Labor in the Age of AGI

Managing Editor’s Note: We hope everyone had fun last week with last week’s Bleeding Edge holiday editions… we certainly enjoyed handing the reins over to Grok for a special rendition of Twas the Night Before Christmas.

If you missed it, we ran Grok’s full poem in last Friday’s AMA, which you can find right here.

We’re excited to be getting back into the swing of things. And as we settle in and prepare to welcome a new year, we’re looking back on some of 2025’s most exciting and hard-hitting Bleeding Edge issues.

Today’s spotlight issue offers insight on what the mass adoption of AGI means for the future of work. As we close in on achieving artificial general intelligence, we are also approaching a critical shift. AGI is going to usher in unprecedented productivity and prosperity…

It’s also going to change the way we work and the way people think about work… Once AGI systems are integrated into workplaces across industries and the burden of automatable “intelligence work” falls to these systems, there will be an adjustment period to follow.

Entirely new industries, new kinds of wealth, and a level of abundance most people can’t even fathom yet… an entirely changed labor force… and likely the biggest labor shift in history.

This is what’s coming next. It may feel disconcerting, but as Jeff reminds us in today’s issue, where there is fear, there’s also opportunity for those bold enough to look and brave enough to act.

Read on for today’s Bleeding Edge…

Over the weekend, I caught up on some economic research out of Yale University.

The research focused on the impact of artificial general intelligence (AGI) on the labor market.

This is obviously something I think about quite a bit, and a very popular topic amongst subscribers who write in with questions.

Your concerns and questions are very valid, as the impact is already being felt.

The research is somewhat ominously titled, “We Won’t be Missed: Work and Growth in the Era of AGI.”

For those with any anxiety about what’s coming with AGI, you might want to skip this issue of The Bleeding Edge.

My personal mindset, however, is that the more aware we are of what’s coming, the better prepared we can be for the changes.

If you share my own mindset, this issue is a must-read.

Allocating Finite Resources

As with almost all academic research dealing with complex problems, we must acknowledge that generalizations, categorizations, and assumptions need to be made.

The topic of AGI and labor can be an emotional one for many people. It may feel “cold” to many of us who may feel as if the results of the research suggest that our human contributions to society are no longer economically valuable.

That definitely wasn’t the purpose of the research. It provides a useful framework – at a macro level – for how both industry and governments will make decisions about employing technology as a labor resource… versus using human labor.

And one of the key assumptions, which is valid, is that computational resources – “compute” – are finite. And as with all finite resources, the decision about how to allocate them comes down to where those resources are most economically valuable.

The other key point is that the rate of economic growth is constrained by the growth in computational resources. All we have to do is increase the amount of this finite resource, and we’ll experience a higher level of economic growth.

That makes perfect sense. It’s intuitive. After all, our ability to solve extremely complex problems and increase productivity has always been directly correlated to our computational resources.

For example, Google DeepMind’s breakthrough with AlphaFold – to create a repository of accurate predictions of how more than 200 million proteins are structured – would have been impossible without today’s GPU-based hyperscale data centers.

The same is certainly true for Tesla’s full self-driving AI, OpenAI’s breakthrough with Retro Biosciences (which we discussed in last week’s Bleeding Edge – Can AI Reverse Aging?), or with xAI’s industry-leading frontier AI model, Grok 4.

But it’s the simple categorization defined by the research of the two kinds of work that will rub many of us the wrong way. It will feel cold, overly simple, and too black and white for many.

But that doesn’t mean that it’s wrong.

Bottleneck or Accessory?

Work, in the era of AGI, is defined in one of two categories:

• Bottleneck work – these are tasks essential for economic growth
• Accessory work – these are tasks non-essential to growth.

Examples given for bottleneck work include: feeding and sheltering people, producing energy, maintaining the productive infrastructure of the economy, advancing science, decision-making, logistics and delivery, maintaining national security, and enforcing the law to maintain order and stability.

