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It’s been more than three years since OpenAI unleashed the first public preview of ChatGPT on the world, setting in motion an infinite news loop cycling between AI hype and AI doom (with stops at every point between).
Headlines about AI and the job market tend to fall on the “doom” side of the spectrum. American workers, understandably, get worried when phrases like “job apocalypse” get tossed about. According to a February report from Marsh, a consulting firm, employee concern about job loss due to AI has risen to 40%, from 28% in 2024.
Companies, enticed by promised productivity gains — and a fear of falling behind — are investing big in AI technologies in search of cost savings. But for many of those firms, those savings are not meeting expectations, according to a study released this week by consulting firm Bain & Company.
In fact, some companies are finding that AI can be pricier than a more old-fashioned resource: people. Personal finance writer Kate Ashford reports below.
What happens when AI costs more than workers?
- Kate Ashford, personal finance writer
So far, the drumbeat of AI in the workplace has been about how technology will replace workers and cut costs.
But an executive at tech firm Nvidia recently revealed that the cost of AI computing “is far beyond the costs of the employees,” according to an Axios article. And Amos Bar-Joseph, CEO of Swan AI, recently said on LinkedIn that the company’s AI bill hit $113,000 for a single month of data for a four-person team.
In some ways, this feels like an alternate reality. Weren’t we promised that AI could replace various human work tasks — more productively, more efficiently, and (importantly) more cheaply?
What happens if the reverse is true?
Misleading sticker price
At first glance, AI seems pretty affordable. Subscriptions start at about $20 a month. The problem is scale — because many companies aren’t stopping with one subscription.
Additionally, when companies hit a certain number of subscriptions, they might move to a different payment model where they’re charged for actual data used. The jump can be startling.
“Costs can be going from something like $10,000 a month to $50,000 a month,” says Jesse Lipson, founder and CEO of marketing platform Levitate.
The result is a scenario where AI costs can eclipse the cost of human workers.
Where do we go from here?
Instead of the predominant anxiety that AI will replace millions of human workers, the real scenario may be that AI displaces some roles but also shifts which are considered essential. And companies will have to figure out how to balance the cost of AI with human workers.
“Some junior roles are getting automated almost entirely,” says Scott Tobin, founder of Delegate, a tool that helps small businesses plan for AI hiring. “But mid-level roles with judgment and stakeholder-management components are getting more valuable, not less.”
And even if AI boosts output, the labor savings may not materialize because human workers will still have to supervise, verify and coordinate the technology.
Also in the June 5 edition of MoneyNerd:
- Prime Day cometh (and unchecked Prime Day spending taketh away).
- The cost of summer meals out (and a laid-back alternative).
- The cost of life insurance (cheaper than you might suspect).
- Money tips and more!
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Your MoneyNerd team: Courtney Neidel, Anna Helhoski, Rick VanderKnyff.
