American Inequality and the Future of AI

In a speech, Federal Reserve Governor Michael S. Barr reviews the latest Survey of Consumer Finances, which shows the top 10 percent of U.S. households hold nearly three-fourths of all wealth and the top 1 percent about one-third, while the bottom half hold only 2 percent. He traces how inequality widened and narrowed over the past century and examines how AI, as potentially capital-biased innovation, could further lower the labor share of national income—which fell to a record low of 52.8 percent in the second quarter of 2026—especially if market power concentrates among a few AI firms. Barr argues society should begin considering how to address these challenges while AI adoption is still in its early stages.