Fears of an employment apocalypse resulting from businesses adopting work-automating artificial intelligence (AI) tools have thus far – happily – proved unfounded. But a new analysis does detect another way that employees most exposed to the tech are being negatively affected: with a painful squeeze on their salaries as employers seek higher returns on AI investments.
That mix of good and bad news on AI’s labour market impact came in a whitepaper by asset management firm Apollo. Its analysis of Anthropic enterprise usage data through 2025 found “no detectable employment effects” in terms of significant job destruction. By contrast, it did determine “that high-exposure occupations experience a 6.7% decline in real wage growth post-2023.” Based on that, the report concluded that employers “are capturing AI productivity gains through wage compression rather than workforce reduction.”
That should be enough to send the majority of workers already stressed about growing financial pressures they face into full wig-out mode. However, the Apollo paper notes that the drag effect of AI tools on worker pay is so far visible only in a certain segment of the workforce – people being paid modest incomes in the first place.
“The effect is concentrated among the lowest earners: service workers face a 24.3% decline and the bottom wage quartile a 10.7% decline, while top earners show no significant effect,” it said.
Elsewhere, it noted the most exposed professions included customer service reps, travel agents, administrative clerks, telemarketers, and others whose functions are most often being automated by AI apps.
Limited salary affects set to spread over time
However, there are two major “buts” to consider before people doing other jobs breathe a sigh of relief about the security of their employment or salaries.
The first is that even in these relatively early days of AI workplace adoption, 3.7% of the entire US labour force – representing over five million people – is already experiencing tech-related declines in real income. That’s occurring as inflation rises, and employers limit wage hikes as part of their efforts to attain higher returns on their AI investments.
The second “but” is that, while that initial portion of affected workers is “significantly lower than theoretical estimates have projected over the past three years,” it’s set to both increase and to spread to even less exposed professions in coming years. Indeed, other occupations described as increasingly at risk due to automation include white-collar mathematicians, astronomers, economists, and insurance underwriters.
“Today, 5.8 million workers are affected, but as AI adoption deepens across corporate America, this figure is likely to grow substantially, with significant implications for income inequality and labour market policy in the years ahead,” the study noted.
Given that, it called the group of employees now most exposed to AI’s impact “a harbinger” of what people who’ve thus far been spared income compression will also face.
‘More occupations will cross the threshold’
That’s because while Apollo researchers don’t foresee the oft-decried and much dreaded employment apocalypse that AI critics have predicted, they do think the initial drag on lower wages will spread as the tech automates and improves tasks by higher-paid and more senior employees.
“AI adoption across corporate America remains in its early stages, and as firms integrate these tools more deeply into their workflows, more occupations will cross the threshold themselves,” the report said, warning today’s 5.8 million figure “almost certainly understates what is coming” in coming years.
“As AI adoption deepens across corporate America, the true number of workers feeling these effects could grow substantially beyond what current exposure measures capture,” it added. “The workers affected today are best understood as the leading edge of a much larger adjustment.”
The consequences of those adaptations may mercifully mean far fewer jobs being destroyed by AI than some may have feared. However, that may be offset by more and more employees watching their pay decrease in real terms, as employers accord smaller or no salary raises over time.
While the highest-paid and least-exposed executive roles will likely remain mostly unaffected, the study says the impact for millions of people further down on the employment ladder is something that businesses and governments need to prepare for right now.
Indeed, while authors of the Apollo paper offered no evidence for AI critics who warn the tech will swiftly wipe out countless jobs, they echo detractors’ calls for business and government leaders to prepare for the effects of wage constriction they already see on the march.
In particular, they said leaders need to take stock of and create plans to deal with expected declines in “income inequality and living standards” for people experiencing AI-driven wage compression. Authors also added that such preemptive efforts should focus especially on “lower-wage workers who have the fewest resources to weather the transition.”
The importance of establishing that support system quickly is all the more urgent with the number of people and kinds of jobs exposed to AI salary compression set to increase, and to start climbing the occupational and corporate ladder.
“The critical policy question is not whether AI will reshape the labour market more broadly,” the report concluded, “but how quickly, and whether workers will have the support they need when it does.” – Inc./Tribune News Service
