AI is making America's billionaires richer — and widening the wealth gap

AI is widening America's wealth gap. A growing body of evidence suggests the AI boom is deepening the divide between the country's economic elite and everyone else, the Washington Post reported Thursday.

Wealthy investors are ramping up spending as the AI-driven stock market surge swells their asset holdings. According to Goldman Sachs, most of the S&P 500's gains this year have come from rising share prices among AI-related companies.

The question is who benefits. Federal Reserve data show that the top 20 percent of US households by income hold nearly 90 percent of all stock market wealth. That means the wealthiest Americans are capturing the largest share of AI-related stock gains.

Mark Zandi, chief economist at Moody's Analytics, said the psychological confidence that rising share prices instill in wealthy households — the so-called wealth effect — is reshaping their spending behavior. Moody's data show that over the past three years, spending growth among the top 20 percent of US households has run at roughly three times the rate of the bottom 80 percent.

"AI-fueled wealth gains are allowing affluent Americans to spend freely on discretionary goods and activities — new clothes, dining out — while the rest are seeing their purchasing power eroded by inflation," Zandi said.

The most active AI users are also concentrated in wealthy urban areas, while economically disadvantaged regions fall further behind. Research by Anthropic, the Brookings Institution and Oxford Economics found that workers and businesses in economically advantaged parts of the United States are adopting AI most aggressively — led by the San Francisco Bay Area, New York, Washington and Seattle. The states with the lowest per-capita AI usage include Mississippi, West Virginia and North Dakota.

New technologies being adopted first by higher-income groups and wealthier regions is nothing new. But Mark Muro of the Brookings Institution warned that AI could entrench income disparities across the US regional economy. "We've seen this movie many times before," Muro said. "AI is likely to reinforce the existing imbalances on America's economic map." He added that businesses and communities with high AI adoption could paradoxically shed jobs faster as companies replace workers with technology.

Experts warn that AI could further widen the income gap between American workers and business owners — what economists call the labor-versus-capital divide, in which a country's economic output is split between wages and benefits for workers on one side and returns to business owners, asset holders and investors on the other.

Commerce Department data show that just over half of total US economic output this year went to worker wages and benefits, while the share flowing to businesses and investors continues to grow.

Daron Acemoglu and two co-researchers recently published a study outlining a scenario in which AI-driven job destruction and inequality — if they further reduce workers' share of national prosperity — could trigger social unrest.

Senior executives at hedge fund Bridgewater Associates warned that "booms end badly when wealth becomes concentrated and discontent spreads." They argued that governments should tax AI use and redistribute AI-generated wealth across society.

Some experts say the responsibility ultimately lies with governments. Guy Lichtinger and Seyed M. Hosseini, both Harvard-trained economists, recently said AI could lead either to a utopian future of shared prosperity or to a deeply unequal economy. In an interview, they said whether the shared-prosperity scenario becomes reality depends largely on how policymakers respond to AI's impact on the economy.