Fears that automation would produce mass unemployment and lower wages, have (so far) proven unfounded. In Western economies, wages and living standards have improved. Despite the prophets of doom, high employment has not yet been a feature of the rush to AI. From an economic perspective, automation has created as many employment opportunities as it eliminated, with a commensurate positive impact on wages.

Artificial General Intelligence (AGI) refers to adaptable technology capable of performing all types of labour tasks. AGI is, as yet, proving elusive, and predictions for its arrival range from the end of the decade to the middle of the century (if it arrives at all). However, it is worth considering the implications of such a powerful technology for society as a whole. Especially as AGI could potentially substitute for human labour across multiple workplace settings, including all blue-collar and white-collar roles, right up to, and including, the boardroom. As a result, this development may affect labour markets in ways not previously observed.

The threat that AGI could drive human wages below subsistence level, the bare minimum needed to sustain human life, is very real.

If essential, scarce factors of production are not scaled through investment, the constraints will push down the marginal productivity of labour. In time wages will reduce to a level which only cover the cost of sustaining labour. Given that AGIs could be fully capable of substituting for labour, the minimum sustaining cost will settle below the level required for human survival.

Of course, if the implementation of AGI is effectively managed, humans could continue to enjoy some quality of life, provided alternative sources of income are available – such as investment income, government welfare, or even philanthropy which provides a more strategic approach to addressing social problems and charity and focuses on immediate financial relief.

Effectively managed, technological progress makes labour more productive, ensuring pay rates remain stable or even rise. However, in the longer term the velocity of technological progress is likely to slow down. However, in the longer term the velocity of technological progress is likely to slow down.

Timing is everything. Without government intervention, once it is developed and viable, the application of AGI is likely to advance rapidly. Pay rates will plateau and begin to decline and by that time, obstacles to the expansion of AI will be limited to the land and energy needed to provide the infrastructure for increasing AI capacity.

In 1914, Henry Ford raised his workers’ minimum daily wage to $5, an uprecedentedly generous wage for the time. This was not done out of charity, but to foster worker loyalty and to enable them to buy the products they made, thus expanding Ford's customer base. This move contributed to the growth of the American middle class and boosted consumer demand, fuelling economic growth.

The question is: if AI replaces all jobs, who will be able to purchase the goods and services it produces?

AI is already contributing to global economic activity, and has the potential to do even more. The adoption of AI is already extending the economic gaps between companies, and workers and in consequence is widening the performance gaps between countries.

Companies, which are at the forefront of AI are forecast to double their returns by 2030. Slow corporate adopters will fall behind. AI leaders, primarily in developed nations could capture perhaps as much as 50% of the economic benefits. Emerging economies are likely to capture materially less - and the impacts are alreay being felt. In India, the country's biggest private sector employer Tata Consultancy Services (the country's largest IT services company), has announced it will cut more than 12,000 jobs at middle and senior management levels as a direct result of AI automating tasks and clients demanding more innovative solutions, rather than just cost savings on manpower.

On the labour front, pay rates demand will increase for digital and cognitive skills, just as they will for skills in tasks that are hard to automate, but for workers performing less skilled tasks the outlook is bleaker. The economic impacts of this trend are emerging gradually and will only be visible only over the long term, but once AGI arrives the pace will dramatically speed up. All of which makes the case for the urgency for addressing the Universal Living Wage (ULW).

Government Policies:

Governments' ability and willingness to address job displacement and inequality through social programmes will be critical. The political philosophy of Governments will vary and influence the solutions to addressing the influence of AI on pay rates, but the rise of populism will make this a priority for democracies.

Public Awareness and Support:

Growing awareness of AI's potential impact and public support for legislation as well as economic and social safety nets will play a role.

Economic Conditions:

Broader economic conditions, such as inflation and overall economic growth, will influence the feasibility and timing of ULW implementation.

The prospect of formulating and implementing the Universal Living Wage requires extensive evaluation. More importantly the sources for funding the Universal Living Wage have to be identified. I did cover some elements of taxation of AI in a previous article for FS Club Pamphleteer, so some of the potential sources are:

• AI Automation Tax: a tax on companies that benefit from AI-driven automation could help fund;
• A Robot Tax: similar to an AI automation tax, a tax specifically on robots and automated systems could be implemented;
• Shifting the tax burden: this is a more fundamental and strategic move to use the evolution of AI to re-evaluating existing tax structures and potentially shifting the tax burden from labour to capital or automation could also provide funding.

The exact timing of AI-driven job displacement remains uncertain but is a strong catalyst for considering and potentially implementing Universal Living Wage. For there is no question that the Universal Living Wage is an effective way to manage the potential negative consequences of technological advancements and ensure a more equitable society. At the same time the Universal Living Wage begs the question “how do such recipients lead constructive purposeful lives, not lives restricted to leisure and idleness?"