Artificial intelligence is not shrinking the labor market. Contrary to the fear that automation replaces workers, new data from Apollo Global Management suggests the opposite outcome is playing out in the economy. This concept is the Jevons paradox, which states that as the cost of a resource drops, its consumption actually rises. When applied to professional tasks like legal drafting or financial accounting, cheaper costs lead to higher demand for these services.
Torsten Slok, Chief Economist at Apollo, identifies this as the Jevons employment effect. Because professional work becomes more affordable to produce, the addressable market expands rapidly. This shift allows more firms and workers to participate in the field, including recent graduates who start their own businesses to compete with established incumbents. The result is a healthy uptick in new business formation, currently at historic levels in the United States.
This trend explains why unemployment rates for young workers continue to decline. Rather than replacing human capital, AI lowers the entry barrier for specialized labor. Industries are not shrinking; they are becoming more accessible, productive, and populous. The data shows that when professional inputs get cheaper, the total volume of work scales up to meet the increased demand.
In short, the fear of technological displacement misses the macro reality of market expansion. Increased efficiency at the task level feeds growth at the industry level, leading to higher overall employment numbers. As these tools become standard in professional environments, the number of new companies entering the marketplace will likely stay high. The economic data confirms that AI acts as a driver for both productivity gains and job creation across professional sectors.