How AI Impacts Wage Dynamics

A new paper from David Autor, in collaboration with Neil Thompson, makes an important contribution to explaining how AI is likely to impact labor markets. Based on a rigorous model, confirmed with an analysis of 40 years of data, they provide a nuanced perspective on how automation impacts job employment and wages. Essentially, this depends on the extent to which easy tasks are removed from a role and expert ones are added, and how specialized a role becomes as a result. When jobs gain inexpert tasks but lose expertise, wages decline, but employment may increase. Think of how taxi driving became less specialized, and well-paid, but more common, due to Uber. In contrast, when technology automates the easy tasks inside a job, the remaining work becomes more specialized. Employment falls because fewer people now qualify, but the scarcity of expertise drives wages up. This is what seems to be happening with proofreading, which is now less about spell-checking and more about helping people to write, leading to lower job numbers but higher average wages. Their model helps us to understand the impacts of AI on labor markets. For instance, why AI tools can raise wages for senior software engineers, but decrease employment, while simultaneously reducing earnings, and increasing employment, for more entry level software engineering roles.

📌 “𝗙𝗼𝗿 𝗖𝗹𝘂𝗲𝘀 𝗢𝗻 𝗔𝗜’𝘀 𝗜𝗺𝗽𝗮𝗰𝘁 𝗢𝗻 𝗝𝗼𝗯𝘀, 𝗪𝗮𝘁𝗰𝗵 𝗧𝗼𝗱𝗮𝘆’𝘀 𝗧𝗲𝗰𝗵 𝗝𝗼𝗯𝘀”   I recently connected with Joe McKendrick to share my perspective on how AI is reshaping the tech workforce. Grateful to see our conversation featured in Forbes.   Joe underscores a point we’ve been emphasizing for months: 𝗔𝗜 𝗶𝘀 𝗻𝗼𝘁 𝗮 𝗵𝗲𝗮𝗱𝗰𝗼𝘂𝗻𝘁 𝗿𝗲𝗱𝘂𝗰𝗲𝗿—𝗶𝘁’𝘀 𝗮 𝗰𝗮𝗽𝗮𝗯𝗶𝗹𝗶𝘁𝘆 𝗺𝘂𝗹𝘁𝗶𝗽𝗹𝗶𝗲𝗿.   It moves the constraint from compute cycles to the Human Intent Layer, where talent, judgement, and abstraction become the new premium.   Fresh labor signals back this up: 🔹450,000+ US tech openings (CompTIA) 🔹AI-related job postings nearly doubled YoY 🔹50%+ wage premium for AI-fluency (PwC) 🔹Revenue per employee rising 3x faster in AI-driven sectors 🔹12%+ of tech job ads now reference AI—and climbing (Federal Reserve Bank of Atlanta)   As I note in the article, we’re not witnessing the end of software engineering—we’re seeing its evolution. Developers are becoming AI trainers, strategic integrators, and adaptive problem-solvers.   𝗖𝗼𝗱𝗲 𝗶𝘀 𝗮 𝗰𝗼𝗺𝗺𝗼𝗱𝗶𝘁𝘆. What matters is how well we frame problems, guide systems, and turn intelligence into outcomes.   Thank you, Joe, for the thoughtful conversation. To other leaders: where do you see this shift heading?   📖 Read the full article linked below.   #AI #FutureOfWork #TechJobs #Leadership

This video podcast - The Impact of AI on the Global Tech Talent Market - discusses the transformative impact of artificial intelligence (AI) on the global tech talent market, highlighting how AI is disrupting old business models and creating a new economic landscape. Pre-AI Market Dynamics: The podcaster first describes the successful business model that existed before the rise of AI. This model was based on a global talent pipeline where companies in developed nations, such as the US and Western Europe, recruited and hired tech professionals from developing countries, including Africa and India. Companies like Andela and Infosys facilitated this process. The system was mutually beneficial: developed nations gained access to skilled labor at a lower cost, while professionals in developing countries earned higher wages with significant purchasing power. Disruption by AI: The arrival of advanced AI tools, referred to as a "renaissance," fundamentally changed this dynamic. The core argument is that AI has become an "entry-level engineer," capable of performing many of the basic coding and development tasks that were previously outsourced to junior talent. This has led to a process of "disintermediation," where the need for human intermediaries and remote entry-level workers has been significantly reduced. Impact on Companies and Employment: The podcast provides specific examples of companies whose business models were shattered by AI. Companies like Andela and Infosys saw their primary value proposition—providing entry-level remote talent—diminished. The speaker also cites the struggles and bankruptcy of education companies like Chegg and 2U, whose services could be easily replicated by AI, which provides direct answers to student questions. This disruption has led to "massive dislocation" in the job market, affecting not only remote workers in developing nations but also new computer science graduates in countries like the US, who are finding it harder to secure entry-level positions. The speaker notes that companies like Microsoft and Google are laying off thousands of people, with AI taking over roles once filled by humans. The podcast concludes that AI is rewriting the "ordinance of the market system." In this new era, technical skills alone are not enough. The focus for businesses and individuals must shift to providing unique value that AI cannot. The speaker warns that this is just the beginning, predicting that in the coming years, even experienced engineers will face disruption as AI becomes increasingly sophisticated, reaching a level of "experience" that rivals their own. The message is a call for adaptation and a fundamental re-evaluation of what makes a person or a company relevant in an AI-driven world https://lnkd.in/eaAY_axV

