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Planet Money
Planet Money

Is AI slopifying the job market? (Two Indicators)

December 03, 2025 • 18m

Summary

⏱️ 7 min read

Overview

This Planet Money episode explores how AI is transforming the job market, particularly in hiring and recruitment. Through two detailed stories, the show examines whether AI represents a new Industrial Revolution, analyzing both the economic impacts on labor share and the surprising benefits of AI-powered job interviews. The episode features research from economists studying financial sector workers and a real-world experiment with an AI recruiter named Anna that interviewed 70,000 job candidates.

AI's Impact on White-Collar Work: A New Industrial Revolution?

Ford CEO Jim Farley makes a dramatic prediction that AI will replace half of all white-collar workers, prompting an investigation into whether AI represents a 21st century Industrial Revolution. Economist Laura Veldkamp from Columbia Business School draws parallels between today's AI adoption and the historical Industrial Revolution, examining how both technologies fundamentally changed the relationship between labor and capital. The section explores how AI is both replacing jobs and making workers more productive, particularly in knowledge work.

  • Ford CEO Jim Farley predicts AI will replace literally half of all white-collar workers in the U.S.
  • Economist Laura Veldkamp compares AI's impact to the Industrial Revolution, focusing on knowledge production rather than physical goods
  • AI is affecting fields like coding and customer service while also helping workers be more productive with tasks like writing emails and analyzing data
" Artificial intelligence is going to replace literally half of all white-collar workers in the U.S. "
" I started thinking about the process of knowledge production because AI doesn't produce cups and plates and goods. It produces knowledge. "

The Labor Share Paradox: Smaller Slice, Bigger Pie

Laura Veldkamp's research into the financial sector reveals a key parallel with the Industrial Revolution: workers are receiving a smaller share of company profits, but paradoxically earning more money overall. Her study predicts AI could reduce labor's share of income by 5%, similar to what happened during industrialization. However, workers with AI skills are earning $22,000 more annually because the overall economic pie is growing, raising complex questions about fairness and wealth distribution.

  • Labor share of income represents both how important labor is to output and what share of income workers should receive
  • AI could lead to labor share of income in knowledge work dropping by 5%, similar to the Industrial Revolution
  • Workers with AI skills in financial sector make about $22,000 more per year than those without, despite getting a smaller slice of company profits
" We find that a worker who has AI skills in the financial sector is making about $22,000 a year more than somebody who doesn't. So they may be getting a smaller slice of the pie at their firm, but their firm's likely to be much more profitable. "

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