Unmasking the Real Impact of Artificial Intelligence on Jobs and Wages
Let's get real about the state of our economy. Yes, it's growing and the stock market seems unstoppable. But when it comes to what matters most to the average American - employment and income growth - it's not quite as rosy.
Decoding the Job Growth Numbers
Recent job growth figures painted a somewhat positive picture, with 130,000 jobs added. However, upon closer inspection, things aren't as stellar as they seem. Over half of the new jobs were in the healthcare sector, with construction contributing another 33,000. Other industries, however, remained stagnant. This sluggish growth rate is almost at its lowest in more than a decade.
What's more, these figures come after a lackluster year of job growth. The disappointing trend seems to be continuing, with the previous year's already weak growth now revised downwards to a mere average of 15,000 jobs per month.
Is AI to Blame?
Can we point the finger at artificial intelligence (AI) for this lackluster performance? Not quite. It's not the direct culprit. Instead, employers appear hesitant about hiring due to the unpredictable political economy. But AI does play a role. Many businesses are weighing up the potential impact of AI on their operations and holding back on hiring in anticipation of future changes.
The Spin on AI
Despite these concerns, AI enthusiasts are going all out to sell us on the benefits of AI for the average person. They paint a picture of AI as a miraculous invention that will revolutionize our lives. But is this depiction accurate?
Recently, some companies have started selling the idea that AI could enable shorter work weeks. The theory is that as AI takes over more tasks, employees will be able to reclaim more of their time, thus achieving a better work-life balance.
While this might sound appealing, it's important to remember that as work hours decrease, so too will pay. If AI takes over part of a worker's role, that worker will likely have to take on additional jobs to maintain their current income.
The Potential Impact of AI on Inequality
AI has the potential to exacerbate income inequality. If productivity increases as AI becomes more prevalent in the workplace, each worker will, in theory, produce more value. However, increased productivity does not necessarily translate to increased wages. In fact, despite rising productivity, median wages have barely kept up with inflation.
Furthermore, the benefits of AI are likely to be unevenly distributed. Over the last four decades, the benefits from productivity gains have primarily gone to the wealthiest 10%. Now, with AI threatening to displace white-collar jobs, these benefits could become even more concentrated, potentially benefiting only the wealthiest 0.1%.
Looking to the Future
So where does this leave us? If the five-day workweek becomes a four-day workweek, then a three-day workweek, and so on, AI could replace much of our work and reduce our earnings. While AI may create a dazzling array of products and services, the majority of us may not be able to afford them.
However, this doesn't have to be our fate. If AI does deliver significant productivity gains, we could all benefit - but only if we have the bargaining power to demand our share of those gains. This may necessitate reviving labor unions, or enacting laws to distribute the gains more equitably, such as a Universal Basic Income or wealth taxes to fund essential services like child care, elder care, and universal health care.
Ultimately, the owners of AI have a vested interest in ensuring that most people can afford the products and services that AI produces. But until then, we should be skeptical of claims that AI will 'free up' our time. The real question is not whether AI can deliver productivity gains, but whether these gains will be broadly shared.