When I started studying AI, one assertion kept jumping out at me in every course I took. In each case, it was some variation on the breathless claim that “AI will increase productivity.” One course quantified the sentiment as “Generative AI could elevate productivity growth by 1.5% over the next ten years.” Regardless of the exact number, it was always presented as an unalloyed benefit that I, a worker, would be happy to be “more productive.” And I might be, except for a second breathless claim I encountered frequently: AI will increase businesses profitability. The same course that quantified productivity growth also predicted the technology would produce a “38% boost in profitability.”
Notice that? Workers will be more productive, and businesses will reap the profits.
Does that sound familiar? It should. Because AI isn’t creating this problem—it’s accelerating one that’s been going on for forty-five years.
After World War II, workers fought for fairer pay. Wealth holders and workers struck an uneasy bargain, in which workers got a fair share of the wealth created by rising productivity. On average, in the years from 1948 to 1979, productivity grew by 2.5% per year. In the same period, worker compensation grew by almost as much, at an average annual rate of 2.1%.
But the wealthy chafed at labor getting a fair share of rising productivity. They believed that the new wealth it created belonged to them, not the people who did the work to create it. Starting in the late 1970s, lowered tax rates on top incomes and anti-worker deregulation efforts decoupled the link between productivity and pay. Between 1979 and 2024, worker compensation increased by 29.4% overall, while productivity increased by 80.9%. Productivity grew almost three times as much as pay!
Where did the money go? It went into executive compensation, which rose over 1,322% while worker pay rose only about 12%. It went into returns to shareholders and other wealth owners.
The money didn’t go into my paycheck or yours. While billionaires fund 600-million-dollar weddings and take joyrides into space, you and I wonder how to pay for repairs to our cars and houses and how we’ll afford groceries.
The only ones who profit from increased productivity have been the ones who aren’t being productive. If you and I haven’t benefited from rising productivity and profits without AI, why should we be excited about AI accelerating the gap between the wealthiest humans and those who work for a living?
AI isn’t causing this problem, but it is accelerating it. We can’t un-invent the technology, but that doesn’t mean we have to accept the consequences of rising inequality as inevitable. Our parents and grandparents organized and fought for a fair share of rising productivity. We can do the same.
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Semantics & So On 