Fed's Barr: US should prepare for 'serious' AI job disruption, widening inequality
SPY•Fed Governor Michael Barr said the US should prepare for serious short-term job-market disruption from AI and warned that gains could concentrate among investors. The labor share of national income reached a record low of 52.8% in the second quarter of 2026.
1. AI could disrupt jobs
Michael Barr said the US should prepare for serious short-term job-market disruption as artificial intelligence is deployed, potentially displacing workers at scale and widening inequality. He said the extent of the effects remains uncertain and depends partly on how quickly AI is adopted and whether small businesses can access it.
2. Uneven gains are a risk
Barr said competition among AI companies could make the technology widely accessible, while increased market concentration could direct gains toward owners and investors in companies that displace workers. The labor share of national income, a rough measure of wages compared with business profits and equity income, fell to a record low of 52.8% in the second quarter of 2026, after holding roughly between 60% and 65% from World War Two until early this century. Barr said there has been relatively little worker displacement so far, but AI may already be substituting for labor in some sectors, especially among younger, less-experienced workers.
