To accommodate different scenarios, I outline a two-tier architecture. The AI Adjustment Insurance (AI-AI) extends unemployment benefits and provides retraining and wage insurance to workers displaced by AI. The Digital Dividend (DD) is a small universal cash benefit financed by a tax on the digital sector, and serves as a scalable pathway toward higher unconditional income support, should economy-wide job scarcity materialize. The combination of a conditional and time-limited program (AI-AI) and a scalable unconditional program (DD) could build worker resilience in the face of AI, no matter the ultimate employment effects. These policy blueprints are designed to provide flexible solutions to address the job losses and the broader transformation of employment that AI may bring.