When Bill Gates talks, people listen. This week he published a lengthy essay on what AI is going to do to work, and told GeekWire that people inside AI companies who name the downsides get told, “Hey, you’re hurting our PR while we’re trying to raise trillions of dollars.”
He’s right about the hard part. The job displacement he describes lands on young workers first, and the safety net is funded by taxes on the very wages that AI erodes. He prescribes three treatments: new institutions at home and abroad, a tax on AI tokens and robots, and “Human Reserved,” a category of jobs only people may hold.
Gates has the diagnosis right but the prescription mostly wrong. I’d sign the robot tax tomorrow, because hiring a person costs you payroll tax every year while buying a robot gets written off in year one. The other two I’d send back.
Let’s start with what’s solid. Stanford’s Digital Economy Lab updated its “Canaries in the Coal Mine” work this month. Employment for 22-to-25-year-olds in the most AI-exposed occupations is running 19% below where it would be if it had kept pace with their peers in less exposed work, up from 15% a year ago. The same authors say they don’t see widespread, economy-wide displacement, and unemployment held at 4.1% in July.
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The AI damage isn’t arriving as layoffs. It’s arriving as jobs that never get posted, and Gates is right that the young get it first.
Now the token tax. Tokens (essentially words) are what AI companies bill by. Taxing tokens is like taxing keystrokes: it measures effort, not displacement.
A high school class working through calculus with an AI tutor burns tokens continuously. A model that quietly retires a 40-person customer center might burn relatively few. The tax lands hardest on the uses Gates says he wants to protect.
Stanford’s AI Index put the cost of GPT-3.5-level performance at $20 per million tokens in November 2022 and seven cents by October 2024, a 280-fold drop. You’d be indexing the safety net to a number that falls every year while displacement rises.
And you can’t collect it. Inference runs on laptops and phones now, and on servers in whatever country declines to sign. A token tax is a tax on whoever uses an American API, and every dollar it adds makes a Chinese model look cheaper. We’d be slowing ourselves down and not China.
Gates says the institutions will take years to build, and also says we can’t afford to move slowly. He’s right twice, and that’s the problem. He wants the international body to borrow from nuclear inspections and aviation regulation. That may pan out in the long term, though the UN is the cautionary tale for the bureaucratic nightmare that the international community can produce.
Meanwhile we have functional agencies with jurisdiction today. The FDA can rule on AI in diagnosis. The FTC can go after AI-enabled fraud. We don’t need a new agency to say a bank can’t deny your mortgage because a model felt like it. We need the banking regulator to reiterate it forcefully.
That leaves Human Reserved, his best idea but his most privileged one. Gates would protect a job for either of two reasons: the role is deeply personal, like a caregiver, or the people who hold it are unlikely to find other work. Only one of those holds.
Freezing headcount because the workers have nowhere else to go protects the job for a while and makes the service more expensive along the way. Reserving the moments when a human being is the point is defensible, and Gates makes that case well. On a robot delivering the news that you have an incurable disease, he writes, “There’s no technical reason why it couldn’t,” and adds, “Yet it shouldn’t.” He’s right.
I made the case in WIRED nine years ago that displaced workers should move into caregiving, and that it would take real money to lift the pay enough to draw them.
The problem with Human Reserved is that it assumes there’s a human being available. Home health and personal care aides earn a median of $34,900 a year, and BLS projects roughly 765,000 openings in that occupation every year through 2034. At that wage, they keep coming open. A third of home care aides are immigrants, and tighter enforcement threatens that supply. A rule that reserves care for people, in a market with no spare people, reserves care for the families who can outbid everyone else.
Gates half-anticipates this, telling The New York Times he might be a flawed messenger because of his wealth. On this point he is. The caregivers who gave his father something irreplaceable were in that room because someone could pay them to be there.
So don’t fence AI out of the room. Put it to work in the hours nobody is paid to cover.
In February the Times ran Eli Saslow’s story about Jan Worrell, 85, living alone on Washington’s Long Beach Peninsula with an AI companion called ElliQ that engages her about eight times a day and pushes her to stay hydrated and moving. (I serve on ElliQ’s board, and I joined because the company builds a machine that extends a caregiver’s reach instead of replacing one.)
Her goal, she told her doctor, was to never live anywhere else. Fund enough aides to cover the hours that need a person and put the machine on the rest.
Here’s where I net out: equalize the tax treatment of labor and capital, which Congress could do next session, and route the proceeds into retraining and into topping up the pay of workers who land in lower-paying jobs. That’s a better answer than a protected job title.
Drop the token tax, build the caregiving workforce instead of fencing it off, and use the regulators we already have while somebody works on the ones we don’t.
