A shortage of workers is boosting wages, but AI may soon help the economy do more with less

Wages are on the rise.

Even after a year of inflation-fighting interest rate hikes, average hourly earnings are growing much faster than usual. The 4.4% year-over-year increase recorded in January was far greater than the longer-term average of about 3%.

Some observers trace the trend to COVID-19, but that’s only the most recent part of a story that begins with demographics.

Workers who are 55 or older constitute the largest contingent of the U.S. labor force at 24%. That’s true even though only 39% are participating in the labor market, by far the lowest percentage of any age group. In contrast, nearly 80% of Americans aged 20 to 54...

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