Will AGI Create a Permanent Underclass?

Imagine a world where artificial intelligence matches and then surpasses every skill humans have ever learned at their desks. This isn't science fiction: experts and influential thinkers are warning that as Artificial General Intelligence (AGI) emerges, the future of human work and social mobility faces profound uncertainty. The idea isn't just about technological disruption; it's about the possibility of becoming locked into a permanent underclass, defined not by poverty but by an inability to change one's economic standing.

Today, AGI is rapidly approaching a level where it could outcompete people in knowledge work, developers, analysts, customer service representatives. The only remaining competitive edge? Access to capital and computing power. As major players race to secure computational infrastructure, the concern is that personal advancement could be tied permanently to the resources one already holds. Throughout this article, we explore these societal risks, examine current labor data, discuss solutions like Universal Basic Income, and ultimately seek a vision of hope through augmentation, not obsolescence.

Let's dive into what AGI means for human labor, who stands to gain or lose, and whether new systems could ensure a future that empowers everyone.

The Rise of Compute as the New Currency

Artificial General Intelligence is poised to make computers better at almost all forms of knowledge work than humans themselves. Once this tipping point is passed, "the only limitation to knowledge work becomes how much compute you have," as one expert stresses. This insight underpins the seismic shift already underway: labor, historically the foundation of economic value, becomes overshadowed by the utility of massive server farms and the capital to run them.

Major technology firms are investing billions into building out their computational infrastructure. It's not just for performance bragging rights, but a recognition that future productivity and success will hinge on "compute as currency." This dynamic suggests those with the capital to buy and maintain massive AI resources will be locked at the top of the social ladder effectively freezing mobility for everyone else.

With AGI, whoever can pay for that will be able to hire these AI workers of the future. The hypothetical world where "human labor loses its value in the economy" could transform social hierarchies into static, self perpetuating structures. The daunting implication: "wherever you are socioeconomically at that moment, that's where you're going to stay."

The Permanent Underclass: Not Poverty, But Stasis

For many, the true danger isn't just widespread unemployment or traditional poverty. It's "lack of mobility." The specter of a "permanent underclass" looms large: not so much a destitute majority, but a world where the rungs of the social ladder are sawed off, and wherever you start is where you remain.

Data emerging from the frontier of the AI labor market supports some of these worries. A study from Stanford, aptly titled "Canaries in the Coal Mine", found a 13% relative employment decline for 22 to 25 year olds in high AI exposed fields compared to older workers. Meanwhile, the career platform Handshake reports 15% fewer entry level postings and 30% more applications per job for class of 2025 graduates. These statistics reveal a squeeze at the bottom of the career pipeline, as newcomers to the workforce struggle to find their footing in a rapidly shifting landscape.

Still, it's not all bleak. Wages have not yet broadly fallen, and older workers in comparable roles see steady or even growing employment. The challenge is less a sudden descent into poverty than a creeping sense that upward movement is being quietly closed off for those just starting.

Cheaper AI, Greater Usage: The Paradox of Progress

A straight path might suggest that cheaper AI leads to abundant opportunity, if AI is affordable, surely everyone can leverage it. but history tells a subtler story. Javon's Paradox, frequently cited by economists, reveals that as a technology becomes more efficient and less expensive, total consumption of that resource actually rises.

"As some resource gets more efficient and less expensive, we actually tend to use more of it overall."

Cheaper compute doesn't automatically democratize opportunity. Instead, as corporate and entrepreneurial access expands, the overall demand for compute not the advantage itself spirals upward. The result is a deepening competition, potentially reinforcing the structures that promote the permanent underclass dynamic, rather than dispersing it.

Universal Basic Income: Promise and Controversy

Into this uncertain future, some propose radical new interventions like Universal Basic Income (UBI) or even Universal High Income (UHI). Leading voices such as Sam Altman and Elon Musk advocate for such policies, envisioning systems where individuals receive unconditional, regular cash payments sufficient for basic needs or even more.