Here's what caught my eye from PwC’s 2025 Global AI Jobs report on how AI is impacting jobs, wages, and skills 1️⃣ AI isn’t just a tech thing anymore. Every single industry is using it more — even ones you wouldn’t expect (like mining and construction). 2️⃣ Wages are growing FASTER in jobs that are more exposed to AI. Workers with AI skills are earning 56% more than others in similar roles. As workers use AI to create more value, they are...more valuable. 😉 3️⃣ Another surprising finding is that jobs that are highly automatable aren't disappearing. Those roles are just getting reshaped. They're automating the repetitive aspects so people can focus on higher-value work. 4️⃣ And as roles get reshaped, your skills need to change to match. Skills sought by employers are changing ❗66% faster❗ in occupations most exposed to AI versus roles less exposed to AI (like physical therapist). This shift in the job market is a signal — not to panic, but to get curious: How is your role going to change? What skills do you need to start developing now? How will your soft skills be even more critical to showcase? You don’t have to go back to school or become an AI developer overnight. But you do have to take ownership of your next chapter. I'm curious what are some of the most valuable tools or resources you're using to stay on top of AI? I'm always open to more recommendations. On my end, I read the The Neuron and Superhuman newsletters, routinely take AI-related LinkedIn Learning courses (and have joined some groups), and keep a post-it note on my monitor with the question "How can AI help me do this?" Drop your thoughts below — I’d love to hear them and what recs you have!

New! We analyzed a billion job postings globally, and the results may surprise you: job numbers and wages are rising. Let’s dive in. For the second year running, the 2025 Global AI Jobs Barometer from PwC shows that productivity and wages are not just rising, they’re accelerating, even in roles that are most amenable to automation. Our research spans six continents and includes data from 24 countries and territories. 💭 100% of industries are expanding their usage of AI (even industries less obviously exposed to AI such as mining and construction) 📊 Since 2022 when awareness of AI's power surged, productivity growth in industries best positioned to adopt AI has nearly quadrupled (while falling slightly in industries least exposed to AI) 3️⃣ Industries most able to use AI have 3x higher growth in revenue generated by each employee  🪙 Workers with AI skills command a 56% wage premium (up from 25% last year) ⚒️ Skills sought by employers are changing 66% faster in occupations most exposed to AI (like financial analyst) versus least exposed (like physical therapist) – up from 25% last year . AI continues to act as an amplifier of human expertise — not a replacement for it, despite what the headlines might suggest. The prime example being that job growth is occurring even in roles where "automation" is playing the biggest role (like customer service and software engineering). Job cuts and doomerism make headlines, but job creation takes longer to materialize and to be recognized. It’s the difference between weather and climate, and why we call this report a "barometer". As the shifting sands of the past two years begin to settle into clearer patterns, there’s never been a better time to dive in, get hands-on, and lead your teams through this transformation. Link to the full report below.

Anthropic analyzed 4 million Claude conversations to reveal how AI is actually being used across the economy, and the results shatter common predictions. Here's what they found: (1) Software and writing dominate - these two fields account for nearly half of all AI usage, with software development alone representing 37.2% of queries (2) Depth of integration varies significantly - while 36% of occupations use AI for at least 25% of their tasks, only 4% show deep integration (using AI for 75%+ of tasks) (3) Automation vs augmentation - contrary to popular belief, most AI interactions (57%) show augmentative patterns where humans and AI collaborate, rather than pure automation (43%) (4) Wage correlation surprises - AI usage peaks in mid-to-high wage occupations but drops significantly at both extremes, challenging previous predictions of the highest impact on top-wage and low-wage jobs The study provides the first large-scale empirical evidence of how AI is transforming work, confirming that AI is transforming work task by task, not replacing entire jobs overnight. Post + paper https://lnkd.in/gYJnWknN — Join thousands of world-class researchers and engineers from Google, Stanford, OpenAI, and Meta staying ahead on AI http://aitidbits.ai