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.
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.
Work, in the era of AGI, is defined in one of two categories:
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:
And here is the bad news from the 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.
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 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
The Bleeding Edge is the only free newsletter that delivers daily insights and information from the high-tech world as well as topics and trends relevant to investments.
The Bleeding Edge is the only free newsletter that delivers daily insights and information from the high-tech world as well as topics and trends relevant to investments.
