New Research Reveals Freelancer Job Losses and Pay Cuts Linked to AI Tools
New INFORMS Organization Science Study Key Takeaways:
- Freelancers Face Job Losses and Income Decreases: The rise of generative AI tools like ChatGPT is reshaping the labor market, reducing opportunities and earnings for freelance workers.
- Top Performers are Hit Hardest: High-earning freelancers experience the steepest declines, with greater drops in both job prospects and pay compared to lower-performing peers.
- AI Undermines Traditional Competitive Advantages: Skilled workers who once relied on expertise and reputation now find themselves competing with AI-driven tools that perform tasks faster and cheaper.
BALTIMORE, MD, March 4, 2025 – A groundbreaking study has uncovered a startling reality: generative AI tools like ChatGPT are already reshaping the freelance job market, slashing employment opportunities and pay for workers across all skill levels. Even top freelancers – those with the strongest track records – are suffering the greatest setbacks.
Published in the INFORMS journal Organization Science, the research provides some of the first hard evidence of AI’s immediate impact on employment.
“Surprisingly, top-performing freelancers are seeing the largest setbacks. For every 1% increase in a freelancer’s past earnings, they experience an additional 0.5% drop in job opportunities and a 1.7% decrease in monthly income following the introduction of AI technologies,” says Xiang Hui, one of the study’s authors and a professor at Washington University in St. Louis.
A Market Disrupted
The study, “The Short-Term Effects of Generative Artificial Intelligence on Employment: Evidence from an Online Labor Market,” challenges assumptions about AI’s impact on labor markets. Although AI is often seen as a threat to lower-skilled jobs, the findings show that its disruption extends to high performers as well.
“We’re seeing a dramatic shift in the freelance labor market. Generative AI isn’t just affecting lowest-skilled workers – it’s disrupting the competitive advantage of even the best workers. High-quality freelancers, who typically thrive in tough markets, are losing out more than anyone else,” says Hui.
Oren Reshef, also from Washington University, emphasized that AI’s rise is shifting traditional labor dynamics. “Skilled freelancers, who have traditionally relied on their expertise and reputation, are now competing against advanced algorithms that perform tasks faster and cheaper.”
The Future of Work in an AI-Driven Economy
These findings raise urgent concerns for businesses, policymakers and workers. With AI adoption accelerating, the results suggest the need for immediate discussions about how to mitigate the job losses and income instability triggered by AI disruption.
“Generative AI is changing the rules of the game,” continued Reshef. “It’s not just reducing opportunities for less-skilled workers; it’s cutting into the core of what has always made top performers successful. This technology forces us to rethink how workers compete and how we support them in an AI-driven economy.”
The study’s findings highlight the need for businesses and policymakers to address the evolving impact of AI on digital labor, developing strategies to safeguard workers from its unintended consequences.
About INFORMS and Organization Science
INFORMS is the world’s largest association for professionals and students in operations research, AI, analytics, data science and related disciplines, serving as a global authority in advancing cutting-edge practices and fostering an interdisciplinary community of innovation. Organization Science, a leading INFORMS journal, publishes innovative research on strategy, management and organizational theory. INFORMS empowers its community to enhance organizational performance and drive data-driven decision-making through its journals and resources. Learn more at www.informs.org or @informs.
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Ashley Smith
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Catonsville, MD
[email protected]
443-757-3578