California Gov. Gavin Newsom issued a first-in-the-nation executive order on Thursday (May 21) directing state agencies to prepare workers, communities and small businesses for the economic and labor disruptions anticipated from the rapid advancement of artificial intelligence.
The directive mobilizes labor experts, economists, industry leaders and academic institutions to track early warning signs of workforce displacement and formulate policies that ensure workers share in the financial gains generated by AI-driven productivity.
According to an announcement from the governor’s office, the state will explore a range of support measures, including updated severance standards, employment insurance and transition assistance for displaced workers. The order also mandates the evaluation of worker ownership models, universal basic capital concepts and expanded workforce training programs.
To better monitor the state of the labor market, California will implement stronger tracking of hiring and payroll trends to respond rapidly to potential layoffs. State agencies are tasked with creating a dashboard to display AI’s impact across various sectors and drafting a report on potential labor disruptions within the tech-heavy state, which is home to 33 of the world’s top 50 private AI companies. Agencies will also review policies that provide safety nets, such as compensation via stock or equity, and develop a modernized AI playbook for job training.
“California has never sat back and watched as the future happened to us — and we won’t start now,” Newsom said in a statement accompanying the order. “We have taken the lead on advancing innovation, safety and transparency. But we must think bigger. This moment demands that we reimagine the entire system — how we work, how we govern, how we prepare people for the future — and that work is starting right here in the Golden State.”
The state-level action in California arrives precisely as federal efforts to increase oversight of the artificial intelligence sector appear to have paused. According to a PYMNTS report issued the same day, the White House had been preparing an executive order that would have established a voluntary framework allowing government agencies to vet advanced AI models for national security risks before their public release.
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However, as PYMNTS reported, plans for a Thursday signing ceremony were unexpectedly called off out of concern that the measure could unnecessarily burden AI developers and dull America’s technological edge. While federal initiatives remain under review, California’s executive order proceeds with establishing localized economic protections and workforce transition guidelines.
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