👀 Are we facing an imminent AI-powered wage collapse?

I have some bad and some good news...

Continuing improvements in AI could trigger a collapse in wages across broad segments of the workforce, University of Virginia professor Anton Korinek suggested in an essay for the IMF last year. The claim was backed up by a deeper pre-print earlier this year and I just rediscovered it.

The researcher posits different scenarios: (1) traditional, non-AI, business-as-usual world, and (2) AI scenarios dependent on the quality improvements and deployment rate of AI.

The good news: AI should be very good for growth.

The better news: wages will rise.

The unsettling news: those wage curves are inverted parabola. Wages plummet toward zero as AI systems become increasingly capable.

But let’s take a deep breath.

The adaptation story we’re missing

I’ve spent decades watching how humans interact with increasingly capable machines.

In the 1980s, as a teenager programming dynamic systems, such as solar system or population-ecosystem simulations on my BBC Micro, I discovered something crucial: when machines become better at specific tasks, humans don’t disappear. We shift their focus to higher-order activities.

As I got better at writing these simulations, I didn’t stop building them. I investigated more and more. If someone had a better approach than me, which I’d usually find in a magazine, I’d type in their code and modify it. I didn’t disappear; instead, I spent more time designing, observing and analysing these systems.

I used to build dynamic simulations of planetary systems and populations on the BBC Micro Model B computer.

This pattern of human adaptation isn’t new. Throughout history, we’ve seen entire job categories vanish completely: from lamplighters to human computers. Our changing beliefs about the world change what we choose to value. Yet each time, society has adapted and new forms of activity have become collectively valued.

JPL’s ‘human computers’. Credits: NASA/JPL-Caltech

Human capability isn’t bounded, it’s continuously expandable. And that means new professions emerge that are impossible to predict. As machines fulfil our basic needs, human work may shift from economic necessity toward actualisation and belonging. This is already happening - who would have predicted yoga teaching or van-life influencers as valued professions a century ago? The value increasingly comes from the human element itself, like artisanal crafts being valued precisely because they’re made by people, even if machines could produce technically superior versions (see my old slide deck on why future of work could be more like artisanal cheese).

Why timing changes everything