Economists are investigating whether artificial intelligence is suppressing wage growth rather than causing mass unemployment, as recent data shows a potential link between AI exposure and slower pay increases.

Key Points

• A study by Apollo Global Management found that workers in AI-exposed roles saw real-wage growth 6.7 percentage points slower than those in less-exposed occupations since 2023.
• Labor's share of nonfarm business income fell to 52.8% in the second quarter of 2026, the lowest level recorded since 1947.
• MIT economist Daron Acemoglu suggests that the U.S. labor market's flexibility may cause AI to impact wages more significantly than total employment levels.
• Research from the Dallas Fed indicates that entry-level workers with less experience may face the greatest wage pressure as AI substitutes for routine tasks.
• Experts like David Autor argue that "AI exposure" is an incomplete metric, noting that similar roles can experience vastly different outcomes based on human expertise.

Why it Matters

The shift in focus from job displacement to wage suppression highlights a critical evolution in how businesses may capture productivity gains from new technology. If AI primarily compresses wages rather than eliminating roles, it could fundamentally alter career progression and the long-term economic stability of the modern workforce.