How much is AI actually affecting the workforce?

Summary

Podcast Summary: How much is AI actually affecting the workforce?

The Indicator from Planet Money – September 4, 2025
Hosts: Darren Woods & Waylon Wong
Topic: Assessing the real impact of artificial intelligence on the U.S. workforce, especially white-collar jobs, by looking at historical parallels and new economic research.

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Episode Overview

This episode explores whether AI is truly revolutionizing the workforce as dramatically as some CEOs and commentators claim. The hosts interview economist Laura Veldkamp and labor historian Josh Freeman to parse the facts versus hype, drawing parallels between the current AI transition and the Industrial Revolution. The focus is especially on how AI is changing the allocation of profits (“labor share of income”) between workers and employers, and what the long-term implications could be.

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Key Discussion Points & Insights

1. CEO Predictions & Initial Hype (00:11–01:29)

• Jim Farley (Ford CEO) at the Aspen Ideas Festival: Predicted that “Artificial intelligence [is] gonna replace literally half of all white-collar workers in the U.S.” (00:47, paraphrased by hosts). The hosts react to the dramatic nature of these proclamations, comparing them to the societal shift during the Industrial Revolution.

2. Is AI Already Transforming Jobs? (02:42–03:22)

• Evidence suggests AI is replacing some jobs (e.g., coding, customer service) while making others more efficient by handling tedious tasks.
• Waylon Wong: “We did a recent episode where we heard from listeners who are using AI for manual or tedious tasks like writing emails and analyzing data.” (02:55)
• Economists are starting to study these effects empirically.

3. Parallels with the Industrial Revolution (03:22–05:43)

• Laura Veldkamp, Columbia Business School: AI, unlike previous technologies, produces knowledge rather than tangible goods, prompting her to study knowledge production processes.
• Josh Freeman, Labor Historian: Provides historical context, pointing out that the Industrial Revolution “both improved and diminished human life on practically a cosmic scale.” (04:37)
  • Quote: “If you look at England ... in the mid 18th century, 1750, the average life expectancy was less than 40 years. Today it’s around 80.” (04:50)
  • However, this improvement wasn’t linear; conditions worsened for many before eventually improving due to labor movements and government intervention.

4. Zooming in: AI’s Measurable Impact on Knowledge Work (05:57–07:14)

• Veldkamp studies the labor share of income—the portion of a firm’s earnings returned to workers.
• During the Industrial Revolution, the labor share dropped as machines reduced reliance on human effort.
• She and her colleagues focused on the financial sector due to its early adoption of AI.
  • Entry-level jobs in finance may now require less human involvement.
  • AI often complements higher-level tasks (i.e., “analyzing data to make investment decisions”).

5. What the Latest Research Finds (07:14–07:35)

• AI adoption is projected to reduce the labor share of income among knowledge workers by 5%—mirroring the pattern from the Industrial Revolution.
• Laura Veldkamp: “So if you think of, you know, profits or GDP as a pie, among firms that are adopting AI, workers are receiving a smaller slice of the overall pie.” (07:24)

6. Is This Bad News for Workers? (07:47–08:15)

• Not necessarily, because the overall “pie” (profit pool) is growing.
• Laura Veldkamp: “A worker who has AI skills in the financial sector is making about $22,000 a year more than somebody who doesn't ... That smaller slice is still more take-home pay.” (07:56)

7. The Risks of Concentrated Power (08:15–09:41)

• Veldkamp notes that the Industrial Revolution led to a few massive firms (e.g., monopolists/robber barons) capturing most of the surplus.
• Parallels raised about today’s AI landscape, but with a twist:
  • Freeman notes: “We're starting from extreme concentration ... kind of monopolized from the get-go.” (09:21)
  • The question remains: Will early AI adopters become entrenched monopolists, and how will that impact workers and consumers?

8. Open Questions for the Future (09:41–10:13)

• Policymakers, workers, and firms will need to decide how to distribute gains from AI-driven productivity.
• Drawing on history: Dividing the new “AI pie” could require years (or generations) of negotiation and struggle.

