AI is driving up the wages of those in experienced positions of employment while reducing entry-level opportunities in the job sectors most exposed to AI, according to a research report written by J. Scott Davis, published on the Federal Reserve Bank of Dallas website.
The study notes that wages are growing for those job roles that require the kind of knowledge employees gain from experience, which is known as 'tacit' knowledge, while job opportunities for entry-level positions, which concern roles that rely on the worker's 'codified' knowledge or information once can obtain by reading textbooks are dwindling.
"The distinction between codifiable and tacit knowledge further suggests that AI may substitute for entry-level workers but augment the efforts of experienced workers," the study said. "The data indicate that wages are rising in AI-exposed occupations that place a high value on a worker's tacit knowledge and experience," it added.
The study noted that employment in the computer systems design and related services sector, which is the most impacted by AI has declined by 5% (since 2022) with job seekers under the age of 25 bearing a majority of the brunt of this development. Older workers have not seen a similar dip in their employment opportunities when it came to the aforementioned sectors.
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The study cited an article by economist Tyler Atkinson, which argued that unemployment was not being caused by mass-layoffs but due to the reduction in the rate of job finding for new graduates in AI exposed job sectors. Wage growth in these sectors seemed to exhibit an inverse development as it surpassed the national average in the US. Wages grew 8.5% across the board for the 10 sectors most exposed to AI in 2022, with the computer systems and design sector climbing 16.7%.
The reasoning for this seems to be due to AI being used to automate routine tasks, which facilitates employees to engage in more application-based value added activities, an area where experienced workers have more of an advantage.
"For entry-level employees, tasks requiring codified knowledge represent the expert part of their jobs. However, for experienced employees these same tasks constitute the inexpert aspect of their work," the study said.
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