Politicians must confront artificial intelligence

While many small business owners are attempting to harness the power of artificial intelligence, others are concerned their products or services will be replaced.

Employees also understand that AI can increase productivity but may threaten their livelihoods. Young professionals have been warned by AI executives that their jobs may be automated and disappear. Although some small businesses are benefiting from AI, there has also been an onset of disillusionment, skepticism and in some cases, anger. The massive data centers that power AI have also faced increasing scrutiny because of their environmental and societal impacts.

How can politicians balance the benefits and risks of AI use? What types of regulation are needed to put guardrails around the implementation of AI? How can we protect small businesses and their employees from being replaced by technology? How can public policy keep up with the speed of AI? Should our government provide tax breaks to large data centers? All of these issues will need to be thoughtfully addressed.

Bipartisan support for AI regulation

This year, Illinois politicians came together and passed legislation aimed at managing catastrophic risks posed by large and powerful AI systems. The developers of extremely large AI systems will now have to publicly post how they will manage these risks and undergo third-party audits. Some AI companies will also need to provide basic information about their models and report safety incidents within a set period. The strong bipartisan support for this legislation highlights the extent to which legislators from across the political spectrum are concerned about the development and impact of AI.

AI rules that may impact small employers

Last month, the Illinois Department of Human Rights (IDHR) proposed new rules regulating employers’ use of artificial intelligence to make, influence, or facilitate employment decisions. IDHR temporarily withdrew the proposed administrative rules earlier this month.

If enacted as originally proposed, these rules will require employers to provide notice to their current and prospective employees when they use artificial intelligence in a way that impacts recruitment, hiring, promotion, discipline, or discharge. Businesses will also need to provide annual notice of AI use to current employees and notice within 30 days of adopting a new or substantially updated AI product, system, or process.

These proposed rules could have a profound impact on small businesses that use AI to hire and manage employees. We have concerns about how these rules will impact businesses that use recruitment software with AI-powered features to attract and evaluate candidates. This highlights the potential problems for small businesses that must use AI technology to keep up but could face unforeseen consequences for doing so.

Data center pushback

Illinois gave huge tax credits to data centers from 2020-2024. However, the blow back to the rapid development of data centers to power AI has been robust. Governor JB Pritzker recently issued an executive order pausing tax incentives for data centers as of July 1. There was hotly debated legislation around data center regulation this past Spring and we expect these discussions to continue.

There is a compelling case for shifting priorities from providing huge tax incentives for large data centers to lowering property taxes, increasing health care affordability, and supporting small businesses. Politicians will need to strike a balance on this important issue.

AI is developing quickly so public policy will need to keep pace. Policymakers should to be vigilant and address both the risks and opportunities associated with AI, and enact balanced solutions

• Elliot Richardson is president and co-founder of the Small Business Advocacy Council.