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Notable Quotes & Memorable Moments

• Darren Woods (on historical parallels): “It could be a 21st century version of the industrial revolution.” (00:51)
• Josh Freeman (on the mixed legacy of the Industrial Revolution): “In the biggest scale, you can see both the upsides and the downsides.” (05:13)
• Laura Veldkamp (on AI-era inequality): “A risk that we could follow the same path here, where early adopters become monopolists and have an enormous amount of market power and squeeze us as consumers and us as workers to get most of the rents.” (08:29)

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Timestamps for Key Segments

• 00:11–01:29 | Dramatic predictions about AI replacing white-collar work
• 02:42–03:22 | Real-world evidence: AI’s dual role in replacing and augmenting jobs
• 03:22–05:43 | Historical perspective: The Industrial Revolution’s lessons
• 05:57–07:14 | Measuring change: Labor share of income and knowledge workers
• 07:14–07:35 | Empirical estimate: A 5% cut in workers’ share of value in AI-driven firms
• 07:47–08:15 | AI-skilled workers may still come out ahead financially
• 08:15–09:41 | Old vs. new monopolies: Is the AI sector consolidating power faster?
• 09:41–10:13 | Open challenges: Dividing up the gains from AI

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Episode Tone

The conversation is brisk, informed, and a bit tongue-in-cheek—with both historical gravity and witty asides about “passive income dreams” and spam emails. The hosts strike a balance between cautioning against exaggeration and acknowledging significant change, expertly making complex economics accessible in under ten minutes.

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This summary captures the episode’s full exploration of AI’s current and potential impact on workforce dynamics, tying today’s technological upheavals to one of history’s greatest economic transitions.

Transcript

[Announcer]

Npr.

[Darren Woods]

This is the indicator from Planet Money. I'm Darren Woods.

[Waylon Wong]

And I'm Waylon Wong. A couple of months ago, Jim Farley, the CEO of Ford Motor Company took the stage at an event called the Aspen Ideas Festival. He was there to talk about the future of the economy and the importance of skilled trades. And, and as he sees it, something of a crisis.

[Darren Woods]

Hiring an entry worker at a tech company has fallen 50% since 2019. Is that really where we want all of our kids to go?

[Waylon Wong]

And then Jim Farley kind of just drops in this huge prediction.

[Darren Woods]

Artificial intelligence gonna replace literally half of all white collar workers in the U.S. half of all white collar workers. That is quite a pronouncement from the CEO of a major company. And Jim Farley's not the only executive talking in these dramatic terms about how AI might upend the economy as we know it. Like it could be a 21st century version of the industrial revolution.

[Waylon Wong]

You mean like a generations long transformational era of human history that will change life forever for you and me?

[Darren Woods]

Well, we only have nine minutes. So today on the show we will talk to an economist who's found one small but fascinating way to measure the impact of AI on workers. That's coming up after the break.

[Waylon Wong]

We sum up all of human progress.

[Darren Woods]

We can do it.

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[Waylon Wong]

Edu when it comes to AI and the future of work, we've seen evidence that AI is doing what Ford CEO Jim Farley talked about. It's replacing jobs in fields like coding and customer service.

[Darren Woods]

We've also seen how AI can help people be more productive or efficient at work. We did a recent episode where we heard from listeners who are using AI for manual or Tedious tasks like writing emails and analyzing data.

[Waylon Wong]

This is a burgeoning area of research for economists like Laura Veldkamp. She's a professor at Columbia Business School. And the debate over whether AI is replacing or complementing jobs got her mental wheels turning.

[Laura Veldkamp]

I started thinking about the process of knowledge production, because AI doesn't produce cups and plates and goods, it produces knowledge. And so, in thinking about the knowledge production process and how it was changing, I was looking to history to guide my thinking about, well, when else have we seen major changes in production processes? And it seemed like the Industrial Revolution was the most natural parallel.

[Darren Woods]

The Industrial Revolution took more than a century to unfold and spanned multiple continents. It is really difficult, probably verging on irresponsible, to summarize such a large, complex era of human history, but that's what Josh Freeman is here for.

[Josh Freeman]

I'm a historian, and I studied the history of labor and industry in particular.

[Waylon Wong]

If you had lived during this period of history, what job do you think you would want?

[Josh Freeman]

Ah, well, I would like to be a rentier, where you didn't have to have a job. You just lived off the labor of your tenant farmers or the interest off of your bonds. You know, early industrial work was mostly not pleasant.

[Waylon Wong]

Passive income is the dream, Darian.

[Darren Woods]

Or at least so many emails are informing me in my spam folder.

[Waylon Wong]

Those are sent by AI. Anyway, Josh says that when you zoom out on the Industrial Revolution, you can see how it both improved and diminished human life on practically a cosmic scale.

