Andy Beshear, Stacey Vanek Smith, and others discuss the future of middle‑class economics at Davos 2026, including AI’s influence and strategies for growth.
At Davos 2026, panelists framed “saving the middle class” as restoring the ability to meet basic needs, build assets, and feel secure. UNI Global Union’s Christy Hoffman argued the squeeze is global: wages lag inflation, labor’s share of GDP is falling, and informality remains widespread. She linked deteriorating job quality to weakened collective bargaining, noting that “70% of workers in the U.S. want a union” but only a small minority have one.
Oren Cass contended the core problem is policy-enabled decoupling between profits and domestic job creation: firms can maximize returns by offshoring, importing labor, or financial engineering rather than investing in worker productivity. Governor Andy Beshear emphasized state-level levers—recruiting “good jobs with good benefits” while limiting cost drivers like healthcare and utilities—and warned that transitions create resentment when communities lose durable careers and are offered inferior replacements (“teach you how to code for $40,000”).
Infosys CEO Salil Parekh offered India as a counterexample, where tech employment has expanded the middle class and AI will “enable us with new jobs,” broadening who can build software. Others cautioned that productivity gains may not be shared without bargaining power and that AI-driven disruption could be concentrated in vulnerable sectors. Beshear highlighted emerging backlash to data centers unless firms pay full costs, fair taxes, and “become a part of that community.”
Hello and welcome to How Can We Save the Middle Class? A panel discussion on an issue that I think is probably one of the most important economic and political issues of our time right now. We are incredibly lucky to have a very brilliant panel of people to discuss this issue with. I'm going to have them briefly introduce themselves, starting with you, governor.
Sure. My name is Governor Andy Beshear. I'm the governor of the Commonwealth of Kentucky, excited to be in Davos, talking to international business about how Kentucky is a great place to do business. And while I'm here, hopefully reminding the world that the American people are more than just our president.
I am Christy Hoffman. I'm general secretary of Uni Global Union. We are a confederation of trade unions from around the world in 150 countries, who represent workers in service industries ranging from cleaners and professional athletes, postal workers, tech workers all across the board. Thank you.
Hi. My name is Oren Cass. I'm the founder and chief economist at American Compass, which is a conservative think tank working on developing a conservative approach to economics that focuses on the interests of the working class in a way that neither political party has been doing over the past generation.
And we will be joined by a fourth panelist eventually. That is Salil Parekh, the CEO of Infosys. But he is in transit. It's a little icy today. So, I think we all understand. Christy, I would love to start with you. You represent 20 million workers in 150 countries. Obviously, the disappearance of the middle class is something that we're talking about a lot in the U.S.. I'm wondering if this is an issue that you are seeing all over the world.
First, I want to say for the bigger audience that using the word middle class is very American. And middle class in other countries means something completely different from what we mean in the United States. So just to just in case some of the audience is like, because it could be like upper income people in the UK. But, what we're seeing around the world universally is that workers are feeling squeezed either, because of inflation, which is always puts it, workers don't really catch up. The wages have not caught up with inflation across the OECD countries and also across the developing countries. So there's worker feeling squeezed also labor share of the GDP, has gone down. And I would just note that the BLS report last week or the week before, in the United States, the labor share of our GDP is at the lowest point in 70 years. And that reflects in how workers are feeling, which is that the economy is really rigged against them. All the growth in the economy is going elsewhere, and they're not seeing and they're not seeing the benefits. We can come back to inflation and and reasons why. But I do think that this is universal. Also to note, though, that in the developing world, we have not been able to reverse the trends on informality. There was, until the pandemic, a trend towards reducing the number of workers in informal work, meaning they have no real employment, they have no guarantee of Social Security or or its equivalent or any kind of, you know, long term stability in their employment, because they don't have employment. But there's 60% across the world right now, 80% in many countries in the developing world. And that is a big problem for that side of the story.
