🔮 AI, jobs and Engels' pause

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This is the year that genAI gains mainstream acceptance in the workplace (i.e. executive approval). Talking directly with more than thirty CEOs and senior executives in Davos, I was surprised to see how fast they have acted. The overwhelming majority had generative AI-based projects underway. In one case, a CIO reported 26 GenAI projects in deployment.

Exponential View reader, John Romeo , led research for Oliver Wyman that surveyed 25,000 workers in 17 countries. Half of all workers were already using generative AI tools in work, with rates much higher in India and the UAE than in the US.

There is a pincer movement going on. Top execs are excited by genAI and front-line workers are using it, coupled with the comparative ease of integration (certainly compared to cloud migration, for example) this pincer could squeeze some of the internal resistance that stops large firms acting quickly.

Let’s not pretend this doesn’t create tensions. Older workers might find it hard to adapt, and middle managers could face a mid-career crisis, realising that their younger colleagues armed with AI make them redundant. The likely outcome is downward wage pressure: junior workers with AI competing with more expensive older workers for one, and the automation (and thus decrease in cost) of many cognitive tasks.

We might be entering an Engels’ Pause — a phase where economic and technological advancements precede improvements in workers’ living standards. This mirrors the early Industrial Revolution, where initial industrial expansion did not immediately enhance workers’ conditions, highlighting a disparity between technological advancement and societal progress. (Sam Altman and I discussed this very issue back in May when I raised the spectre of “Altman’s Pause”.)

Avoiding an Engel’s Pause might be possible. If economies adapt rapidly, workers might have the option to switch from roles where wages are declining to better ones. Policy interventions might also help mitigate this but could be expensive for governments, and lack political support.

*I got back from Davos late on Friday. It was incredibly interesting, and I will be sharing my takeaways with Exponential View members in the coming weeks. Become a member to participate.