AI will supercharge productivity. Will workers benefit?
Productivity growth, or the ability to produce more per hour, is supposed to make everyone richer. The idea is that greater productivity allows companies to make more money, which workers and owners share through higher wages and more valuable businesses. But since the 1980s, productivity gains have gone almost exclusively to executives and owners of companies, leaving average workers behind and fueling the widest wage and wealth gaps on record.
Enter artificial intelligence, which promises greater productivity growth than any technology before it. If AI delivers, and those productivity gains continue to elude everyday workers, wage and wealth gaps will widen further, perhaps significantly, adding to the burdens that high rates of economic inequality are already placing on the economy, the labor market and the political and social environment. It doesn't have to be this way, and now is the time to consider policies that would help everyone share in AI's anticipated bounty.
The divergence between productivity growth and pay raises, which has swelled over the past four decades, is well known to economists. I'm citing numbers from the Economic Policy Institute, but they're roughly the same no matter how one slices them. What they show is that productivity and compensation for ordinary workers grew in near lockstep from the end of World War II through the 1970s. Since then, however, productivity has grown nearly four times faster than pay for ordinary workers, the difference going to shareholders and the most highly paid workers.
The results are glaring. Wage ratios — the difference between the highest- and lowest-paid workers — have surged in recent decades. The best known among them, the CEO-to-worker pay ratio, climbed to
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