House members press Powell on labor force risks: immigration enforcement and AI-driven job disruption

Several members raised questions about longer-run labor supply and structural risks to employment, focusing on recent immigration enforcement activity and the potential for artificial intelligence (AI) to displace jobs.

On immigration, several members warned that aggressive enforcement and removals could shrink labor-force growth and slow economic growth. Powell said immigration policy is not the Fed's to make; nevertheless he acknowledged that when labor-force growth slows it reduces overall economic growth and that the current reduction in labor-force growth is one factor slowing growth this year.

On AI, Representative Foster described authoritative predictions that many entry-level white-collar jobs could be affected within one to two years and asked what analysis the Fed is doing to prepare. Powell said the Fed and other economists are studying AI's potential effects on employment. He noted significant uncertainty: AI could replace many jobs in the short run, and history suggests technology raises productivity and creates jobs in the longer run, but the timing and distribution of those effects are unclear.

Powell said the Fed's tools—monetary policy—cannot directly retrain workers or set immigration policy. The Fed's response would be to pursue its dual mandate goals and adjust policy if labor-market weakness were to materialize as a result of shocks. He agreed that the Fed should analyze tail risks and that researchers at the Fed are focused on labor-market developments and productivity changes from new technologies.

Members asked for continued research; Powell said the Fed is both a consumer and producer of research on labor markets and AI and will continue to monitor developments.