The key point is that an economy cannot continue to grow without these bottleneck tasks being performed.

This is common sense for most of us. Without law and order, we have chaos. Without strong infrastructure, the economy cannot function efficiently. Without energy production, very little would work.

Examples of accessory work include: work associated with arts and crafts, performing for others (i.e., entertainment), literature, hospitality, fine dining, design, customer support work, work related to religious and civic organizations, etc.

Conceptually, the idea is that AGI will be used to automate as much of the bottleneck work as possible. After all, it is a bottleneck. So, anywhere technology can be used to remove a bottleneck, a higher level of economic growth is achievable, assuming the continued increase in computational resources.

The research assumes that all bottleneck work will be automated with AGI. And, where necessary, it will be augmented with intelligent robots capable of interacting with the real world.

This is a point that I have long made about this idea of manifested AI. The industry has been building intelligent robots in a form that we can easily understand and interact with to help us achieve those bottleneck tasks…

The research concedes that some of the bottleneck work will be done in collaboration with human bottleneck workers – a point I agree with 100%.

Much of the accessory work, however, will likely be relegated to humans for two primary reasons:

• To save on computational resources. In other words, the value of the computational resources will be higher than the value of the accessory work being performed, so the work is left to humans.
• Accessory work will be delegated to humans to provide purpose to the labor force. It will provide stability and continuity during this transition to the widespread availability of AGI and computational resources to power it.

And here is the bad news from the research…

Our Purpose at Brownstone Research

Accessory work will no longer be a source for the increase in wealth and wages.

There will be an excess of human labor to support accessory work, which will provide a cap on wage growth. And in theory, the value of the accessory work will be deemed equivalent to the cost of computational resources for an AGI to take over an individual job.

That’s right. It won’t matter how many years of work we have under our belts, or how much experience we have… Our earnings potential will boil down to the cost of computational resources required to do our job.

And here is the kicker that we all know well: The cost of computational resources will continue to decline over time.

Does this suggest a decline in economic growth and productivity?

Absolutely not! Quite the opposite. We’re going to see a hyper-acceleration of economic growth at a pace faster than anything we’ve seen before. And wealth will increase dramatically as a result.

But, and there is always a but, it will be accumulated by those who produce energy, feed the development of computational resources, provide computational resources…

Those with the capital to leverage AGI to commercialize technological breakthroughs, and those who invest in the companies making all this happen.

This is precisely why Brownstone Research exists…

To empower self-directed investors to grow their wealth by being ahead of the curve… and by allocating capital into this once-in-a-lifetime Cambrian explosion of technological advancement.

Those who don’t do this will be relegated to accessory work with limited prospects for wage growth.

Where There’s Fear, There’s Opportunity

I know this can feel deeply disconcerting, and it will get our minds spinning about what it all means.

So here are some key takeaways:

• The labor disruption is already happening. AI-fueled reorganizations and layoffs have been a major theme this year and will increase with each year that passes.
• Individuals who embrace the use of AI will improve their positions and will be less likely to be impacted by the disruption in the near future.
• Engineering, science, and computer-science backgrounds will be rewarded, as they will be empowered to use AI to accelerate technological advancements.
• Those bottleneck jobs that require physical work in the real world will be well-suited to collaborate with robots to perform the work.
• Unless you are truly exceptional at what you do, accessory jobs will have limited wage growth.
• We will witness extraordinary economic growth and wealth creation unlike anything we’ve seen before. The world will become a better, more technologically advanced place.
• Incredible investment opportunities will be possible for those willing and able to allocate capital and position themselves to take part in this explosive growth.

The Japanese word for crisis is 危機, which is pronounced “kiki.” The first kanji means “danger” or “fear,” and the second kanji means “opportunity.”

It’s an appropriate word for what’s coming.

This crisis will be full of danger and fear. It will also be full of incredible opportunities.

Jeff