California wants to “reimagine” work system in the face of risk of AI layoffs

WASHINGTON — California Governor Gavin Newsom signed an executive order on Thursday to study a broad reform of labor policies, in an attempt to get ahead of a possible wave of mass layoffs caused by artificial intelligence.

Newsom, a Democrat, has ordered state agencies to work with academics, unions and AI companies to analyze how to subsidize companies that retain employees rather than replacing them with technology.

The order calls for the expansion of professional training programs, especially for “white collar” workers, such as customer service representatives, software developers, and marketing and sales professionals, whose roles are likely to be eliminated by AI. Newsom also ordered the idea of ​​a “universal basic capital” to be studied, which would give all residents a stake in assets such as stocks, bonds or sovereign wealth funds.

According to the governor, unemployment insurance and other traditional protections will not be enough. Leaders in the AI ​​sector have warned of rapid and profound changes in the job market, with the risk of extinction of entire categories — especially among office workers.

“California has never sat back and watched the future happen to us — and it won’t start now,” Newsom said in a statement. “But we need to think bigger. This moment demands that we reimagine the entire system — how we work, how we govern, how we prepare people for the future.”

The executive order, the first of its kind signed by a U.S. governor, reflects growing anguish around the world. Fears around AI fuel debates about how to help people transition to new careers or support those facing long periods of unemployment.

On Wednesday, Meta cut 10% of its workforce, or about 8,000 people, citing yet another shift in strategy toward AI. The company joined Intel, Cisco, Amazon and other technology giants that have laid off thousands of employees, with executives claiming the technology has brought significant efficiency gains.

Dario Amodei, co-founder of AI startup Anthropic, even predicted that around half of office jobs could disappear in the next five years. Although other industry leaders disagree with this estimate, almost everyone agrees that technology will replace humans in areas such as communications, law and engineering in the near future.

Governments in several countries have reacted to job losses linked to AI with different measures and experiences. In China, which now has youth unemployment at 17%, courts have ruled in favor of workers who sued former employers for compensation after being replaced by AI.

England, Japan and South Korea have discussed universal basic income models, in which the State pays a regular fixed amount to citizens to compensate for shocks in the labor market. In the United States, some Democratic parliamentarians also raised proposals for similar pilot projects.

Tech leaders like Elon Musk of Tesla and SpaceX and Sam Altman of OpenAI have said that a universal basic income may be necessary. Musk argues that the productivity gains brought by AI should generate an abundance of fiscal resources for governments, which could compensate people who lose their jobs to the technology.

“A HIGHLY BASIC INCOME, via checks issued by the federal government, is the best way to address AI-caused unemployment,” Musk wrote in a post last month.

Although Newsom’s order is about studying paths and not implementing immediate measures, California already stands out among states in regulating AI. It was the first to pass a comprehensive security law for large language models such as OpenAI’s ChatGPT, Google’s Gemini, and Anthropic’s Claude. Recently, Newsom also signed an executive order mandating that companies with AI contracts with the state go through security and privacy filters.

California and other states have been filling a federal regulatory vacuum as the White House has largely given free rein to companies in the face of the global AI race with China. That could change after the launch of the Mythos, Anthropic’s new high-performance model, which prompted White House advisers to consider an executive order requiring safety testing for new models.

Speaking this week at an event by the Center for American Progress — a center-left think tank and advocacy group — Newsom said he was concerned about companies receiving tax breaks while workers continue to pay payroll taxes. In his view, tax benefits for companies that automate and fire employees enrich companies and punish workers twice.

The order does not explicitly mention tax reform, but the governor’s team stated that this type of change could be considered as state agencies design new labor frameworks linked to AI.

For Newsom, the trend is toward a widening gap between AI companies and workers as the sector becomes highly profitable and labor is left behind. In the order, the governor asks that state bodies study ways to strengthen collective bargaining by unions as a tool to reduce this gap.

“Businesses are going to make a fortune, and that’s why you can’t maintain a payroll tax system that taxes jobs while subsidizing automation,” Newsom said in the speech.