What if Labor Becomes Unnecessary

The leading A.I. labs aren’t making hundred-billion-dollar bets because they expect A.I. to have minor effects on the labor market. They are betting on achieving artificial general intelligence (A.G.I.), which could substitute for human labor across much of the economy. And the investment numbers are staggering. In the past year alone, Alphabet, Meta, Microsoft and Amazon have collectively spent more than $300 billion, primarily on A.I. infrastructure. This is more than triple what they spent just a few years ago.

As I think about the eventual employment effect, I’m struck that this huge spending isn’t creating many jobs even at the A.I. companies themselves. It is notable how few people work at these labs. OpenAI has roughly 4,000 employees and is valued around $500 billion. Anthropic has about 2,300 employees at a $350 billion valuation. Either way, that’s roughly seven or eight employees per billion dollars of market capitalization. Compare that to Walmart, which has 2,200 employees per billion dollars of value. The equivalent number at Ford is about 3,000.

So I think we may be asking the wrong question. The employment effects we are looking for may simply be lagging indicators of a transformation that’s already locked in by the capital being deployed. A.I. may ultimately be beneficial by revolutionizing scientific discovery, health care and human well-being. But we should be preparing now for the possibility of significant labor market disruption, rather than waiting for it to show up conclusively in the statistics...

For two centuries, labor has been the scarcest factor in our economy, leading to wages that have risen far above preindustrial levels. Human workers were the bottleneck, and being the bottleneck made us valuable. But if labor itself becomes optional for the economy, that would be very different.

When a machine can do a worker’s job, the worker’s wage eventually falls toward the machine’s cost. Yes, new jobs will emerge as they always do. But the machines will learn them faster and do them more cheaply. The reassuring historical patterns depended on humans being needed to run the economy. Remove that bottleneck, and we are facing something qualitatively different: a permanent shift in who, or what, captures the gains from economic growth.

The good news is that artificial general intelligence would generate enormous economic gains. The same forces that may diminish the value of labor would also dramatically increase total output. The challenge is ensuring that humans share in that abundance when our labor is no longer required to generate it. Historically, wages have been the primary mechanism for broadly distributing the benefits of economic growth. We may soon need new mechanisms that decouple income from labor: broad-based capital ownership, universal basic income or approaches we haven’t yet imagined. We need to start building those institutions now.

by David AutorAnton Korinek and Natasha Sarin, NY Times | Read more:
Image: NYT