MIT study finds AI can already replace 11.7% of U.S. workforce

The Massachusetts Institute of Technology released a study Wednesday finding that AI could currently replace 11.7% of the U.S. labor market, or $1.2 trillion in wages in finance, healthcare and professional services.

The study was conducted using a labor simulation tool called Iceberg IndexIt was created by MIT and Oak Ridge National Laboratory. The index simulates how 151 million U.S. workers interact across the country and how they are affected by AI and related policies.

Iceberg Index, announced Earlier this year, he offered a forward-looking look at how AI could reshape the labor market not just in coastal tech hubs but in every state across the country. For lawmakers preparing billion-dollar reskilling and training investments, the index provides a detailed map of where disruptions are occurring, down to the postcode.

“We’re basically creating a digital twin for the U.S. labor market,” said Prasanna Balaprakash, director of ORNL and co-leader of the study. ORNL is a Department of Energy research center in eastern Tennessee that is home to the Frontier supercomputer, which powers many large-scale modeling studies.

Balaprakash said the index conducts experiments at the population level and reveals how AI is reshaping tasks, skills and workflows long before these changes emerge in the real economy.

The index treats 151 million workers as individual representatives, each tagged with skill, task, occupation and location. It maps more than 32,000 skills across 923 occupations in 3,000 counties and then measures where existing AI systems can already perform those skills.

What the researchers found is that the visible tip of the iceberg—layoffs and role changes in technology, computing, and information technology—represents just 2.2% of total pay, or about $211 billion. Beneath the surface lies the $1.2 trillion charge, the total risk that includes routine functions in human resources, logistics, finance and office management. These are areas that are sometimes overlooked in automation estimates.

The index is not a predictive engine for exactly when or where jobs will disappear, the researchers said. Instead, it aims to provide a skills-centered snapshot of what today’s AI systems can already do and offer policymakers a structured way to explore possible scenarios before committing real money and legislation.

Researchers partnered with state governments to conduct proactive simulations. Tennessee, North Carolina, and Utah helped validate the model using their own workforce data and began creating policy scenarios using the platform.

Tennessee ranked first, citing the Iceberg Index in its official statement. Artificial Intelligence Workforce Action Plan It was published this month. Utah state leaders are preparing to release a similar report based on Iceberg’s modeling.

North Carolina state Sen. DeAndrea Salvador, who worked closely with MIT on the project, said what attracted him to the research was how it revealed effects that traditional tools had missed. He added that one of the most useful features is the ability to drill down to local details.

“One of the things you can drill down to is county-specific data, where within a particular census block, the skills that are happening right now are mapped to the likelihood of those skills being automated or increased, and what that might mean in terms of changes in the state’s GDP in that area, as well as changes in employment,” he said.

Salvador said such simulation studies are particularly valuable as states stand up to overlapping AI task forces and working groups.

The Iceberg Index also challenges a common assumption about AI risk: that AI risk will be limited to technology roles in coastal hubs. Simulations of the index show exposed occupations spread across all 50 states, including interiors and rural areas that are often left out of the AI ​​conversation.

To close this gap, the Iceberg team created an interactive simulation environment that allowed states to experiment with different policy tools; from shifting labor budgets and adjusting training programs to exploring how changes in technology adoption can impact local employment and gross domestic product.

“Project Iceberg allows policymakers and business leaders to identify exposure hotspots, prioritize education and infrastructure investments, and test interventions before dedicating billions of dollars to implementation,” the report says.

Balaprakash, who also serves on the Tennessee AI Advisory Council, shared state-specific findings with the governor’s team and the state’s AI director. He said many of Tennessee’s core industries — health care, nuclear energy, manufacturing and transportation — still rely heavily on physical work, providing some insulation from purely digital automation. The question, he said, is how to use new technologies such as robotics and artificial intelligence assistants to strengthen these industries rather than drain them.

For now, the team is positioning Iceberg not as a finished product but as a sandbox that states can use to prepare for AI’s impact on the workforce.

“We’re really aiming to get involved and start experimenting with different scenarios,” Salvador said.

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