U.S. Labor Share of Income

Nearly all forecasters expect the decline in the U.S. labor share—"from roughly 68% in 2001 to 58% in 2024"—to continue. The core difference among forecasters is by how much. Moderate-decline respondents tend to anchor on the existing trendline, particularly for near-term outcomes. One notes, "labor share moves like a supertanker," and another that, "labor share tends to change slowly because it is embedded in deep institutional and economic structures…labor markets adjust with demographic cycles measured in decades." These forecasters see AI as contributing to future declines, but in a way that fits neatly into the existing, long-term drive toward automation and that also includes other major drivers, such as "globalization, capital deepening, and structural shifts in bargaining power." Major-decline respondents argue that advances in AI will significantly accelerate the existing trend, particularly when it comes to long-term outcomes: "The U.S. labor share has decreased by roughly 10 p.p over the past 40 years…transformative AI will produce a similar decline in the labor share, but in less than half the time."

Major-decline respondents view AI as primarily substituting for labor across expanding domains. One writes: "By [2040] it is likely that we will have made such significant gains in AI developments that AI systems can outperform humans at: a) nearly cognitive tasks and; b) a significant share of physical tasks. This means that we will see an unprecedented decline in the labor share for nonfarm sectors such as finance, insurance, information technology and others where a small remaining share of employees occupy managerial positions or those around maintenance of AI systems and infrastructure." Moderate-decline respondents typically envision a slower AI-diffusion timeline and stress that AI is likely to change the nature of, but not eliminate, human labor: "Near-term AI adoption is more likely to reconfigure tasks and increase capital intensity within occupations rather than fully displace labor at scale," writes one, and another that "if AI and automation increases labor productivity in manufacturing…and a bigger share of labor is used in the provision of personal services that are not really suitable to automate (e.g. personal care), then it's possible that the labor share will increase."

Many moderate-decline respondents cite the potential for government policies to act as a stabilizing force. "Robots don't vote humans do," writes one, adding, "governments could decide that some classes of jobs should be reserved for humans…many non-traditional professions require a licence, which is often just a job protection measure." Another notes the question outcome "does not just depend on the technology but also on how regulation will react to a decline in labor share. Such a reaction could be to enforce a higher labor share, to implement something closer to universal basic income, or to do neither." Major-decline respondents express skepticism. One writes, "It is possible to stem this drop but it will require greater political will and cooperation than has been apparent in the last 25 years." Another notes that not all mitigating responses would stem the labor share decline: "I expect mounting political discontent and calls for windfall taxes or UBI by the early 2030s, government transfers generally do not count as 'labour share' in BLS methodology, so even if society adapts to keep humans materially comfortable, the technical metric will still crater."

Many major-decline respondents argue that most AI-generated value will flow to owners of capital: "The rise in AI will increase productivity and profits, but those yields will go to shareholders, not the actual workers."; "Labor share will tend to go down, unless we do something about the inequality between labor and capital. Given the current trends it is unlikely to happen." Although a minority, several forecasters argue countervailing wage pressures exist, particularly from demographics: "Perhaps more important in the short term is the aging population in the U.S. and the decline of immigration. That will put pressure on the labor market and might increase pressure to drive this upward."

Moderate-decline respondents argue labor share cannot fall indefinitely without systemic breakdown: "It obviously can't go to zero, because then no one is earning a living...otherwise there will be no income earned by people to spend on the goods that the AI-assisted businesses are selling." Major-decline respondents either don't engage with this argument or tend to point to the possibility of an exceptionally low floor, with one writing: "My median of 25% assumes a post-scarcity or ASI-driven economy where biological human labour has been relegated to a niche prestige market."