The Wages Of Fear

In 1914, Henry Ford announced that the minimum wage at Ford Motor Company would double to $5 a day. As explosive, automation-driven production gains came at the cost of worker satisfaction, the decision was grounded in economic logic: employee retention and customer class creation. The social and the industrial contracts were one and the same.

Given AI’s expected impact on the workforce, labor relationships will once again need to be redefined. This will occur amid fragile social dynamics. The 2026 fgs Global Radar* shows a clear picture across nations: 73% of respondents say life is getting harder, and 74% say the system is rigged in favor of the elite. Technology adds a layer of angst. While experts obsess about productivity gains, 70% of the public believes AI will destroy more jobs than it creates, and most low-income respondents believe they will be left behind by AI. Against this backdrop, one issue dominates across countries: the cost of living.

The fgs survey, and other sources such as the 2026 Edelman Trust Barometer, show a global population that feels economically anxious, socially disconnected, and institutionally underserved. It is inherently vulnerable to political narratives that simplify issues, assign blame, and promise rapid correction.

In fact, the more politicians of all sides stoke a sense of grievance and betrayal, the greater the authority voters will grant to the executive branch to implement urgency-driven policymaking that may cut (legislative) corners, weaken liberal democracy, and heighten policy and economic volatility.

The implications for firms go beyond the commonplace call for agility. A scaled version of Robert Axelrod’s prisoner’s dilemma confronts every boardroom shaping its AI strategy: Each company, acting individually and rationally, faces a clear incentive: deploy AI, reduce headcount, and capture the increased profits. But, if replicated across the economy, such policies would deepen social fractures, compress consumer demand, and boost the political forces most threatening business stability.

When a prisoner’s dilemma is dealt with just once, its consequences are grim: each party acts unilaterally, and all pay the collective price. In this case, it could mean higher corporate taxes, social contributions, or redundancy costs in a volatile environment.

However, AI deployment is not a one-shot event. It will unfold over successive cycles of investments, productivity gains, and political cycles. When a prisoner’s dilemma is played over an indefinite number of moves, incentives shift, as demonstrated in Axelrod’s ‘The Evolution of Cooperation’ (1984). Breaking ranks becomes visible, reputations form, and improved outcomes emerge from learning about the cost of acting individually. Therefore, a genuine coordination to redefine employment contracts, whether through industry bodies, sectoral norms, or even informal compacts, is more than wishful thinking.

At present, workforce transformation seems to prioritize upskilling. My conviction is that each industry will need to be far more creative. Solutions will likely need to include job redesign, shorter working hours without pay cut, internal mobility, new job types, the reabsorption of outsourced and offshored functions, and equity participation tied to productivity gains.

Ford rewrote the social-industrial contract a century ago and was called revolutionary. A new economic revolution is on its way.

This is not a moral posture. It is pure game theory.

* FGS conducted wide-ranging nationally representative polls in the US, Canada, the member countries of the European Union, UK and Japan: c.20,000 in all