Federal Reserve Governor Michael Barr says it remains unclear whether artificial intelligence will increase the share of income going to capital as labor’s share of US nonfarm business income continues to decline. That share reached a record low of 52.8% in 2026, compared with roughly 60% to 66% for much of the post-World War II era. Barr describes two possible outcomes: gradual adoption that raises productivity and allows workers to capture more of the gains, or rapid adoption that displaces workers and concentrates those gains among capital owners. By November 2026, he acknowledged emerging signs of AI substituting for labor in some sectors, although no broad displacement had yet been observed. The Federal Reserve’s tools can address cyclical conditions, but Barr says monetary policy cannot correct technology’s structural effects on income distribution.
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