Oren, I'd like to to go over to you as an economist. There have been there's a big debate happening right now about often they will call it, I guess, the k-shaped economy, maybe more accurately than the middle class, which is just an economy where a few people are doing really well and their future looks bright, and the majority of people are not doing so well and their future looks not so bright. What do you see as the causes of this?
Well, the way that I think about it really is that, you know, when capitalism is working well, there is a mutual dependence between the whether you want to think of it as the capital or the managers and the typical workers, neither can really succeed without the other. And so both have an interest in coming together and figuring out a solution. I think what we've done, certainly in the developed world in, in recent years, is break that apart and create a lot of very good opportunities to really maximize profit in ways that either just ignore workers or or actively leave them behind. And so, you know, whether that's an approach to globalization that says if you can go find cheaper labor elsewhere, easily exploited labor elsewhere, go do that. If it's an approach to immigration that says, well, if you can't go find exploited labor elsewhere, let us bring in some exploitable labor for you. Or an approach to financial markets where I think a lot of what happens in finance has just become an end unto itself. We send a tremendous share of our top business talent not to actually build anything new or employ anybody new, but to spin assets around in circles or extract value from those that others have already created. So if the best way to make a profit is not creating good jobs and increasing the productivity of workers, that's not what people are going to do. And it's not what people have been doing.
Governor, what about the political implications of of the k-shaped economy or a disappearing middle class?
Well, let me start by trying to put a face on the middle class. What it actually feels like to people. Being middle class means that you can do more than just pay your bills at the end of the month. It means you're not sweating to pay the grocery bill, wondering if you're going to have enough for your kids. It means you're not sweating about the power bill or your child's next prescription. It means that you can meet your basic needs, and every once in a while, take your kids on that family vacation that you went on as a child, that you can actually go to the beach every now and then. What it also means is that you can buy a house, you know, part of that American dream, which is supposed to be available to the middle class, involves a home, and you can buy it sometime around the same age that your parents did. I think about my wife is here in the audience. We bought our first home at 28, but the current average in the United States is 40. And so when you hear a lot about affordability in the United States, it's people feeling like they've got this middle class job, but they're no longer middle class, that they can't take that vacation, that they can't buy that home. And in many ways, it makes it feel like they're failing. They're failing their family because they're working just as hard, but they're not getting ahead and they can't meet their needs. And so I think as a, as a governor, we look at, at a couple different things, you know, number one, we've got to recruit better jobs. I think you've got wages and you've got costs. And those are two things. As a governor, you can do your best to address. So we've brought in the best jobs in our history. Since I've been governor. We've had our first, second, third and fifth best years for private sector investment. Our average incentivized wage last year was just under $30 an hour. And that means that we can't just throw incentives because states use incentives at anything. We've got to throw them at good jobs with good benefits. But then on the other end, if your cost of health care is rising faster than your wages are, if your utility bills are going up faster than your wages are. And I see this in our government employees, you can't let those increases eat up all of the the rise in wages. Otherwise people are going to say, wait a minute, I'm earning $5,000 more. I'm earning $10,000 more. I've taken that step up, yet I'm doing worse. And sometimes you see that as you're stepping up. I remember when I moved from being an associate to a partner in a law firm, and I had to cover all my own health insurance. I did worse that next year than the previous one. So. So as a governor, I look at both wages and costs and how we can we can push those costs down and hopefully bring those better jobs and better jobs and better jobs as we go.
Welcome. Thank you so much for joining us. I'm just going to have you give a short introduction of yourself, if you don't mind. And then I have a quick and then I have a question for you.
Perfect. No. So first, sorry for being late. My name is Salil Parekh. I work with Infosys, I'm the CEO at Infosys and we do a ton of work helping within India, the country moved to more and more middle class individuals so we can share some insights.
Yes. I'm wondering what you're seeing. As you know, emphasis is one of the biggest companies in India. It's a global company. How have you seen, I guess, the middle class shift in India. What are you seeing in your country?
