Reading at Beginner level
Two of America's top economic leaders—Treasury Secretary Scott Bessent and Federal Reserve Chairman Kevin Warsh—say artificial intelligence will soon make the country much wealthier. But a growing number of analysts are asking: who will actually benefit? Right now, the answer appears to be corporations, not workers. Workers' share of total U.S. income has fallen to 52.8% of the economy's total output, the lowest level since the government started tracking this number in 1947. Meanwhile, corporate profit margins just hit a record high at 14.9% of the economy. This gap widened even before AI became widespread—it's the result of a decade of automation, companies cutting costs after hiring too many people during the pandemic, and big investments in new equipment.
The worry is that AI could make this divide even worse. Historically, when new technology arrives, a small number of large companies grab most of the gains first. That's what happened during the railroad boom in the late 1800s and the internet revolution of the 1990s. Eventually, the benefits spread to smaller companies and workers earned more. But AI is different: it requires massive upfront spending on data centers and computer equipment. Last month alone, the U.S. imported $450 billion worth of these specialized computers on an annualized basis—up from roughly $50 billion a year in 2023. Here's the catch: most of this equipment is made overseas. When companies buy imported servers, the economic boost goes to other countries, not America's workers. One economist warns that there may be no floor to how low workers' share can go, as long as profits keep flowing mainly to large corporations and a handful of successful firms.