How can AI impact your salary?

Approximately ten years ago, Carl Benedikt Frey and Michael Osborne, two economists, published a paper that quickly became popular. This report claimed that almost half of all American occupations were in danger of being replaced by automation. Subsequent studies indicated that those with the least education and money were most vulnerable to the impending technological revolution. As artificial-intelligence (AI) has progressed, such worries have only grown more intense. Elon Musk spoke at Britain's AI summit on November 2nd and predicted that "there will eventually arrive a time when no jobs are required."

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 Economists have become more hopeful of late due to recent research that suggests fewer individuals are exposed to automation than initially predicted. Michael Webb from Stanford University brought to light that AI patents are more aimed at skilled jobs over software and robots. AI appears to be better suited for coding and creativity rather than manual labor, meaning low-skilled jobs may not be in as much danger. Shakked Noy and Whitney Zhang from MIT conducted an experiment that showed ChatGPT improved the productivity of lower-ability workers more than higher-ability workers.

 Though artificial intelligence is still in its early stages, certain industries have been fast to embrace it. A review of three of these - translation, customer service, and sales - suggests that economists' optimistic predictions may be accurate, though with certain complications. For example, in translation, AI has allowed newbies to break into the industry, as the tech is used to create first drafts which human workers then refine. AI has also helped to raise the performance in customer service of those who were lagging behind. Conversely, in sales, top performers are using the technology to gain leads and take notes, creating a larger gap between them and the rest. This raises the question of whether AI is going to widen the gap between the incomes of the superstars and those of the stragglers, as the internet did, or if it will be a "great equaliser", raising the incomes of the least successful but not those of the highest earners. The response may well vary depending on the kind of job.

 Taking a chance with the dice

 For the past 27 years, Roland Hall has been converting board games and promotional materials from French to English. He reminisces that in the 1990s, technology was used to switch certain terms from one language to another. Nowadays, the technology has become more complex, causing the job opportunities to divide into two categories. One of these contains texts where smoothness is not as critical. For instance, Mr Hall gives the example of a multi-thousand-page manual for an aeroplane, where the reader simply wants to know "which part to look for" and "do you turn it left or right". The other type includes literary translations, where the minutest of details are crucial.

 The first group significantly impacted by AI is the workforce that now edits translations that have been generated by a machine similar to Google Translate. Though they make comparatively less money per word, the quantity of jobs has increased. Lucia Ratikova, a Slovakian translator with expertise in construction and legal translations, estimates that over half of job listings are now AI-generated, a noticeable increase from estimates a few years ago. A larger quantity of companies, many of which desire to enter foreign markets, have taken notice of the cost reduction.

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 As machines become cost-effective substitutes for human labor, employers may turn to them to reduce costs. Yet, as prices go down, the need for a certain service may also increase, thus making up for the increased use of automation. It is difficult to determine which of the two effects will be dominant, but in America, the number of translators has grown despite the slight decrease in wages (see chart 2), likely due to the lessened skill requirement for the job.

 AI's application to customer service has proven to be a challenging task. Companies have attempted to automate it for a while now with very minimal success. People often try to avoid the chatbot in order to get in contact with a real person. The American Customer Satisfaction Index has been diminishing since 2018, and employees are evidently not content either. Last year, the turnover rate in American "contact centres" was an all-time high of 38%.

 However, there may be a silver lining: the labor force is becoming more open to those with limited abilities. Stanford's Erik Brynjolfsson, as well as Danielle Li and Lindsey Raymond from MIT, conducted a study of the implementation of an AI assistant for more than 5,000 customer-service representatives in the beginning of the year. The assistant delivered real-time advice to the employees. As a result, the productivity of the least proficient staff increased by 35%, whereas the most competent ones experienced almost no alteration.

 One may expect the effect on salespeople to be comparable to the one experienced by customer-service personnel. However, this is not true. Marc Bernstein from Balto, a company that designs AI software for both sales and call centres, points out that “style points” (charisma and the capacity to form a bond) are much more critical in sales than in customer service, where the main focus is to render the correct answer quickly.

 Artificial intelligence could even spawn sales superstars. Skylar Werneth has been in the industry for eight years and is now at Nooks, a startup that automates sales. Software is utilized to analyze his calls and uncover the tactics most effective for him. Additionally, it assists him in calling multiple people simultaneously. The majority of his customers do not answer; by dialling in parallel, Mr Werneth is able to spend more time talking and less time hearing ringing tones. He believes the tools Nooks offers have made him three times more productive, leading to a notable increase in his income.

 When productivity increases within a business, managers usually raise the bar in regards to what is expected of sales representatives, such as bonuses based on the number of clients they bring in. As a result, those who cannot make the cut may be let go, as product demand does not grow in tandem with sales performance, making it difficult to keep them. This can lead to a smaller pool of highly productive salespeople, though due to the high turnover rate of the industry, this often translates into less hiring instead of mass firings.