So there it's it's been a huge move over the last several years. And I think people all over the world have probably read or seen it a little bit, but some data, just the technology industry in India employs about 6 million or so people. And when you add everything associated with it, it's maybe 5 to 8 times more. So somewhere between 30, 40 million people who benefit from the sort of wages that a technology job allows, which is essentially the definition of middle class in India. And what what that's done, that 40 million or 60 million people is changed the life of all of them by making these sorts of jobs and then the opportunities around them available. So for us in India, that means more things like education, consumption and healthcare. And those are things which are not, easily available, if you will, in India. So if you sort of abstract that back the way I think India or maybe some other places can move is to create these sorts of jobs. So first create an industry of that sort. We have another in that domain in pharmaceuticals. We have something that we do within the country now more on consumer businesses and then more today on electronics, export. So it's a combination of local consumption and export orientation that allows for this. And then underlying that is education, where we can create a large number of either engineering graduates or other degrees which allow for these industries to happen. So that's what I think the government has done to make some of these things available. And every year, more and more of these individuals become part of the middle class.
Christy, I'd love your perspective on this and wonder what you're hearing from the workers that you talk with all over, all over the world.
Well, as I said a little bit earlier, workers are really feeling squeezed, and but I want to sort of amplify a little bit what Governor Beshear said about good jobs. Because it's not just about any job. People are, you know, really it is about good jobs. And I want to make it more personal to me. I started working in the early 80s in a jet engine factory. And, you know, I wasn't like the, the most highly skilled. I was sort of in the middle. And I got that job because of a die policy of the federal government, which I won't touch right here. But I would say that in my job, mostly I worked with men. But everybody had a decent wage, everybody had health insurance, they had a pension. Most of my colleagues started owning houses in their late 20s. They could go on vacation. Some of them had a small boat and we were working class. We were working in a factory. Not everybody loved to come, you know. Do. The young ones were like, do I really have to work five days a week? Yes. But, you know, it was a job. And I look back at my wage then and what that would mean today would be 90,000 a year now. Those were good union jobs. And I really want to stress that the one feature of the decline of the working class in, you know, and the desperation that you see among people in both Europe and, and the U.S. and I put India a little bit in a different category here, but but is the decline of union representation and collective bargaining. And it has declined year on year, precipitously, precipitously since around 1980. And I think that's a big thing that has to be factored in to the pressure on the working class, is that good union jobs are increasingly less available, especially in the private sector. And that has to be, you know, dealt with head on.
Oren, I'd love your perspective on this. You mentioned earlier that part of the issue of the disappearing middle class had to do with corporate interests and, profit maximizing profits and things like that. What do you see as possible ways to reverse course on this or to. I mean, are there things governments and companies can should do?
Well, companies are going to try to maximize their profit. That's how our our system is designed. So I think it's important not to suggest that we solve the problem by expecting corporations to pay differently. The questions are what constraints do we ask them to operate within and what incentives do they have? And so if the way to maximize your profit is to invest in creating better jobs, than that is what they will do. You know, I think the union example is a really important one where if workers have more power, that is a constraint on what corporations can do. I think we get cause and effect a little bit backwards. When we think of the decline of unionization as a sort of exogenous factor that just sort of created problems. Unionization has declined because we told corporations, if you don't want to deal with the union, here's somewhere else you can go where there is no union. If if you don't have that other option, then you figure out how to deal with the union. And so, you know, I think one of the really interesting things about the composition of this panel is that we can see the trade offs very directly. I mean, I have tremendous respect for what Infosys has done in supporting workers in India. But from the perspective of America, Infosys business model is very much structured on the premise of coming in and offering corporations an opportunity to maximize profit by laying off American workers and relying upon lower income Indian workers instead. And that's that's not an accusation against Infosys. Infosys is supposed to be maximizing its profit. It's an accusation against American policymakers who have said, we're going to allow that to happen. And the theory of the case was and because of the magic of globalization, some better job will appear for the American worker. But that's just hand-waving. There's nothing. There is nothing in all of economics that says the job that appears instead is going to be a better one. And what we have seen instead is, yes, you can you can hand out H1-b visas, you can say, we're going to drive down costs by doing this. But if the jobs that show up instead are low wage, frontline, precarious service jobs, that is not a good that is not a good deal for American workers. That doesn't work well for the United States.
