What Happens When AI Costs More Than Workers?

So far, the drumbeat of AI in the workplace has been about how technology will replace workers and cut costs.

But an executive at tech firm Nvidia recently revealed that the cost of AI computing “is far beyond the costs of the employees,” according to an Axios article. And Amos Bar-Joseph, CEO of Swan AI, recently said on LinkedIn that the company’s AI bill hit $113,000 for a single month of data for a four-person team.

In some ways, this feels like an alternate reality. Weren’t we promised that AI could replace various human work tasks — more productively, more efficiently, and (importantly) more cheaply?

What happens if the reverse is true?

At first glance, AI seems pretty affordable. Subscriptions start at about $20 a month. The problem is scale — because many companies aren’t stopping with one subscription.

“A $30-a-month tool usually becomes six or seven of them, plus API overages, plus a workflow platform tying it together,” says Scott Tobin, founder of Delegate, a tool that helps small businesses plan for AI hiring.

Additionally, when companies hit a certain number of subscriptions, they might move to a different payment model where they’re charged for actual data used. The jump can be startling.

“Costs can be going from something like $10,000 a month to $50,000 a month,” says Jesse Lipson, founder and CEO of marketing platform Levitate.

The result is a scenario where AI costs can eclipse the cost of human workers.

Instead of the predominant anxiety that AI will replace millions of human workers, the real scenario may be that AI displaces some roles but also shifts which ones are considered essential. And companies will have to figure out how to balance the cost of AI with human workers.

“Some junior roles are getting automated almost entirely,” Tobin says. “But mid-level roles with judgment and stakeholder-management components are getting more valuable, not less.”

“You may be getting more productivity, but you may not be able to get it out of fewer people,” says Nils Gilman, editor-in-chief of the Berggruen Press at the Berggruen Institute, a think tank based in Los Angeles. “Everybody is becoming a middle manager of their team of bots.”

About the author

Kate Ashford is a writer and spokesperson for NerdWallet. She is a wealth management specialist (WMS)™ and certified senior advisor (CSA)® and has more than 20 years of experience writing about personal finance. Previously, she was a freelance writer for both consumer and business publications, and her work has been published by the BBC, Forbes, Money, AARP, LearnVest and Parents, among others. She has a degree from the University of Virginia and a master’s degree in journalism from Northwestern’s Medill School of Journalism. Kate has been quoted by outlets including the Associated Press, MarketWatch, NBC and Fortune. She is based in New York.

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