Summary
A famous economic theory from 1865 suggests that artificial intelligence might actually create more jobs for lawyers and accountants instead of cutting them. Torsten Slok, a top economist at Apollo Global Management, argues that as AI makes professional tasks cheaper and faster, the demand for these services will skyrocket. This idea, known as the Jevons Paradox, shows that efficiency often leads to higher consumption rather than less. While many fear a "jobpocalypse," current data shows that industries most affected by AI are actually seeing significant growth and hiring.
Main Impact
The primary impact of this theory is a shift in how we view the future of work. Instead of AI replacing human workers, it may act as a tool that opens up new markets. When the cost of legal advice or financial planning drops, more people and small businesses can afford these services. This creates a "Jevons employment effect," where the total number of firms and workers in these fields grows to meet the new demand. This challenges the common belief that automation always leads to fewer jobs.
Key Details
What Happened
Torsten Slok recently shared a note explaining why the history of the steam engine applies to today’s AI boom. In the 19th century, people thought more efficient steam engines would lead to less coal use. Instead, because the engines were so good, people used them for everything, and coal use went up. Slok believes the same will happen with labor. As AI handles the boring parts of white-collar work, the market for that work will expand, leading to more hiring in law, consulting, and finance.
Important Numbers and Facts
Recent economic data supports some of these ideas. The unemployment rate for people aged 20 to 24 fell from a high of 9.2% in late 2023 to 5.6% in March 2026. Additionally, a report from Vanguard found that the 100 jobs most exposed to AI are currently outperforming the rest of the job market in both growth and pay raises. However, the news is not all good for young workers. Underemployment for recent college graduates hit 42.5% at the end of 2025, meaning many are working jobs that do not require their degrees.
Background and Context
The Jevons Paradox was named after William Stanley Jevons, an English economist. He noticed that when the Watt steam engine made coal use more efficient, England didn't burn less coal; it burned much more. This happened because the efficiency made coal a more useful and affordable energy source for many different industries. In the modern world, labor is like the coal of the past. If AI makes a lawyer's time more efficient, the "price" of legal work drops, which could lead to a massive increase in the number of legal cases and contracts being handled globally.
Public or Industry Reaction
Tech leaders are divided on what this means for the workforce. Some, like the CEO of Anthropic, have warned that AI could automate many management and accounting tasks. On the other hand, Nvidia CEO Jensen Huang believes AI will lead to more workers, not fewer. Major companies are already putting money behind this idea. Salesforce recently announced it would hire 1,000 new graduates to work on AI systems, and IBM stated it was tripling its entry-level hiring. These companies believe that AI will help workers focus on higher-value tasks rather than just replacing them.
What This Means Going Forward
While the total number of jobs might grow, the way people work will likely change. The Jevons Paradox suggests the industry will expand, but it doesn't guarantee that every specific job will stay the same. For example, while the accounting industry grew after the invention of bookkeeping software, many entry-level roles were lost. Going forward, the risk is not necessarily that jobs will disappear, but that they will be restructured. Young workers may need to focus more on entrepreneurship or specialized skills, as traditional entry-level roles are the most likely to be handled by AI agents.
Final Take
The future of AI and employment is more complex than a simple loss of jobs. History shows that when we make a resource more efficient, we usually find more ways to use it. If AI makes professional services affordable for everyone, we might see a world with more lawyers and accountants than ever before. The real challenge will be ensuring that new workers have the right skills to thrive in these changing industries.
Frequently Asked Questions
What is the Jevons Paradox?
It is an economic theory that says when a technology makes a resource more efficient, the total use of that resource actually goes up instead of down because it becomes cheaper and more useful.
Will AI take away all accounting and legal jobs?
According to some economists, no. While AI will automate specific tasks, it is expected to lower costs and increase the overall demand for legal and accounting services, potentially creating more jobs.
Are companies still hiring entry-level workers?
Yes, several large tech companies like Salesforce and IBM have recently announced plans to increase their hiring of new college graduates to help build and manage new AI technologies.
