The Indicator from Planet Money How much is AI actually affecting the workforce?
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Sep 4, 2025 Explore the impact of artificial intelligence on the workforce, comparing it to the Industrial Revolution. Discover how AI may displace jobs while simultaneously enhancing productivity. Insights reveal a potential 5% drop in labor income for knowledge workers in finance. Wage disparities emerge for those with AI skills, echoing historical trends of monopolies. The discussion poses critical questions on wealth distribution and regulatory challenges in today's AI-driven labor market.
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AI Changes Knowledge Production
- Laura Veldkamp frames AI as changing the knowledge production process rather than manufacturing goods.
- She compares this transformation to earlier shifts like the Industrial Revolution to guide analysis.
Industrial Revolution's Mixed Legacy
- Historian Josh Freeman recounts broad life changes from the Industrial Revolution, like life expectancy doubling over generations.
- He balances gains with harms, noting early industrial urban life worsened health until reforms improved conditions.
Labor Share Drops As AI Scales
- Veldkamp measures AI's effect using the labor share of income to see how firms split profits between capital and workers.
- She finds AI could shrink the labor share in knowledge work by about 5%, while raising productivity and firm profits.