Asger Risom
Economists warn that recent productivity gains linked to AI are flowing largely to corporate profits rather than worker pay, reviving concerns that today’s technology boom may echo the wage stagnation of earlier industrial revolutions.
Artificial intelligence is boosting productivity across corporate America.
But many workers say they are not seeing the rewards — even as profits rise.
A growing body of economic analysis suggests that recent productivity gains are flowing primarily to companies rather than employees. Analysts at the Bank of America Institute have warned that while output per worker is improving, wages and salaries are shrinking as a share of US GDP.
“Profits are gaining ground vs. wages,” the economists wrote, noting that “recent productivity gains have been piling as corporate profits, with labor income steadily falling as a share of U.S. GDP.”
Echoes of the past
The pattern recalls what economic historian Robert Allen described as “Engels’s pause” — a period in the early Industrial Revolution when productivity surged but worker pay stagnated for decades.
In 19th-century Britain, factory output soared thanks to new machines, yet laborers saw little improvement in living standards for years.
Only after political and economic shifts did wages begin to rise alongside productivity.
Some economists now see parallels. US job growth has cooled significantly compared with 2024, yet economic output continues to expand.
Bank of America economists estimate roughly 2% annualized GDP growth in the fourth quarter, suggesting higher productivity per worker even as hiring slows.
Is AI the driver?
It remains unclear how much of the recent productivity boost stems directly from artificial intelligence. Analysts note that productivity began rising during the pandemic, driven by remote work, digitalization and leaner staffing.
However, sentiment has shifted in recent weeks. Warnings of an AI “takeoff” have gained traction, and nearly $1 trillion was wiped from software stocks amid fears that AI tools could replace engineers faster than expected.
Stanford researcher Erik Brynjolfsson argued recently that the US may be moving from an AI investment phase into a “harvest phase,” where spending begins to translate into measurable productivity gains. He wrote that US productivity growth roughly doubled in 2025 compared with the prior decade’s trend.
“The productivity revival is not just an indicator of the power of AI,” Brynjolfsson wrote. “It is a wake-up call to focus on the coming economic transformation.”
A widening disconnect
While corporate leaders often frame AI as an efficiency breakthrough, worker sentiment appears more skeptical.
A Gallup poll found that six in 10 Americans distrust AI, and most support regulations prioritizing safety and oversight.
Meanwhile, a Harvard Business Review survey reported that 76% of executives believe their employees are enthusiastic about AI adoption — compared with just 31% of individual contributors.
Many workers fear being required to train systems that could eventually replace them. At the same time, higher-income households have been cushioned by stock market gains, while wage growth has lagged broader corporate profitability.
Bank of America analysts described the imbalance as another driver of a “K-shaped economy,” in which gains accrue disproportionately to capital owners rather than labor.
Whether wages eventually catch up — as they did after earlier industrial revolutions — remains uncertain. For now, productivity may be rising, but not everyone feels richer because of it.
Sources: Bank of America Institute; Bureau of Labor Statistics; Harvard Business Review; Gallup; Erik Brynjolfsson essay
