Fed Governor Barr warns AI could concentrate gains among a few firms and widen inequality

Federal Reserve Governor Michael Barr warned that AI could widen economic inequality if a small number of companies dominate it, in a speech on AI and inequality on 12 November.

Barr said AI could be what some researchers call capital-biased innovation, with returns going mainly to owners of capital rather than to workers, pointing to the handful of hyperscalers and frontier AI labs that dominate the field and the scale of investment flowing into them. Because AI depends on data, computing power and model improvements, and can speed up the development of new models itself, the advantage of the leaders "may prove to be unprecedented," he said. In that scenario most businesses would have limited access to the best AI and labor's share of income would keep falling.

He noted that labor's share of US national income reached a record low of 52.8% in the second quarter of 2026, and said there are already signs AI may be replacing workers in some sectors, especially younger and less experienced ones. "Now is the time for society to begin to consider how to address these potential challenges—while AI adoption is in its relatively early stages," Barr said.