## Introduction: A Longstanding Effort to Reduce Labor Costs For as long as workers have demanded fair pay and benefits, companies have looked for ways to reduce labor costs. Tactics like **downsizing**, **outsourcing**, **streamlining**, **understaffing**, and **automation** have been commonplace. If a business can reduce payroll expenses by eliminating jobs, it often will. ## A Shift Driven by Artificial Intelligence Recent advances in **AI**, including **large language models (LLMs)**, **general-purpose robots**, and **generative AI**, are accelerating this trend. While these tools are far from perfect and have faced skepticism, they are already replacing jobs—and they are improving rapidly. ## The Corporate Perspective: Efficiency Over Employment For corporate executives and business owners, AI offers appealing cost savings. Systems powered by AI can replace or reduce teams, increase productivity, and cut labor costs. A notable example is a small media company that used to employ a part-time editor to remove backgrounds from images. Now, **Adobe’s AI tools** can handle this task instantly, requiring no manual effort. ## Job Loss Data: The Impact of AI Integration A **Metro G survey** of 697 companies revealed stark data: - Companies **not using AI** in 2023 hired **89% more agents** than those that did. - Companies that adopted AI in call centers **laid off 26.1% of their staff**, on average.\ This is particularly concerning in industries like call centers, which have already been heavily affected by **outsourcing** and **automation**. ## The Ford Parable: Labor and Consumer Power The story of **Henry Ford** doubling his workers' wages to ensure they could afford a **Model T** is often cited as an example of enlightened capitalism. While this tale is partly myth—Ford’s real motive was reducing employee turnover—it highlights a critical truth: **workers need income to consume products**. If mass layoffs become widespread due to automation, consumer spending will fall, hurting business revenues. ## A New Strategy: Catering to the Wealthy To counteract shrinking consumer markets, some companies are shifting their focus. Rather than producing for the masses, they are targeting **wealthy consumers** who have the means to spend. This strategy is evident in industries like **gaming**. ## Case Study: The Gaming Industry's Freemium Model The video game industry, now larger than the **movie**, **music**, and **television** industries combined, has mastered a **freemium pricing model**: - Games are free for most, but **“whales”** spend thousands or millions for exclusive perks. - These whales are often wealthy individuals who derive income from **assets**, not labor.\ AI and automation could make **income-producing assets** far more valuable than labor in the future, reinforcing this trend. ## A Growing Luxury Market: The Rise of Ultra-Wealthy Consumers Luxury markets are booming: - **Lamborghini** sold more cars in the last decade than in all previous decades combined. - **Luxury brands** like **Bentley**, **Ferrari**, **Patek Philippe**, and high-end **gyms**, **hotels**, and **private jets** are seeing record sales.\ This signals a rise not only in billionaires but also in the number of **ultra-wealthy consumers**. ## The Stagnation of Labor Value While the value of **assets** has surged, the value of **human labor** has remained stagnant. Those who invested—even modestly—have seen massive gains. Meanwhile, investing has shifted from a retirement strategy to a **necessity for basic financial security**. ## The Future: Asset Owners vs. Workers If AI continues to replace labor, the value of **human work** will decline, while the value of **assets**—owned by investors and corporations—will rise. This could accelerate wealth inequality. ## Universal Basic Income: A Potential Policy Response Some advocate for **Universal Basic Income (UBI)**—a government-provided payment to all citizens, regardless of employment status—to offset lost wages due to automation. While UBI could provide a safety net, it signals a **worst-case scenario** where traditional employment becomes largely obsolete. ## Conclusion: A Trend, Not a Revolution AI is not initiating a new trend—it’s **amplifying** an ongoing one. Companies are already **adapting to a world** where fewer people can afford traditional consumer goods. Understanding how **money, labor, and wealth** interact in this evolving economy is crucial for both workers and businesses.