Tech Boom's Hidden Risk: Why Workers Who Joined Last Wave May Be Losing Out

The last tech boom in the late 1990s had a significant impact on skilled workers who joined the booming sector, particularly those in France. A recent study by Johan Hombert and another researcher found that workers who entered the information and communication technology (ICT) sector during this period experienced a wage premium of about 8% at entry, but this premium eroded over time.

Using data from France, the researchers compared the wages of skilled workers who started their careers in ICT between 1994 and 2001 to those who started in other sectors. They found that by 2015, these workers had earned about 9% less than comparable peers who had started outside ICT.

The study also found that the losses deepened with exposure: each additional year spent in the boom added 2.3% to the long-run shortfall. The researchers argued that the crash of the tech bubble in 2001 was not the primary cause of these losses, as workers who entered the sector after the crash did not experience similar wage shortfalls.

The study's findings have implications for the current wave of artificial intelligence investment and its impact on the labor market. Federal Reserve Chair Kevin Warsh has compared the current AI boom to the productivity boom of the late 1990s, raising concerns about the potential risks to American workers.