Two years before he died, legendary physicist Dr. Stephen Hawking ominously warned that the development of artificial intelligence, or AI, would be “either the best, or the worst thing, ever to happen to humanity.” Today, the rapid proliferation of artificial intelligence, or AI, is already wreaking havoc on workers in multiple industries. In May 2023 alone, AI took an estimated 4,000 jobs away from workers.
CEOs using AI to cut labor costs is only likely to intensify: The CEO of IBM said he would be using AI to replace nearly 8,000 jobs at the company over the next five years. Summit Shah, the CEO of an Indian e-commerce tech startup, recently made headlines for laying off 90% of his support staff and replacing them with an AI chatbot similar to ChatGPT. And according to a 2020 report by the World Economic Forum, AI could be utilized to fill 85 million jobs around the globe by 2025.
In the ongoing WGA and SAG-AFTRA strike that’s brought Hollywood to a standstill, one of the points of contention is studios wanting to use AI to capture an actor’s likeness and then use that likeness in perpetuity while only paying an actor for their initial appearance. And while Disney CEO Bob Iger could make up to $25 million in yearly compensation under his current contract, actress Jana Schmieding, who acts in the Disney+ series Reservation Dogs, makes just $0.03 every three months in streaming residuals for that show.
But despite all of the conversation around AI, what has yet to be seriously discussed is using AI to perform the job where it would be the most useful and cost-effective: As a CEO.
AI is exacerbating the war against the working class
The logic behind corporations replacing human workers with AI is that it will reduce payroll costs and make the company more efficient, allowing it to make other investments that will improve its balance sheet and its share price over time. AI may be new, but its use in this way is merely an acceleration of a decades-long trend of corporate executives paying workers as little as possible while rewarding themselves with increasingly excessive compensation packages.
At every company, the CEO role is easily the most costly. According to a 2023 study by Equilar and the Associated Press, CEO pay packages at publicly traded companies still average between $10 million and $20 million annually across 11 different industries when accounting for both salary and stock. The top 10 highest paid CEOs collectively were paid nearly $900 million in total compensation in 2022 alone.
When comparing CEO compensation with average worker compensation, top executives made roughly 400 times more than the average worker, according to a 2022 study by the Economic Policy Institute (EPI). Since 1978, CEO pay has risen by almost 1,500%. The EPI also found that while worker productivity and wages were growing at roughly the same pace between 1948 and 1978, wage growth abruptly flatlined in the 1980s and onward even as productivity continued to steadily increase. By 2021, worker productivity had grown by more than 64% since 1978, while wages had grown by only 17%. This means nearly 50% of workers’ labor value was effectively stolen by their employers over the course of several decades.
Interestingly, that period of time was also when the percentage of American workers who belonged to labor unions began to decline while the incomes of the richest 10% of Americans started climbing rapidly. After President Ronald Reagan busted the federal air traffic controllers union in 1981, union membership declined steadily each year with other companies likely viewing Reagan’s anti-worker policies as a green light to do the same.
A separate chart from EPI showed that in 1978, the percentage of workers who were unionized was around 25%, while 32% of income went to the top 10%. By 2014, only 11% of workers were unionized, and the top 10% held more than 47% of income. Conversely, in 1956, when union membership was the highest at 33% of workers, the top 10% held just 32% of income. This data strongly suggests the drive for “efficiency” and “cost-cutting” could be better described as the owner class pillaging the wealth of the working class, or, more simply, class war.
AI would be less costly and more efficient than a human CEO
When analyzing all of this data in a larger context, it could be argued that, at least in the US, a CEOs’ primary role is not just strengthening the company’s balance sheet, but fattening their own net worth. After all, when considering more than 52% of CEO compensation is in the form of stock options, CEOs are incentivized to do whatever it takes to increase the value of company shares, so the shares they’re paid with are worth even more. This is not only greedy and self-serving, but highly inefficient.
In June of this year, US News & World Report ranked the 50 best countries in the world for business. The publication ranked countries based on criteria like the favorability of a tax system, the level of bureaucracy, manufacturing costs, corruption, and government transparency. Switzerland ranked #1, and Panama, Finland, Luxembourg, and Norway rounded out the top five, respectively. To compare, the US didn’t even crack the top 50.
The best countries for business all share a few common traits: They typically have universal healthcare and public health insurance options, free education through the college level, generous paid leave policies, maternity and paternity leave, and child care among other well-funded safety net programs, freeing up companies from having to provide those benefits themselves. Additionally, CEOs are paid well, but far more modestly than American CEOs. Workers in these countries are also paid far more on average than in the US. According to Glassdoor data, the average Swiss CEO makes roughly $236K in US dollars (USD), while average Swiss workers make between $7,800 and $9,089 USD per month.
It could be easily argued that creating an AI to perform executive level functions like data analysis, risk assessment, and resource allocation would be preferable given AI’s strengths in those areas, especially when considering a machine doesn’t need compensation in the tens of millions of dollars to do so. While it would be somewhat concerning as a worker to know you’re reporting to a machine, that machine would still report to human beings on the company’s board and would be supplanted by other human C-suite executives who could come up with organizational vision and be the human faces of the company,
Just as Summit Shah had a programmer create the AI chatbot he used to replace support staff, an AI CEO could be programmed to include the well-being and happiness of the company’s workers in its performance metrics, rather than being chiefly driven by share prices. And if a company was no longer bound to pay a CEO tens of millions of dollars in compensation and bonuses over the course of a multi-year contract, it could have millions more to use for talent recruitment and retention, capital expenditures, and other things that would strengthen a company over the long term.
Like it or not, AI is here to stay. If it can be utilized where it will create the most efficiency and do the least harm, it could, as Stephen Hawking noted, be not the worst thing, but the best thing for humanity.