A major shift in how California prepares for the future of work is underway, and the warning is clear: artificial intelligence is no longer a distant disruption, it is a present force reshaping jobs, wages, and economic stability across the state.

Governor Gavin Newsom has issued a first-of-its-kind executive order aimed at preparing workers, small businesses, and entire communities for what officials describe as the coming wave of AI-driven economic disruption.

A sweeping state response to AI disruption

The executive order mobilizes California agencies, labor experts, economists, universities, and industry leaders to build a coordinated response to workforce changes triggered by artificial intelligence. The goal is to identify early warning signs of layoffs and economic instability while ensuring workers benefit from AI-driven productivity gains.

It also directs state officials to develop new data tools, policy recommendations, and long-term workforce protections as AI adoption accelerates across industries.

Policies under consideration include major labor and safety net reforms

The order instructs California to evaluate a wide range of potential policies, including severance standards, employment insurance and transition support for displaced workers, worker ownership models, universal basic capital concepts, expanded workforce training, and stronger tracking of hiring and payroll trends to help the state respond faster to potential layoffs and economic disruption. Read the executive order here.

**“California has never sat back and watched as the future happened to us – and we won’t start now. 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.

Today is just the first step as we rewrite policy and direction, creating a future of work that works for all.” Governor Gavin Newsom said.**

“As the epicenter of the tech industry, California recognizes our responsibility to ensure workers are prepared for success as AI reshapes the economy. Women, in particular, face disproportionate risks of displacement and widening economic inequality as AI evolves. So, California is committed to understanding AI’s impacts on workers, modernizing workforce training, and expanding pathways into the jobs of the future so more Californians are set up for success. Today’s executive order underscores California’s commitment to advancing opportunity alongside responsible innovation.” Jennifer Siebel Newsom said.

California doubles down on AI leadership and regulation

California already dominates the global AI landscape, with 33 of the top 50 private AI companies in the world based in the state. Officials say no other state has taken more aggressive steps to balance innovation with consumer protection, safety, and privacy safeguards.

The new order builds on years of AI-focused policy action, including California’s early work on generative AI oversight and state government adoption standards. It also follows the California Report on Frontier AI Policy and the Transparency in Frontier Technology Act, Senate Bill 53, Wiener, which has influenced similar laws in other states.

Additional protections already signed into law address child safety, protections against self-harm, restrictions on sexually explicit deepfakes, AI watermarking requirements, protections for performers’ digital likenesses, and safeguards against AI-generated scam robocalls. It also expands on a March 2026 executive order strengthening civil rights and privacy protections in state AI procurement and improving government use of AI services.

Tracking AI’s impact on jobs and wages

The executive order directs state agencies to build a structured framework to monitor how AI is affecting employment and to prevent workers from being left behind as adoption accelerates.

Key actions include:

Empowering workers and sharing AI gains
State agencies will evaluate worker ownership models, including employee-owned structures, to expand wealth-building opportunities tied to productivity gains. Small businesses will receive support through training and incentives to adopt emerging technologies while maintaining workforce stability. Officials will also study how collective bargaining has improved worker outcomes and expand AI preparation in higher education.

Tracking AI disruption in real time
California will produce a new report identifying early warning signals of labor disruption, create a statewide AI workforce impact dashboard, and deliver recommendations within 180 days on updates to the California Worker Adjustment and Retraining Notification Act to improve early warning systems. Business feedback will also be added to the state monthly jobs report.

Strengthening safety nets and retraining systems
The plan includes reviewing severance policies and equity-based compensation, expanding awareness of employment insurance programs, and creating an AI playbook to modernize job training. A single online platform will be developed to help Californians access social services more easily, while California Volunteers will support long-term unemployed workers and entry-level training programs.

Using AI for public benefit
State agencies will collaborate with academic experts and industry leaders to design incentive structures that encourage AI development focused on solving major societal challenges.

A statewide push for public input on AI’s future

Governor Newsom also announced a first-of-its-kind statewide deliberative democracy effort through Engaged California, giving residents a direct role in shaping AI policy.

All Californians can participate in the initiative, which is designed to ensure public input helps guide the state’s response to AI-driven economic change. Officials say the findings will directly inform the policies outlined in the executive order.

Participation is available at engaged.ca.gov/ai.