AI Reduces Salaries, Not Jobs, According to Apollo

The Unexpected Impact of AI on Wages

Artificial intelligence, often seen as a threat to employment, may actually have a more insidious impact on wages. According to a recent study conducted by Apollo Global Management, jobs that are highly exposed to AI have experienced a notable decline in wage growth in recent years. This analysis reveals that AI does not necessarily eliminate jobs, but it could negatively affect salary increases.

In a white paper, Apollo highlighted the professions most affected by this trend. The study, which examined wage and employment data for 321 occupations in the United States, found that jobs most exposed to AI recorded an average decline of 6.7% in real wage growth after 2023, a year marked by the growing popularity of ChatGPT. However, the overall impact of AI on employment remains difficult to detect, according to Sania Edlich and Torsten Sløk, analysts at Apollo. The main idea is that AI may not take away your job, but it could very well take away your raise.

The Most Vulnerable Workers

The study emphasizes that AI has primarily affected the wage growth of the lowest-paid workers. Service sector employees have seen an average decline of 24.3% in their income growth since 2023. Additionally, those in the bottom 25% of the income scale experienced a 10.7% decrease in their wages during the same period. In contrast, the highest-paid workers have not been significantly affected by this trend.

The report relied on data from the Bureau of Labor Statistics and took into account several challenges related to analyzing this information over time, including changes in job and industry classifications. Anthropic's Economic Index was used to assess job exposure to AI, based on the percentage of tasks performed using Anthropic's AI tools.

Professions and Exposure to AI

Among the professions most exposed to AI, some have already experienced significant changes in real wages. Here are a few examples based on comparative data from Apollo between 2022 and 2024:

• Computer Programmers: decline of -6.1% (AI exposure: 0.75)
• Statistical Assistants: decline of -5.4% (AI exposure: 0.51)
• Software Quality Assurance Analysts and Testers: decline of -2.9% (AI exposure: 0.52)
• Database Architects: decline of -2.7% (AI exposure: 0.58)
• Medical Transcriptionists: decline of -1.5% (AI exposure: 0.64)
• Sales Representatives, Wholesale and Manufacturing, Except Technical and Scientific Products: decline of -1.3% (AI exposure: 0.63)

Some professions, although less exposed to AI, have seen their wages drop due to broader industry factors. For example, broadcast advertisers and radio DJs experienced a 52% decline in their real wages over two years.

Wage Increases Despite AI

Despite moderate exposure to AI, some professions have recorded notable wage increases. Personal financial advisors, with over one-third of their tasks exposed to AI, saw their salaries rise by 8.4%. Similarly, administrative law judges, arbitrators, and hearing officers, with 30% of their tasks exposed to AI, benefited from a 17.5% increase during the same period.

The Future of the Labor Market

According to the document's estimates, about 5.8 million workers hold positions that are highly exposed to AI. "As the adoption of AI progresses in the American business world, this number could grow significantly, with important implications for income inequality and labor market policy in the coming years," Edlich and Sløk stated.

The idea that AI could destroy jobs has sparked debate, but evidence is mounting regarding its potential to reduce the incomes of certain workers. Ioana Marinescu, an economist at UPenn, pointed out that wages could begin to suffer when roles see about 37% of their tasks automated by artificial intelligence.

Historically, workers displaced from "technology-disrupted professions" have experienced a real wage decline of about 3% compared to other workers when they found new employment. Moreover, their real incomes have grown on average 10 percentage points less over the following decade, according to an analysis by Goldman Sachs.