Why AI may increase economic inequality over the years
What jobs are most at risk for automation?
Early waves of AI, like robotics, ended up automating a lot of routine, manual work. That automation affected mostly blue-collar jobs, such as those in manufacturing. However, more recent waves of automation, like generative AI, will automate more routine, cognitive work. This automation will affect many white-collar jobs, such as administrative work.
Nowadays, it’s practically a truism to say that these waves of automation in business technology will be economic disruptors. Nevertheless, it’s worthwhile to consider what this disruption will mean to working people. Here’s how AI may increase economic inequality (unless we take steps to mitigate this risk—more on that point below).
Technological unemployment or lower pay
One immediate consequence of AI may very well be technological unemployment. In other words, many workers could lose their jobs if their work becomes fully automated.
Then again, even if AI doesn’t fully automate their work, it may still automate significant tasks from their work. Either way, the result could be less of a need for workers who previously performed those tasks. Lower demand for their work, in turn, would likely reduce hiring and decrease wages.
Winner-take-all markets
Another consequence of AI will likely be the dominance of winner-take-all markets. For example, whichever software engineer programs the best AI will end up with all or most of the profits. Why? Because few businesses will pay for second-rate programs, especially if another business has a better one to outcompete them.
The result would be a greater concentration of wealth among fewer individuals and organizations. Unfortunately, this sort of a scenario would not be a rising tide that lifts all boats.
If AI may increase economic inequality, what can we do to mitigate the risk?
Although AI may increase economic inequality, there are steps we can take to mitigate this risk. One solution could be implementing a negative income tax, guaranteeing a minimum income for anyone unable to earn enough. (Such a tax might be paid for by taxing capital gains or profits from automation.)
Another solution could be creating affordable, lifelong learning programs, offering easy access to continuing education and retraining. Personally, I think there’s good reason to support general education (having versatile knowledge of many fields, with one or two areas of expertise—a.k.a. a liberal arts and sciences background) as well as specialized trades and professions (from mechanics and engineers to cybersecurity analysts and computer programmers).
Whatever the solutions, they’ll need to help build both economic security and technological infrastructure needed from AI’s disruption.
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Hi,
Thank you for this insightful and thought-provoking article on the potential for AI to increase economic inequality. Your analysis of the possible risks and societal impacts was very enlightening. It’s a crucial topic that needs more attention, and I appreciate the balanced perspective you provided.
Looking forward to reading more of your thoughtful content!
Best regards,
Jaseph
This is a thought-provoking article highlighting the potential challenges of AI-driven economic inequality. While AI offers incredible advancements, it’s essential to address its societal impacts responsibly. Industries like sports, for example, use technology to bring fans closer to the action—platforms like IPL 2025 updates demonstrate how tech can bridge gaps and create inclusivity. Great read, and thanks for sharing these critical insights!