California Governor Gavin Newsom signed an executive order on May 22, 2026, marking the first time a U.S. governor has used such a directive to address workers' job losses tied to artificial intelligence. The order pushes state agencies to collaborate with researchers, labor unions, and companies in the AI sector on new labor market strategies.
Specific Measures: Subsidies, Retraining, and Universal Basic Capital
The executive order outlines several concrete actions. It calls for subsidies designed to encourage companies to keep employees on payroll rather than replace them with AI systems. It also expands retraining programs with a focus on office workers, who are considered especially vulnerable to automation. And it directs a review of "universal basic capital," a concept in which every citizen would receive stakes in stocks or other investment funds.
Newsom warned that traditional unemployment insurance will not be sufficient to handle the scale of disruption. He responded to warnings from industry figures such as Anthropic co-founder Dario Amodei, who has predicted that roughly half of all office jobs could disappear within five years as AI capabilities advance. The governor also criticized the current tax system, saying it rewards automation, by allowing deductions for technology investments, while penalizing companies that hire people, according to the New York Times.
California's Role in AI Policy
California is home to many of the world's leading AI companies, including Anthropic, OpenAI, and Google DeepMind. Newsom has previously issued executive orders on AI safety and transparency. This new order focuses on the labor side of the AI equation, recognizing that rapid automation could destabilize the state's workforce.
The executive order is not a law but a directive to state agencies to develop policies and recommendations. It sets the stage for potential legislative action and could serve as a model for other states. The inclusion of universal basic capital, a variation of universal basic income, reflects a growing debate about how to distribute the economic gains of AI more broadly.
Industry and Union Reactions
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The order brings together stakeholders with often conflicting interests. Labor unions have been pushing for stronger protections as AI tools take over tasks in administration, customer service, and data processing. AI companies, including Anthropic, have acknowledged the job risk but argue that the technology will also create new roles. The executive order seeks to balance these views by involving all parties in the planning process.
Dario Amodei, who co-founded Anthropic (creator of the Claude AI assistant), made his prediction about job loss during public testimony and interviews. His estimate aligns with several economic studies that project significant office job displacement by 2030. Newsom directly cited these forecasts as a reason for urgent action.
The order also addresses the tax code. Currently, businesses can often deduct the cost of AI software and hardware investments, while payroll taxes make hiring more expensive. Newsom called for reviewing this imbalance, which he said incentivizes firms to replace workers with machines.
Looking Ahead
State agencies are expected to report back on the proposed reviews and pilot programs within the next year. The subsidy and retraining initiatives will likely require new funding from the state legislature. The universal basic capital review could lead to a ballot measure or pilot program, though no timeline has been set.
The executive order marks a significant shift in how governments are responding to AI's impact on employment. While other states and the federal government have issued voluntary guidelines or task forces, California's directive includes specific financial and programmatic measures. Whether these steps can keep pace with the speed of AI development remains an open question.
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