Great Lakes Wire

Artificial intelligence (AI) is predominantly used in recruitment, but its influence may extend to compensation and labor markets. Algorithms, for instance, are already employed by companies like Uber to manage pricing and control costs. These algorithms could potentially redefine driver expectations and earnings.

The use of AI in determining employee pay raises questions about accuracy and fairness. As contracting rates and pay transparency laws provide data for algorithms, there's a risk of inaccurate determinations based on job titles rather than duties. This could lead to inconsistent salary decisions across employers.

AI-driven pricing might also encourage employees to move between jobs based on algorithm-generated models, causing staffing issues and product delays. Employees may prioritize skill-based resumes over longevity if better opportunities arise.

Following pandemic-induced wage increases, salary budgets are stabilizing at pre-pandemic levels. Dr. Dan Kuang from Resolution Economics notes that low-paying jobs may see higher turnover as employees switch companies for better wages.

AI-powered management software is increasingly being adopted in workplaces, indirectly affecting pay through project allocation based on employee data. Antonio Aloisi from IE University Law School warns this could lead to discriminatory practices if certain projects are preferentially assigned.

Real-time productivity tracking by major U.S. employers has raised concerns about misinterpretation of work activity by AI systems. Employees report reduced pay due to the inability of these systems to capture offline work accurately.

As AI continues to evolve within HR functions, it is crucial for organizations to establish guidelines ensuring compliance with discrimination laws and wage regulations while preventing unintended consequences like job arbitrage.