[Josh Freeman]

If you look at England, which is usually considered the first place for the Industrial revolution, in the mid 18th century, 1750, the average life expectancy was less than 40 years. Today it's around 80. So that's the most basic measure. And you've doubled. On the other hand, you and I and everyone else is facing a planetary crisis from the Industrial Revolution that may seriously impact the future of our species. So, you know, in the biggest scale, you can see both the upsides and the downsides.

[Darren Woods]

Of course, this increase in life expectancy was not a straightforward or linear path. People's health actually got worse as they moved into crowded, polluted cities and worked dangerous factory jobs. It took generations of organized labor activity, government regulation, and advancements in healthcare to change these conditions.

[Waylon Wong]

Ultimately, Josh says the Industrial Revolution redefined people's relationship with their home life, with nature, even with their basic sense of time. And it's too early to know whether AI is upending human civilization in the same way.

[Darren Woods]

But economists like Laura Veldkamp are trying to study AI related changes in smaller doses. And they're doing this by zooming in on things they can measure. Laura set out to capture essentially how bosses and workers are splitting profits. There is a technical term for this. It's called the label share of income.

[Waylon Wong]

So think about the money that a business makes. Some of that money comes back to workers in the form of wages and benefits, and that percentage is the labor share of income.

[Laura Veldkamp]

It both represents how important labor is in the output, what share of value it's adding, but it also represents what share of the income that labor should receive.

[Darren Woods]

Laura says the labor share of income fell during the Industrial Revolution. This is because the adoption of new machines meant less human labor went into producing goods.

[Waylon Wong]

Laura wanted to know if this is happening with AI and today's knowledge workers. So she and a colleague studied workers in the financial sector. They picked that industry because it's been an early adopter of AI.

[Darren Woods]

There is entry level work that Laura thinks will require less human involvement over time, like maintaining databases and then moving up the career ladder. AI is more of a compliment than a substitute. For example, Laura says workers at financial firms are using AI to analyze data to make investment decisions.

[Waylon Wong]

And here's what Laura and her colleague found in their research. They predict that AI could lead to the labor share of income and knowledge work dropping by 5%.

[Laura Veldkamp]

So if you think of, you know, profits or GDP as a pie, among firms that are adopting AI, workers are receiving a smaller slice of the overall pie.

[Darren Woods]

Laura says this 5% decrease is similar to what happened to the labor share of income during the Industrial revolution. So that's one potential parallel between then and what's happening with AI today.

[Waylon Wong]

And Laura says it's not necessarily bad news for workers that they're getting a smaller slice of the pie, and that's because the overall pie is getting bigger.

[Laura Veldkamp]

We find that a worker who has AI skills in the financial sector is making about $22,000 a year more than somebody who doesn't. So they may be getting a smaller slice of the pie at their firm, but their firm's likely to be much more profitable. And so as a result, that smaller slice is still more take home pay.

[Darren Woods]

A smaller slice of a bigger pie. So this gets us into big questions about fairness, like how should workers and corporations split profits? Laura says the Industrial revolution offers lessons here too.

[Laura Veldkamp]

What we saw in the Industrial revolution is that there were a few firms that adopted these new technologies and became monopolists. This was the era of robber barons, right? And the, you know, great capitalists and they were insanely rich at a time when most people were desperately poor. And so I think there's a risk that we could follow the same path here where they're early adopters that become monopolists and have an enormous amount of market power and squeeze us as consumers and us as workers to get most of the rents.

[Waylon Wong]

Concerns about a small group of companies controlling those rents or, you know, the AI pie are on Josh Freeman's mind too. He points out that in the US There used to be lots of automakers and steel makers and airplane manufacturers. These industries got concentrated over multiple decades. Josh says so far, AI seems to be different.

[Josh Freeman]

We're starting from extreme concentration. That's the way it's beginning. So that is a somewhat different dynamic kind of monopolized from the get go. And will that shape way this unfolds across the society? And who benefits? You know, those are still very open.

[Darren Woods]

Questions, open questions that Laura says policymakers and regulators will have to grapple with. You know, if AI is going to make all those companies more productive and wealthy, how should those spoils be divvied up?

[Waylon Wong]

And if the Industrial Revolution is any guide, figuring out how to share this pie could take generations of struggle between government regulators, bosses and workers and computers. Oh, I forgot about the computers.

[Darren Woods]

Yes, they're waiting in the wings. Do not cut them out.

[Waylon Wong]

This episode was produced by Cooper Katz McKim and engineered by Robert Rodriguez. It was fact checked by Sierra Juarez and edited by Paddy Hirsch. Kagan Cannon is our show's editor and the indicator is a production of npr.

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