AI Causes Wage Compression for Exposed Workers

Research from several financial and academic institutions indicates that artificial intelligence is causing wage compression and slower earnings growth for workers in exposed occupations. This trend appears to precede significant employment displacement, suggesting the market value of specific automated skills is declining and reducing employee bargaining power.

Apollo Global Management found that real wage growth for workers in high-AI-use occupations lagged behind less-exposed roles by 6.7 percentage points after 2023, with the lowest-paid quartile feeling the most significant impact. Similarly, research summarized by IESE Business School noted a 4.5% drop in starting wages at AI-exposed companies following the release of ChatGPT, primarily affecting junior and mid-level employees.

PwC's 2026 Global AI Jobs Barometer distinguishes between two types of roles. In professionalised roles, where AI increases demand for human expertise, pay rose 37%. Conversely, in democratised roles, where AI reduces the need for specialized skills, pay rose only 26%. Additional data from the National Bureau of Economic Research showed a 2% reduction in relative demand for skills associated with high AI exposure over five years.