Federal Reserve Governor Michael Barr warned that AI’s rapid adoption could bring serious near-term job-market disruption and deepen inequality, even as the technology may boost demand and create new jobs.

AI could range from helping workers with individual tasks to disrupting entire industries, with the speed of adoption and scale of productivity gains shaping the impact.

So far, worker displacement has been limited, but AI appears capable of replacing labor in some sectors, with younger and less-experienced workers particularly exposed; rapid change could leave workers little time to adjust.

Barr said the scale and duration of those effects will depend on guardrails established while AI adoption is still at an early stage, as well as investment in worker training and the creation of new jobs.

The Federal Reserve’s 2025 Survey of Consumer Finances shows wealth is more concentrated than income, raising concerns about AI’s effects on an already unequal economy.

The top 10 percent of households receive almost half of U.S. income and hold nearly three-fourths of national wealth, while the bottom half hold just 2 percent of wealth.

Barr warned that if a small number of AI firms gain market power, executives and equity owners could capture much of the upside as smaller businesses lose market share and labor’s share of national income falls.

Whether AI gains spread broadly will depend partly on competition making the technology affordable and accessible to smaller businesses, rather than concentrating benefits among a few dominant companies.

Adoption is already uneven: about 75 percent of large companies used generative AI in 2024, compared with rates in the high single digits among smaller businesses.

Barr said regulation and competition policy can help shape the outcome, particularly because large firms’ resources may give them an advantage in developing and deploying AI.

Barr has cited an expected roughly $3 trillion surge in data-center investment as a potential source of long-term productivity growth, while warning that near-term demand could add price pressure in electricity and construction.

In a November 11, 2025 address at the Singapore Fintech Festival, Barr also warned that AI trading systems using similar models and data could encourage tacit collusion, increase volatility and trigger market herding.