For the First Time in History, People Are Cheaper than Software
Analysts from a16z reveal that in top companies, AI token costs per employee are nearing the average salary of engineers. This trend could indicate a significant shift in the labor market due to AI growth.
For the First Time in History, People Are Cheaper than Software
Analysts from a16z have compiled data on AI costs in companies and presented some interesting graphs. In short, they calculated that in the top 1% of companies, the expenses on AI tokens per employee have nearly equaled the average annual salary of an engineer.
Moreover, the growth has been exponential recently, so with this trajectory, by the end of the year, engineers will significantly lag behind LLMs in salary. Quite amusing, isn't it? We were promised the opposite.
And this is only about explicit costs. Digging deeper, it turns out that besides token costs, AI also generates numerous new jobs: the second graph shows that companies with high AI usage intensity increased their workforce by +10.2% two years after implementation, while companies with low AI expenses remained virtually unchanged. (But this is merely correlation, which could be explained by other factors.)
Why it matters
AnalysisThis is significant as it highlights how AI technologies are reshaping the labor market and company expenses. Understanding these trends can aid in adapting to new work conditions.
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