As Silicon Valley and Wall Street come to terms with the impending artificial intelligence “job apocalypse,” there are few solutions as to what will happen next.
The majority of white-collar occupations might be automated within the next one to five years, according to predictions made by Microsoft AI chief Mustafa Suleyman and Anthropic CEO Dario Amodei. Last month, Jamie Dimon, CEO of JPMorgan Chase, stated that it’s time to start considering significant AI labor disruption. According to a recent Morgan Stanley analysis, workers had a more optimistic outlook: Even if your current position is terminated, you won’t remain unemployed indefinitely because new positions will take its place.
Regardless of whose long-term forecasts come true, AI layoffs are happening, and for newly unemployed workers in a stagnant labor market, they carry with them impending financial instability.
Amodei has frequently urged the government to get ready for high unemployment, and many may rely on unemployment insurance benefits meant to help workers while they search new employment.
However, the Bureau of Labor Statistics (BLS) reports that approximately 75% of jobless individuals did not even apply in 2022. According to experts that figure is still valid today.
Even though the unemployment rate increased to 4.4% last month from 4.2% a year earlier, new unemployment insurance claims have remained relatively steady over the past year at 200,000 to 250,000 claims per week, indicating that many workers are not utilizing a crucial safety-net tool.
Reasons for not applying
In a 2023 BLS study of 2022 unemployment claims, 55% of respondents said they didn’t apply because they didn’t think they eligible for benefits.
Potential barriers to qualifying included their employer not being covered by unemployment insurance, leaving their job voluntarily, being fired for misconduct, having inadequate prior employment, and having previously used up all of their benefits.
Meanwhile, 10% stated they didn’t need the money, had a bad attitude about unemployment benefits, were unaware of them, or had trouble applying, and another 17% said they didn’t apply because they anticipated finding a new job soon.
Rejection rates for applicants are likewise high. According to the BLS, only roughly 55% of those who ask for benefits are granted them.
Since the unemployment insurance system is not a single national system, it might be difficult to understand. Rules and requirements vary by state and region.
Why you quit your job, how much you made in recent quarters, and your readiness to take new work all have an impact on eligibility. As a result, recent graduates and those returning to work following maternity or family leave are less likely to be eligible because they do not match the earnings requirements.
Some popular misconceptions regarding eligibility persist, according to Alexander Hertel-Fernandez, a Columbia University government professor who worked in the Department of Labor and the White House during the Biden administration. Many people believe that resigning automatically renders one disqualified, however this is not always the case. Harassment or violations of employment laws are legal grounds to depart and may not affect eligibility, but the restrictions vary by state.
Hertel-Fernandez told that it is difficult to determine who does not apply for unemployment insurance because they are not included in the data. According to his coauthored research with the National Employment Law Center, workers with more formal education and better wages are far more likely to file for unemployment insurance. White employees are more likely to seek for and receive benefits than workers of color, who are less likely to believe they are eligible, he added.
Even once you apply, the process of receiving assistance might be lengthy.
“Applying for unemployment frequently entails a legal procedure. According to Hertel-Fernandez, 25% of applicants claim their employers attempted to oppose their application. “Your employer may try and fight your application process,” he stated. Because claiming unemployment benefits increases taxes in the majority of states, employers have a reason to do this. The two are directly related to one another.
He cited the demise of labor unions as one factor contributing to the high number of people who never apply for benefits. According to the BLS, labor union membership decreased to a record low of 9.9% in 2024 and hardly increased in 2025.
“Being a member of a union helps you understand the process and can even help you with the application, so it’s one of the best indicators of whether or not you apply for benefits and receive them,” he stated. According to the BLS, those who were union members in their prior employment are twice as likely to seek for benefits.
Getting the system ready for more layoffs
The federal taxes that fund the program haven’t changed since the 1980s, and the unemployment insurance framework hasn’t been altered since it was established as part of the New Deal.
Rachael Kohl, an assistant professor at the Wayne State University Law School, told, “We test the system every time, every time there’s a recession or some type of economic downturn, like when it was related to COVID.” She used to oversee the University of Michigan Law School’s Workers’ Rights Clinic, where she mainly dealt with matters involving unemployment insurance.
According to the BLS and the U.S. Census Bureau, UI benefits helped one in six American adults throughout the epidemic and kept at least 4.7 million people out of poverty.
According to the BLS and the U.S. Census Bureau, UI benefits helped one in six American adults throughout the epidemic and prevented at least 4.7 million Americans from falling into poverty. However, compensation delays plagued the systems of many states, and they still do.
Benefits have also decreased with time. In the past, unemployed workers were entitled to 26 weeks of insurance; but, in certain areas, such as Arkansas, Florida, and North Carolina, this has been reduced to just 12 weeks. According to Hertel-Fernandez, the initial objective of unemployment insurance was to restore 50% of prior wages; nevertheless, in many states, this target is closer to 30% or less.
He added that the current system is unprepared for widespread, long-term unemployment and that “really, a wholesale reform is needed, especially as we think about the impact of AI on potential labor market disruptions and especially as we might think of another recession coming down the pike.” He recommended expanding eligibility for individuals with little work experience and easing the application procedure.
While it may be reasonable for you to locate another work in normal times, if we foresee that some jobs will disappear, it will be far more difficult to use that time to retrain and support, instance, transitioning to a completely different industry or occupation.