UBI's critics worry about inflation and label it "just socialism", but research counters those fears. Expert Scott Santins, for example, finds that "when you have more free time on your hands, you actually tend to be more entrepreneurial." This means UBI could inspire new businesses, spark creative projects, and generate jobs that don't exist today.

Still, the lingering question remains: even if people have guaranteed income, will their roles always play second fiddle to AGI? The incentives for skill development and innovation, it seems, hinge on how these policies are implemented and how they intersect with broader labor market trends.

Human Roles in the Age of AGI: Augmentation Over Automation

Despite mounting concerns, a vital thread of optimism persists within the AI community. Many argue that AGI will make profound changes, but not render people obsolete. Instead, "job augmentation" is the future; humans and AI working alongside one another, with people orchestrating, verifying, and leveraging the immense capabilities of AI.

"AI is likely going to be only capable of completing tasks middle to middle, not end to end for the foreseeable future. For a wide range of tasks, humans are going to be required in the loop."

In this vision, humans are still needed at the endpoints, providing context, judgment, oversight, and creativity. As AI takes over the repetitive or highly technical middle sections of tasks, the "ends" become more valuable and numerous. This means the structure of work will change, with a premium on people who know how to integrate and supervise advanced technologies.

Corporate Strategies: Efficiency and Opportunity

Industry leaders are already adapting to these changes. Aaron Levy, CEO of Box, suggests companies should "invest more in departments that leverage AI", upending the old logic of simply replacing humans only where AI can't be used. He predicts that adapting to AI tools will make organizations more efficient and prosperous, leading to new types of jobs even as old ones shift or disappear.

For example, as coding and development become more efficient thanks to automation, areas like customer success, consulting, and creative enterprise could see growth as companies unlock new bottlenecks. The result? Potentially, more hiring, just in different spheres than before.

Unimagined Jobs and Entrepreneurial Growth

Beyond corporate transformation, AGI harbors the potential to spark entirely new categories of work, some of which are simply impossible to predict. As the CTO of OpenAI points out, "there is also going to be tremendous job creation, jobs that we can't even think of today". Roles like YouTube content creators or professional livestreamers didn't exist two decades ago; the next generation of work may be equally surprising and abundant.

AI lowers the barriers to creation and entrepreneurship, making it possible for small studios, independent makers, and everyday people to produce content, build businesses, and tackle problems once reserved for the elite. The democratization of powerful tools holds the promise of a more inclusive, entrepreneurial economy, provided that the right structural supports are in place.

Preparing for a Shifting Landscape

Success in the age of AGI will demand more than resignation; it will require active adaptation. "we're going to have to be proactive to teach people how to use these tools, AI tools, to be most productive and to be most valuable in the workforce." This means reimagining education, workforce training, and social safety nets to empower individuals to thrive alongside AI, not in its shadow.

The deployment of AGI also won't happen overnight. The transition will take years, affording society time to adjust, if that time is used wisely. By embracing lifelong learning, fostering creativity, and investing in robust public supports, it may be possible to transcend the limitations of the permanent underclass and chart a path toward greater equity and opportunity.

Conclusion: Hope or Stasis in the Age of AGI?

The coming age of AGI poses real risks: knowledge work may be upended, and those without access to capital or compute could find themselves at a disadvantage. Signs of stasis and decreasing mobility, especially for new entrants to the workforce, are already appearing. Yet, the story is far from over.

Technological revolutions have always restructured labor, but they also sow the seeds for creativity and growth in ways few can initially foresee. Policies like Universal Basic Income, a focus on job augmentation, and continuous investment in human skills will shape whether AGI entrenches inequality or unlocks new heights of abundance for all.

The choice, ultimately, is not predetermined by AI itself but by how society adapts to it. By promoting empowerment, innovation, and inclusivity, the future could be one where AI serves as a lever for upward mobility, or at the very least, ensures no one is left behind.