AI boosts wages 2.5% when augmenting jobs, cuts 2.3% when automating

A new working paper reveals that artificial intelligence exposure in the workplace correlates with higher wages among U.S. workers, but the impact depends critically on whether AI augments or automates job tasks. The research, conducted by the Washington Center for Equitable Growth using data from Anthropic’s Claude.ai conversations, found that while overall AI exposure increases wages by 0.5 percent, automation-focused AI reduces wages by 2.3 percent while augmentation-focused AI boosts them by 2.5 percent.

What you should know: The study builds on previous research by analyzing real-world AI usage patterns rather than relying on subjective assessments.

• Researchers analyzed conversations with Anthropic’s Claude.ai chatbot to measure how frequently specific work tasks are either augmented (supported) or automated (replaced) by AI.
• They linked these AI queries to the U.S. Department of Labor’s Occupational Information Network (O*NET) task framework and weighted tasks by their frequency in different occupations.
• The methodology provides a more data-driven approach compared to earlier studies that relied on “collective judgment” to predict AI exposure.

Key findings on demographics: AI exposure patterns reveal significant disparities across different worker groups.

• Women tend to work in occupations with higher AI exposure compared to men, a trend consistent across most racial groups.
• Workers with college educations and higher incomes are more likely to work in AI-exposed occupations, regardless of race.
• White and Asian American workers overall work more in highly AI-exposed occupations compared to Black and Hispanic workers.

The wage impact breakdown: Different types of AI deployment have opposing effects on worker compensation.

• Overall AI exposure shows a “statistically significant and positive but minor effect” on hourly wages, with each 1 percent increase in exposure correlating with a 0.5 percent wage increase.
• Automation-focused AI exposure reduces wages by 2.3 percent for every 1 percent increase in exposure.
• Augmentation-focused AI exposure increases wages by 2.5 percent for every 1 percent increase in exposure.
• The researchers note that these “relatively minimal overall effects” may mask larger opposing influences from different AI applications.

Why this matters: The research provides crucial insights for policymakers and business leaders navigating AI implementation in workplaces.

• The findings suggest that AI’s impact on worker welfare depends heavily on deployment strategy rather than simply the presence of AI technology.
• Workers in higher-paying, higher-education jobs face greater AI exposure but may benefit more from augmentative applications.
• The results highlight the need for nuanced policy approaches that distinguish between AI uses that support versus replace human workers.

What the researchers conclude: The study’s authors emphasize the importance of understanding AI’s dual nature in workplace applications.

• “Artificial Intelligence has the potential to improve some workers’ wages if it helps them do their jobs more effectively and efficiently. But AI is equally likely to reduce workers’ wages in areas where it can substitute for workers.”
• They recommend that “policymakers should be cognizant of these differences when regulating the development and workplace deployment of artificial intelligence.”