Washington, Nov 13 (IANS) US Federal Reserve Governor Michael Barr warned on Thursday that Artificial Intelligence (AI) could concentrate wealth among a small number of companies and their owners, urging society to prepare for possible disruption to jobs even though worker displacement has so far been relatively limited.
In remarks at a Yale University event, Barr said the distribution of AI’s benefits would depend partly on competition, workers’ bargaining power and whether the technology replaced people or helped them become more productive.
“That said, we should be prepared for the possibility of serious short-term disruptions in the labour market that need to be managed effectively to ensure the benefits of AI are realised over the long term,” he said.
Wider competition could make AI inexpensive and broadly available, helping small businesses gain access to skills and information. Concentration among a few dominant developers could instead direct much of the return towards owners of capital, he said.
If leading AI companies captured most investment returns, their managers and owners could become substantially wealthier, while smaller businesses struggled to obtain comparable technology, he said. That could increase market concentration and reduce labour’s share of income.
The warning was accompanied by a more measured account of what has happened so far.
“So far, there has been relatively little displacement of workers by AI and some significant evidence that the transition to AI is enhancing the productivity of some workers, increasing demand in some sectors, and even creating new occupations,” Barr said.
Competition among AI companies had also kept access relatively broad, he said. Some businesses might be able to meet most of their needs through smaller language models rather than the most advanced systems, allowing benefits to spread more widely.
However, Barr said signs of substitution were emerging in some sectors, particularly among younger and less-experienced workers.
Tasks with predictable outcomes and clear boundaries might be automated more quickly, he said. Work involving judgement, relationships, coordination or creativity could instead be more likely to benefit from technology that complemented human skills.
Investment in training, new jobs and helping workers move between occupations would influence the extent of disruption, Barr said.
“In my judgment, now is the time for society to begin to consider how to address these potential challenges—while AI adoption is in its relatively early stages—so we can realize the long-term benefits for society,” he said.
Barr placed those risks against an already unequal distribution of wealth. Citing the Federal Reserve’s latest Survey of Consumer Finances, he said the wealthiest 10 per cent of households held nearly three-quarters of wealth, while the bottom half held about 2 per cent.
He also said labour’s share of national income had fallen to a record low of 52.8 per cent in the second quarter of 2026. Measurement issues explained some of the decline, but the downward trend remained after adjustments, he said.
Barr said inequality had both widened and narrowed over the past century, shaped by technological change, education, taxation, regulation and workers’ bargaining power. Its course was not fixed, and policy choices played an important role.
The remarks built on his earlier speeches examining AI’s possible effects on employment and living standards.
–IANS
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