Average Is Over. That’s the title of a seminal book by the American economist Tyler Cowen, looking at the impact of emerging technologies such as artificial intelligence on the work we do. Cowen points to AI having a potentially profound effect, creating a “bifurcated” labour market: lots of low-paid roles at the bottom, those at the top getting paid even more, and middle-income white-collar occupations getting hollowed out by automation.
Cowen’s book came out a decade ago but new data in recent days looks to support his predictions. The number of vacancies for UK graduates, apprenticeships and other junior positions has fallen by 31.9 per cent since the launch of the AI tool ChatGPT in November 2022, for instance. This sobering finding from Adzuna, the recruitment website, covers a period when British companies such as BT announced plans to use AI in place of thousands of human workers.
Only this week, the Wall Street Journal revealed that the e-commerce giant Amazon was on the brink of using more robots than humans in its American warehouses. More than a million robots are now deployed across its distribution network.
This automation drive may well mean fewer warehouse jobs in future. Amazon’s chief executive, Andy Jassy, has also announced that mid-tier white-collar roles are also likely to be cut. “As we roll out more generative AI and agents … we expect that this will reduce our total corporate workforce,” he has said.
At the same time, we’re seeing evidence that the AI wave is driving higher salaries at the top end of the tech sector, where it is already having a real-world impact on software engineering. Large language models (LLMs) turn out to be really good at writing code. This is tough for entry-level and mid-tier programmers who are at risk of being replaced. But for the very best, these AI tools make them even more productive, and mean the companies they work for need fewer staff.
The current wave of AI start-ups is generating significant revenues with smaller teams to a greater degree than any previous generation of technology companies. One example: Midjourney, a popular AI image generator, hit £150 million of annual income with only ten workers — an eye-popping £15 million per staffer. So AI may come to mean fewer tech positions overall but those who are employed could earn astronomical sums.
How astronomical? Well, over the past few weeks Meta’s founder, Mark Zuckerberg, has been offering signing bonuses worth tens of millions of pounds to elite AI programmers, with chunky salary and share packages on top. Zuckerberg is also investing £11 billion in the AI start-up Scale AI, primarily to recruit its founder Alexandr Wang, a 28-year-old MIT maths prodigy, to run Meta’s “superintelligence” AI division.
Cowen puts it starkly: “If you are a programmer who is only slightly better than the bots, you may lose respect and income. The exceptional programmers … will command more attention and status. And as successive generations of [AI models] improve, these rewards will be doled out to a smaller and smaller percentage of humans.” In other words, lots of middle-class professions get squeezed, while the rewards at the top become ever greater.
So far, so worrying — unless you happen to be an MIT whizz-kid. Over the long term, it does seem inevitable that AI will squeeze the life out of many white-collar roles. At the same time, if you’re a partner at a law firm or accountancy practice, you may well see your income increase, because you need fewer staff beneath you and your career strengths — human relationships, network, strategy and so on — are hard for AI models to replace.
Most importantly though, what about the jobs that are lost? It’s obviously a tragedy for the families that relied on those salaries, and for the youngsters whose career plans are right now being upended.
That being said, as the brilliant business analyst Benedict Evans has observed, there’s nothing fundamentally novel about automation: humans have been using technology to automate work for two centuries. As Evans points out: “Every time we go through a wave of automation, whole classes of jobs go away, but new classes of jobs get created. There is frictional pain and dislocation in that process… but over time the total number of jobs doesn’t go down, and we have all become more prosperous.”
Back in 1800, few could have imagined that a century later, hundreds of thousands of Britons would be working on the railways or lighting gas lamps in cities. And in 1900, no newspaper writer fretting about industrialisation could have foreseen that by 2000, large numbers of Brits would be working in roles as unimaginable as IT managers or HR professionals. If the past is any guide, the same will be true in Britain in a hundred years.
It’s tricky to predict what the professions of the future will look like, but Cowen is a ballsier man than I am, and he’s forecasting that occupations involving “emotional intelligence will rise in importance, as it’s one of the few things machines can’t replicate”.
Cowen therefore prophesies growth in fields such as care of the elderly and children, as well as roles such as coaches, therapists and personal trainers, because these tasks, which depend on interpersonal skills, are extremely hard for AI models to emulate.
And Cowen — much like the cerebral Reid Hoffman, who co-founded LinkedIn — also foresees a surge in demand for human workers who know how to work effectively alongside AI. This might include data analysts and AI trainers, but also “hybrid professionals” such as medical staff and management consultants using AI to work more productively.
For anyone wanting to apply for one of these AI enabled careers some day, Cowen thinks “the key question will be: are you good at working with intelligent machines or not?”
Of course, no one really knows how all this will play out, not even ChatGPT. (I’ve asked it.) But my hunch is this: the average may indeed be over, but another equilibrium will soon emerge — as it always does. And however turbulent the transition ends up being, this new normal will quickly come to feel pretty average.
Daniel Finkelstein is away