In the early days of AI adoption in the workplace, many debated whether the move would result in job losses, or whether it could create enough new jobs to offset cuts.
Now a few years in, employers may be capturing productivity gains not through workforce reductions but through wage compression, July 30 research concluded.
Workers in roles with high exposure to AI have seen an estimated 6.7% decline in wage growth post-2023, according to researchers at asset management firm Apollo. The dip was more pronounced for the lowest earners such as those in service occupations, according to the research.
This phenomenon is likely to grow substantially as employers integrate AI tools more deeply into workflows, the researchers wrote. Those in high-exposure roles — 5.8 million U.S. workers or roughly 3.7% of the labor force — are a harbinger with “potentially profound implications for income inequality and living standards, particularly for lower-wage workers who have the fewest resources to weather the transition.”
“The critical policy question,” researchers concluded, “is not whether AI will reshape the labor market more broadly, but how quickly, and whether workers will have the support they need when it does.”
Employers may have to square AI-related cost savings with a workforce that is less financially secure. Workers have already voiced concerns that their compensation is not keeping up with costs, and PwC research from April indicated that employees who are stressed about money may have lower productivity and engagement rates.
In response to those concerns, some employers have turned to financial education and benefits. Employees have increasingly welcomed those offerings, but when it comes to total rewards, most still say cash is king.
