The Israeli state has approved plans to purchase F-35 and F-15IA fighter jets from Lockheed and Boeing, a move described as enabling a technological leap in integrating autonomous flight capabilities and next-generation defense systems. This massive expenditure on military hardware coincides with a new study revealing that artificial intelligence (AI) is systematically displacing workers in Israel’s domestic economy, particularly young people and those in previously secure hi-tech roles.
Israel’s defense modernization is increasingly centered on artificial intelligence, autonomous systems, and electronic warfare. This focus drives companies and governments to integrate AI into military networks, improve sensing, and adapt to drone and GPS threats. The US Department of Defense has also announced partnerships with major tech corporations including SpaceX, OpenAI, Google, NVIDIA, Reflection, Microsoft, and Amazon Web Services to create an “AI-first” approach for its armed forces.
The Pentagon’s GenAI.mil platform, designed to streamline data synthesis and augment warfighter decision-making, has accumulated over 1.3 million department users. In its first five months, the platform generated tens of millions of prompts and deployed hundreds of thousands of agents, demonstrating the scale of state investment in advanced military technology.
Private capital is also flowing into this sector. Tenna Systems, which raised $13.5 million in February 2026, develops a platform described as “AccuWeather for electronic warfare,” turning existing sensors into a live electromagnetic detector. R2 Wireless, another firm, uses passive RF sensing to detect and classify wireless signals; it is deployed with NATO forces and won the US Army’s xTech competition.
The Cost to Labor
While defense contractors and tech giants secure lucrative state contracts, the Taub Center study by Michael Debowy, Prof. Gil Epstein, and Prof. Avi Weiss reveals the human cost of AI’s integration into the economy. The study found that AI’s impact on overall unemployment remains limited, but it is fundamentally changing who becomes unemployed, with the effect concentrated in occupations that previously had strong demand, low layoff rates, and persistent vacancies.
Prof. Epstein stated, “The era of hi-tech workers’ immunity is over. Our data shows that AI is ripping the cards. It explains about a fifth of the increase in programmer unemployment and locks the door mainly on young people. While veteran staffers become more efficient with the help of the machine, the ‘juniors’ are the first to pay the price.” This highlights a clear class stratification, where capital-intensive technology serves to enhance the productivity of experienced workers while displacing those at the beginning of their careers.
The study found that between 2019 and 2022, workers in occupations at high risk of displacement by AI accounted for 14% to 16% of all Israeli unemployed. By 2025, this share had risen to between 20% and 25%. Among software developers, AI accounts for between 12% and 20% of the increase in unemployment recorded between 2022 and 2024 and 2025. For sales representatives, AI explains between 10% and 26% of the increase.
Debowy noted that robots have also pushed people into unemployment, albeit more slowly than generative AI due to implementation costs. He stated that in Israel, traditional local manufacturing has needed fewer hands because of robots, with a third of such workers replaced in recent years.
The research also cited US evidence of a 13% decline in employment among young workers aged 22 to 25 in occupations at risk of automation, while more experienced workers were largely unaffected. This demonstrates how AI, rather than creating new opportunities for all, is being deployed to extract greater surplus value from a smaller, more experienced workforce, intensifying competition for those entering the labor market.
State Response and Structural Contradictions
Prof. Weiss acknowledged that technology is “completely changing the rules of the game,” leading to tougher competition for existing jobs. He suggested that “at the policy level, the state must already activate assistance systems for the newly unemployed and design programs for them to provide them with skills complementary to artificial intelligence to enable them to reintegrate into the changing labor market.”
However, the study itself points to deeper structural factors shaping these trends, including a slowdown in the hi-tech sector and the growing share of digital-age occupations at risk of automation. These underlying contradictions are not addressed by state-sponsored retraining programs, which merely attempt to manage the symptoms of a system designed to concentrate wealth and displace labor. The researchers confirmed that while overall unemployment has not risen, the composition of the unemployed has shifted, with AI explaining between two percent and six percent of this change in occupational distribution.