Policy Snapshot
Giving citizens a direct ownership stakes in AI infrastructure via equity stakes
Scenario
Gradual
Augmentation
All Scenarios
Rapid
Automation
Scope
Near Term
(Volatility Risks)
Medium Term
(Transition Risks)
Long Term
(Structural Risks)
Governance Level
Local
National
International
Target
Entrepreneurs
Displaced Workers
Primary Actor
Governments
Private Actors
Unemployment Benefits
Modernized unemployment insurance with broader eligibility and longer duration, supported by stronger financing and connections to reskilling opportunities.
What it is:
Unemployment insurance provides temporary income replacement to workers who lose their jobs through no fault of their own, funded through employer payroll taxes or social insurance contributions. Most advanced economies operate some version of this system, though designs vary widely: Nordic countries tend to offer relatively generous benefits with strong reemployment services, while systems in the US and UK provide lower replacement rates for shorter durations. Eligibility typically requires a minimum period of prior employment, and benefits are time-limited and conditional on active job search.
For managing AI-driven job displacement, modernized unemployment insurance could provide immediate income stabilization for workers who lose jobs, buying time for retraining or job search without forcing premature acceptance of unsuitable work. If AI displacement is concentrated in specific sectors or regions rather than spread evenly across the economy, UI systems with automatic triggers — such as benefit extensions tied to local unemployment rates — can direct resources where they are most needed. Connecting UI receipt to reskilling programs, rather than treating income support and retraining as separate systems, could also shorten the transition between displaced and reemployed.
The core limitation is that UI was designed for temporary, cyclical downturns, not structural transformation that may permanently eliminate categories of work. If AI displacement proves prolonged, time-limited benefits will expire before many workers find adequate reemployment. Moral hazard associated with traditional unemployment benefits remains a concern, as more generous or longer-duration benefits can delay reemployment, though research suggests this effect is modest during periods of genuinely high unemployment. Reforms that broaden eligibility to cover non-traditional workers — such as independent contractors, gig workers, and those with irregular earnings histories — would also be especially important, since AI-driven restructuring may increasingly blur the line between traditional employment and contingent work.
Recommended Reading:
Kory Kroft and Matthew J. Notowidigdo
Should Unemployment Insurance Vary with the Unemployment Rate? Theory and Evidence
July 2016
Finds that the moral hazard cost of unemployment insurance is procyclical — larger when unemployment is low and smaller when unemployment is high. During recessions or periods of high joblessness, extended benefits have weaker disincentive effects on job search because jobs are simply harder to find. This provides empirical support for trigger-based UI designs that automatically extend benefits during periods of elevated displacement.
Patrick Gaspard, Center for American Progress
Patrick Gaspard’s Statement for the Senate AI Insight Forum on Workforce
January 2024
Calls for transforming unemployment insurance into a true safety net by expanding eligibility to independent contractors, increasing benefit levels and duration to allow adequate time for retraining, and modernizing outdated UI technology systems that failed during the COVID-19 pandemic.
He also advocates for strengthening UI as an automatic stabilizer that increases benefits during periods of high unemployment or regional/sectoral shocks from AI, and proposes a "jobseekers allowance" to provide income support for workers in vulnerable occupations undertaking retraining before displacement occurs.
W. E. Upjohn Institute for Employment Research
Transforming Unemployment Insurance for the Twenty-First Century: A Comprehensive Guide to Reform
August 2023
Stephen A. Wandner proposes comprehensive UI modernization including raising the federal taxable wage base to Social Security levels ($160,200), requiring all states to provide 26 weeks of benefits, and implementing employee contributions (one-third to one-half of total UI taxes) to increase worker ownership and political support for the program.
Furthermore, he recommends establishing a national UI program administered by the Social Security Administration with standardized eligibility requirements, automatic stabilizers, and expanded reemployment services to better respond to automation-driven displacement and prepare for future economic shocks.
University of Notre Dame & Americans for Responsible Innovation
Proactively Developing & Assisting the Workforce in the Age of AI
July 2025
Suggest implementing trigger mechanisms that automatically scale UI benefits based on economic conditions like the ratio of job losses to job openings, allowing the program to scale responsively to AI-driven displacement without requiring new legislation. They also propose raising the minimum taxable wage base, strengthening experience rating to charge higher taxes to employers generating permanent layoffs from automation, and significantly expanding funding for Reemployment Services and Eligibility Assessment (RESEA) programs to help displaced workers transition to new employment.
MIT Work of the Future Task Force
The Work of the Future: Building Better Jobs in an Age of Intelligent Machine
January 2022
Advocates for modernizing unemployment insurance by allowing workers to count their most recent earnings toward eligibility, determining UI eligibility based on hours worked rather than earnings, and eliminating the requirement that unemployed workers seek only full-time work. This entails partial unemployment benefits to better protect workers who lose substantial work hours due to technological displacement, and extending coverage to independent contractors and gig workers who fall outside traditional employment relationships.
Real-world precedents:
In response to COVID-19, the CARES Act temporarily expanded UI through Pandemic Unemployment Assistance (PUA), which covered gig workers and self-employed individuals for the first time, and Federal Pandemic Unemployment Compensation (FPUC), which increased weekly benefit amounts by $600. While implementation was chaotic in many states due to outdated systems, these programs successfully prevented mass destitution during the sharpest labor market contraction in modern U.S. history.
Denmark's flexicurity model combines flexible hiring and firing rules for employers with generous income security for workers (up to two years of unemployment benefits) and comprehensive active labor market programs including retraining, job search assistance, and counseling. The model operates as a "golden triangle": employers can easily adjust their workforce, workers receive income protection during transitions, and the state invests heavily in getting people back to work quickly. The model has delivered low unemployment alongside low inequality, though it requires high taxation to finance; Denmark spends more on active labor market programs than any other OECD country.
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