New York City is 'sleepwalking into the age of AI,' report warns

This article is the first in a series examining how artificial intelligence may affect New York City workers. Future installments will explore the technology's potential impact on specific industries and occupations, including city government, uniformed services, healthcare, education and the trades. 

As artificial intelligence surges in usage across industries, promising to boost productivity, efficiency and innovation, government officials and labor leaders in New York City are preparing for it to disrupt the nation's biggest economy — potentially eliminating jobs, deepening inequality and threatening the tax base that funds public services.

Those concerns are laid out in a report from New York City Comptroller Mark Levine's office, which warns that the city is "sleepwalking into the age of AI" despite being particularly vulnerable to the emergent technology. Using predictive modeling from Moody's Analytics, the report presents five scenarios for how AI will reshape the city's economy and workforce. In the most foreboding, New York could end up with almost 300,000 fewer jobs and lose a total of $14 billion in tax revenue by 2030.

"There is no city in America — and perhaps none on earth — more exposed to both the promise and peril of artificial intelligence than New York City," the report states.

Labor leaders have also responded proactively, arguing that AI is advancing faster than the protections needed to ensure it benefits workers rather than replacing them. 

"The proliferation and use of artificial intelligence has led to very serious labor concerns that will affect our jobs, economic lives and privacy," read the legislative agenda of the New York State AFL-CIO in May. "AI can be a valuable tool, however it should not be viewed as a replacement for jobs or human decision making."

White-collar exposure and early warning signs

The comptroller’s report argues that AI is likely to reshape New York's economy more profoundly than almost any previous technological shift, with its greatest impact concentrated in white-collar work. Because the city's economy leans heavily on finance, legal services, professional and business services as well as information technology — sectors where AI adoption is accelerating — New York faces both outsized opportunity and risk.

While there is little evidence yet of mass layoffs directly tied to AI, hiring has slowed in many knowledge-intensive industries even as layoffs remain relatively low. Entry-level workers appear most exposed, with recent college graduates experiencing rising unemployment that the report links in part to employers substituting AI tools for junior-level tasks. 

Clerical staff, administrative assistants, customer service representatives and data-entry workers are among the most vulnerable to automation. Public-facing and physically grounded jobs — teachers, healthcare workers, social workers, firefighters and other frontline municipal employees — are less likely to be replaced, though they are increasingly incorporating AI tools into their work.

The comptroller outlines a wide range of possible outcomes, from modest productivity gains with limited disruption to severe job displacement concentrated in office-based industries. In its most extreme "AI Shockwave" scenario, the city would lose roughly 259,000 private-sector jobs, with losses heavily concentrated in finance, law, customer service and administrative support.

In the most likely scenario, however, AI will incrementally improve economic growth and add approximately 50,000 jobs between 2025 and 2030.

Labor and legislative response

The uncertainty has prompted growing calls from labor organizations and policymakers for stronger oversight of AI in the workplace. The AFL-CIO has endorsed legislation that would require employers with 50 or more workers to report annually to the New York State Department of Labor on how AI is affecting their workforce, including whether it contributed to layoffs — with those reports made public.

"The impact on employment is undeniable, yet little information is available about the effect it is having on labor," New York State AFL-CIO president Mario Cilento said in May. "Given the profound impact AI has already had and its rapid development, it is critical we have up-to-date, reliable input from employers about AI use."

The federation has also backed broader measures including restrictions on electronic surveillance, limits on algorithmic wage-setting and requirements for human oversight of automated decision-making. 

Assembly Member Alex Bores and Public Employees Federation president Wayne Spence have also urged Governor Hochul to support the RAISE Act, which would regulate the most advanced AI models, require developers to implement safety protocols and report serious failures to regulators.

“Technology should serve people, not the other way around,” Bores and Spence wrote. “We’ve seen what happens when government acts too late to regulate emerging technologies.”

In response to the uncertainty of AI, the comptroller argues the city should begin preparing now by strengthening fiscal reserves toward the proposed 16 percent rainy day fund target, which would provide a buffer against AI-driven tax revenue losses and give the city flexibility to protect core services and support displaced workers without resorting to cuts or tax increases. 

While Levine stresses that the report does not predict immediate mass unemployment, it does highlight the potential for a structural reshaping of office work that could deepen inequality between workers able to adapt and those whose jobs are most easily automated. 

"We are not helpless," Levine wrote. "Again and again, we have shown that we have the power to shape such change with democratic values and public purpose."