“People have the wrong intuition” about AI’s impact on wages. Products can become cheaper if AI is capable enough to perform complex tasks at low cost. Yale professor explains.
Artificial intelligence may put pressure on wages, but this may not necessarily mean a direct loss of quality of life for workers.
“People have the wrong intuition when they say, ‘if AI can do my job for ten dollars an hour, my salary will drop to ten dollars and my life will be terrible’, but “what matters is not the salary in dollars, but what you can buy with it”, he starts by saying Pascual Restrepoassociate professor of Economics at Yale University, in the university.
The economist — which studies how technology reshapes labor markets, wages and economic growth — argues that if AI is capable enough to perform complex tasks cheaply, then it could also reduce the cost of producing many other goods and services.
In this scenario, even if nominal wages fall, workers’ purchasing power could be maintained or even increase, thanks to the general fall in prices. In other words, the central question will not just be how much you earn, but the cost of living in an economic context transformed by automation.
“A world where AI can perform research or teach at this cost is a world where AI is extremely capable and can produce many other goods and services at low cost“, he states.
The debate over AI’s effect on wages continues to rage.
has intensified. Ioana Marinescu, associate professor at the School of Social Policy & Practice at the University of Pennsylvania, told *Business Insider* that
especially as some experts have warned that workers’ incomes could plummet with the rise of AI. Ioana Marinescu, associate professor at the School of Social Policy & Practice at the University of Pennsylvania, tells what the Salaries may start to fall when around 37% of cognitive tasks are automated.
This would be the point at which technology stops mainly complementing human work and starts replacing it on a larger scale. And that moment, Marinescu warns, could come sooner than many anticipate if AI adoption continues to accelerate.
Furthermore, salary cuts tend to be one of the most common and discreet ways in which new technologies impact the job market, sometimes more frequent than mass layoffs.
The most negative scenario will be one in which technology only affects certain professions, explains the Yale professor. Then the wages of the most exposed workers could fall without prices following suit. But for now, the economist describes the job market as being in a phase of expectation.
