Employers have cited artificial intelligence as the reason for over 120,000 announced job cuts in the U.S. this year, a figure that dominates public discourse on AI's impact on the workforce. However, the number of jobs created by AI, particularly in fostering new businesses, remains largely unquantified.
This year has seen a nearly 18% increase in new business applications compared to the same period in the previous year. Data from Resume Genius indicates that one in three laid-off Gen Z workers are considering entrepreneurship. This trend suggests a significant, yet undercounted, positive economic effect of AI.
Launching a new business traditionally incurs substantial costs, often ranging from $50,000 to $250,000 before any revenue is generated. This financial barrier has historically excluded individuals without significant capital, such as aspiring entrepreneurs with innovative product ideas but limited funding. AI is now altering this landscape by significantly reducing the initial costs and accelerating the process for entrepreneurs.
AI tools can assist in drafting initial designs and streamlining other aspects of product development, lowering the barriers to entry for small businesses. While human expertise and manufacturing remain crucial, AI is democratizing access to resources previously available only to well-funded ventures. This shift allows individuals with ideas to potentially achieve what once required extensive teams and investments.
This evolving economic environment presents two potential futures. In one scenario, established companies like Amazon, Walmart, and Google leverage AI to increase productivity with fewer employees, leading to concentrated wealth among the few and increased job displacement for many. Alternatively, AI could dramatically lower the cost of expertise, enabling individuals to launch and manage businesses with fewer resources.
To foster the latter, policymakers could implement a three-pronged approach: accurately counting AI-driven business creation alongside job losses, tailoring regulations to avoid stifling small startups, and developing financing systems suitable for small-scale ventures. Additionally, AI could support reshoring efforts by enabling a network of small, localized brands that require nearby manufacturing.
The author, Faheem Kajee, a serial entrepreneur and founder of Dough, argues that Washington should focus on quantifying the opportunities AI creates for business owners, not just the jobs it eliminates. This shift in focus could unlock a new wave of American entrepreneurship.