Barr warns AI could widen income and wealth inequality

Barr framed AI’s effect on living standards as an open question in a speech titled “Will Artificial Intelligence Broadly Raise Living Standards or Drive Income and Wealth Inequality?”[1] He said AI could transform lives and the U.S. economy, potentially making workers more productive, with lower- and middle-income workers benefiting most.[1] But he also warned that AI could eliminate some jobs held by those workers while increasing the income and wealth of people who are already higher-income.[1] The distribution of gains, not productivity alone, is central to the risk he outlined.[1]

Barr said technological advances tend to raise living standards over the long run by increasing productivity and creating more jobs than they destroy.[1] He cautioned, however, that the number of people dislocated and the harm they may experience can be large and persistent.[1] The bottom half held less than 3% of wealth, compared with 59% held by the top tenth.[1] Barr said technology can widen these gaps when benefits accrue to relatively few people.[1]

He cited a difference in reported use: 43% of workers with graduate degrees used AI in the previous month, compared with 10% of workers with a high school degree or less.[1] He also said workers using the most advanced and expensive AI models might gain more than users of baseline models.[1] Together, those observations raise questions about who can access AI and which workers may face disruption.[1]

Barr said there had so far been little evidence of economy-wide job displacement from AI, though there was some evidence it may have made it harder for young workers to enter jobs in some categories.[1] He said surveyed workers who used AI were more likely to think it would improve their careers than replace their jobs.[1] Barr described concentration of AI benefits as a possible future scenario he was examining, not a prediction.[1] He said AI could instead become a cheap, widely available commodity if competition and distributed innovation prevail.[1] He urged consideration of policies across education, training, workforce development, competition and taxes.[1]