Historically, many have feared that automation would lead to mass unemployment and lower wages. Yet, despite massive improvements in automation in the

AGI could drive wages below subsistence level

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2025-01-25 20:00:05

Historically, many have feared that automation would lead to mass unemployment and lower wages. Yet, despite massive improvements in automation in the last two centuries, average wages have risen, living standards have improved, and high unemployment has not become a persistent, long-term issue as many had expected. This historical pattern has led most economists to adopt the following optimistic view: automation typically creates at least as many opportunities as it destroys, and its overall impacts on wages are positive.

But artificial general intelligence (AGI)—defined here as a technology that can functionally substitute for human workers in all labor tasks—may defy these historical precedents. Unlike past technologies, which typically automated specific tasks within industries, AGI has the potential to replace human labor across the entire spectrum of work, including physical tasks, and any new tasks that could be created in the future. Because of this, AGI might disrupt labor markets in an unprecedented way.

In fact, there is a straightforward case for why developing AGI could drive human wages below subsistence level—the bare minimum needed to sustain human life. This argument states that if there are essential but scarce factors of production that cannot be quickly scaled through investment, then these constraints will push down the marginal productivity of labor. Over time, this could drive wages down to the point where they can only barely cover the cost of sustaining labor. If AGIs are fully capable of substituting for labor, this minimum sustaining cost would likely rest below the level required for human survival.