"While full AI role displacement will happen in certain roles, history shows that wage resets are a more common, insidious, and often equally disruptive way that new technologies affect workers. AI (like past tech waves) slashes the skill floor for once-premium jobs, flooding labor supply and compressing wages."
"One is what she called an 'intra-sector squeeze,' where workers who lose jobs in an industry compete for the remaining roles in the same field, pushing wages down. As factories closed or automated and manufacturing moved overseas, laid-off workers fought for a shrinking pool of domestic manufacturing jobs, and real wages declined."
Clara Shih, former CEO of Salesforce AI, argues that wage reductions represent a more significant threat to workers than outright job displacement from artificial intelligence. Historical patterns show that new technologies typically trigger wage compression rather than mass layoffs. Three primary mechanisms drive wage decline: intra-sector squeezes occur when displaced workers compete for remaining positions in their industry, reducing compensation; technology lowers skill barriers for specialized work, expanding labor supply and compressing wages; and workers transitioning to new fields often accept lower pay. Manufacturing provides a clear precedent, with 5.5 million US jobs lost between 2000 and 2017 as factories automated or relocated, forcing remaining workers into shrinking domestic positions at reduced wages.
#ai-labor-market-impact #wage-compression #technology-displacement #worker-economics #skill-requirements
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