This will only get worse because the pool of available un-skilled or moderately skilled labor is about to get much larger. And of course supply and demand will prevail driving down wages.

Consider Uber. They openly are embracing driverless cars. This is being driven (pardon the pun) by Artificial Intelligence (AI). Accountants have said for years that you should remove repeating costs from business processes. This can take many forms but one of the easiest is human labor. So a driverless Uber car that only requires an initial investment and minimal maintenance costs, when compared to driver wages, makes sense for their business model. Other hidden benefits also surface like the fact that a driverless car cannot decline a fare and create more idle time. AI can always route the car for a pickup that can arrive the quickest or use less fuel or whatever is needed to optimize profit without human thought anomalies. It will do the same when picking the route to the destination … again without human thought anomalies and more concrete data like traffic patterns for all routes to the destination. All of this efficiency will also translate into fewer cars needed to accomplish the same number of passenger fares so less overall investment is required.

Also consider that Tesla and every other major car company is doing most of the R&D for Uber to make driverless cars a reality. Unless regulations severly limit their use this will be one of the early mass successes for AI and it will transform the wage model for an entire industry. You say the investment will be huge to acquire the cars but I would propose their stock price will rise and investors, at least for a while, will line up to provide the cash to purchase driverless cars.

This is just one example of removing that repeating cost, human wages, from various business processes. Many more will follow.

If you are a stockholder or a CEO all of this sounds very good but doing this on a mass scale has some very serious downsides.

Over time this will relegate large groups of people to just being irrelevant to society. No business will need most of this pool of unskilled labor. So if we don’t some up with some sort of Universal Basic Income they will simply starve … or maybe this will be the start of anarchy … but that will take a while. The other downside is the demand side. When large numbers of people have very little disposable income then the demand for these more efficient AI driven industries will start to fade.

But before massive starvation starts and demand shrinks significantly, supply and demand will depress wages even further and stock prices will go even higher due to improved cost models and profitability. And of course then CEO compensation will go up … for a while.

I am not sure this will be a massive shift that will occur first or Mother Nature will cause some other catastrophic economic event triggered by climate change. No matter what happens first our economic lives and our economic models as we know them will “hit the fan”.

The good news and the bad news …

Either way the problem of CEO is likely to correct itself and those that survive will get to see the result. The key being “those that survive”.