Fed Governor Michael S. Barr Warns AI Concentration Could Widen U.S. Inequality

Federal Reserve Governor Michael S. Barr warned Thursday that U.S. inequality could worsen if a small group of artificial intelligence firms dominates the market and receives most investment returns. In that scenario, workers would get a smaller share of income as market concentration rises. “Inequality would go up,” Barr said.

Barr said there has been relatively little displacement of workers so far. Some evidence points to productivity gains for some workers, higher demand in certain sectors and the creation of new occupations. The technology’s future effects depend on how it develops and how businesses adopt it.

The concern comes as gains tied to AI have become concentrated in the stock market. AI-linked companies’ share of the S&P 500’s market-value gains exceeded half of nearly $32 trillion from ChatGPT’s release through Nov. 3, with the increase concentrated among 10 companies.