You can hear it in the elevators if you walk into an office tower in midtown Manhattan on a Tuesday morning. Not exactly rumors of layoffs. Something more subdued. With a hint of humor, someone asks, “What if AI doesn’t replace us?” “What if it simply lowers our costs?” Perhaps it is the most disturbing question.
Job losses have dominated news stories for the past year: chatbots taking customer service calls, algorithms creating research notes, and AI programmers replacing junior workers. However, a more subtle change is taking place within businesses that hardly ever makes the headlines: titles and roles are still in place, but pay is starting to decline. Wall Street may not actually be placing bets on mass unemployment. It might be placing a wager on margin growth.
| Category | Details |
|---|---|
| Core Concern | AI compressing white-collar wages rather than eliminating roles |
| Key Industries Affected | Finance, Tech, Consulting, Legal, Media |
| Parallel Force | Stock buybacks reducing headcount the “old-fashioned way” |
| Market Reaction | Increased focus on productivity metrics and margin expansion |
| Broader Issue | Corporate control of employee knowledge and automation tools |
| Reference |
It appears that investors think artificial intelligence would increase production. With AI technologies helping with modeling and sketching, one analyst can now perform the tasks of three, so the organization doesn’t necessarily have to terminate them. It might just employ fewer new people. It might provide lower beginning pay. Wages even out over time. There are no viral headlines created by that slow compression. It doesn’t result in impressive severance benefits. All it does is rebalance expectations.
A financial services company recently demonstrated their internal AI system in a conference room with glass walls and a view of the Hudson River. In a matter of seconds, the application could create compliance notes, prepare client communications, and recap earnings calls. Senior managers gave a signal of approval. Silently, a junior associate gazed at the screen. He wasn’t being eliminated by the software. Parts of him were being absorbed by it.
Employees seem to be preparing for the wrong conflict. Losing one’s job is the loud dread. Bargaining power might be the less obvious threat.
Technology has produced new jobs and replaced others throughout history. While craftspeople were displaced by the industrial revolution, engineers and factory supervisors were created. Although print media was decimated by the internet, digital marketing and app development were born. This cycle, according to optimists, will recur. However, there is one significant difference: AI records knowledge.
An organization is stifling institutional memory when it trains an internal AI system using years’ worth of staff output, such as emails, reports, and code. People used to live with that memory. It now resides in shareholder-owned software. And historically, efficiency has been a top priority for shareholders.
It’s difficult to overlook the fact that many of the same companies maintain aggressive stock buybacks while executives hail AI’s potential. After all, buybacks increase profits per share without generating new employment. They represent the traditional approach of upward value transmission.
In this context, AI turns into a tool and a distraction. The thought of robots taking control fascinates us. We envision futures from movies. In the meantime, labor economics is subtly reorganized by corporate finance. Entry-level analysts may still be employed, albeit at lower salary ranges, as “AI augmentation” justifies.
Leaner project teams are already being tested by consulting firms. AI research assistants are being used by law firms to cut down on the number of billable hours needed for specific assignments. Media companies need fewer editors when they employ generative tools to generate initial versions of their material.
The jobs are still there. The premium degrades. Seeing this play out is strangely familiar. Many industries cautiously rehired after the 2008 financial crisis, frequently at reduced wages. That dynamic might be accelerated by AI and woven into the very fabric of the company.
The question of control is another. Who owns the results if AI systems are trained using staff knowledge? Has an experienced financial analyst unintentionally trained her replacement—or merely diminished her value—if she feeds years of insights into internal models that subsequently automate some of her duties?
Whether pay compression will spread or stay sector-specific is still up in the air. Talent that is highly specialized may fetch higher prices. For instance, engineers creating AI infrastructure are earning enormous sums of money. However, the core of corporate America—mid-tier knowledge roles—may be under attack.
For its part, Wall Street seems more concerned with margins than with morale.
Executives regularly mention “operational efficiency” and “AI-driven productivity” on recent earnings calls. Cost reductions are rewarded by analysts. The price of shares is gradually rising. Regarding long-term pay patterns, few questions remain.
Ironically, a workforce with stagnating salaries is unable to continue to support consumption. Where does the surplus go if production increases and salaries stagnate? To capital, more and more.
There’s a subdued anxiety as you watch people filing into the subway outside a brokerage office at dusk. Nobody appears to be easily replaced. However, many might be recalculated.
The anxiety on Wall Street these days isn’t about pink slips appearing out of nowhere. It has to do with wages slipping as output standards rise. AI can change the economy without displacing jobs.