So I did want to give you a chance to respond. And also on the kinds of jobs that replace them, especially with AI in the mix, I think that's something that's causing a lot of worries.
Sure. I think first, what we see is, you know, where Infosys works, where many new technology companies are working. We have about 30,000 employees in the US who are essentially American workers. What we see is there's a change in the way some of that work is being developed. There are newer areas that we are recruiting at colleges in America and growing that base as well. We have digital centers in a number of states working with state governments. For example, in Texas, for example, in North Carolina, in Rhode Island, in Connecticut, on the West Coast. And these are centers essentially bringing in US employees to do the projects that we are working on. What we are seeing as a global phenomenon is more of where companies are driving change in their technology. They're looking for depth in certain types of skills, and those are the skills that Infosys can provide. For example, over the last several years, a lot of the work has been in cloud technologies or in digital technologies. And as we look ahead, a lot of the new work is in AI technologies. And there what we see is things that were not possible in the past with AI are becoming more possible for companies to embark upon. And that's the sort of new work that Infosys is working on. There are other areas where AI is making productivity benefits, where the existing work becomes smaller in size, but the net of it between the two, we see more opportunities in the new type of work that Infosys and AI are providing.
Governor, I wanted to talk with you. You mentioned earlier that one of the things you try to do is incentivize companies to come into Kentucky to bring in a certain kind of job, a job that you consider to be a good a good job. What what have you heard from your constituents? What are you doing to address those concerns? And also, do you think the way to address them is the same at the state level and and the national level? And yeah, I would love your thoughts.
No, I think I think there are differences in the state and the national level about the, the levers that we have. And also what our day to day jobs are now at the federal level. We don't have people that are hustling to create a specific American job in a specific place. You know, day to day you have some. But as a governor, that's your job every day. You know, the three governors that have been here in Davos, we've been meeting with as many companies as we can, each of them saying Kentucky or Michigan or Oklahoma are the best place to do business. And here are the, the reasons. But but as I think about a good job, the first thing it has to be is a job that is going to exist in the future. It is critically important that when you recruit a job, it is not in an industry or a part of an industry that will not exist in a certain number of years. We suffer through this in Kentucky, in the energy sector. And when the energy sector began shifting away from coal, it hit Kentucky hard. You know, we were the coal miners that powered us through the industrial revolution that helped create the strongest middle class the world had ever seen, helped power us through two world wars. But the term environmental justice came before economic justice. So when the new energy jobs were created, they weren't where the old energy jobs were. And so you saw things like parts of eastern and western Kentucky, where you had a 80,000 coal mining job, you were supporting multiple families suddenly disappear, almost all of them. And then you had a couple companies that came in and said, wait, we'll teach you how to code for $40,000. And you were supposed to say thank you. And so that's where you see some of the resentment that is out there in this changing world. We need to be really thoughtful about where new jobs go and displacement is created. If it's structural and it's going to happen, let's just be thoughtful. Let's be decent human beings about where we want to put those next set of jobs so that we can, lessen the, the impacts that, that are there. And I think about, the automotive sector because that's our one of our next biggest sectors in Kentucky. Aerospace is our number one export, which most people might not think they typically think bourbon, which is delicious, but not our number one export. And then we are the number one automotive, state per capita. And so when EV technology was coming along, that's something I worked very hard on. We landed some of the biggest battery plants in the world, until a change in federal policy has delayed or or hampered that. But remember, this is more than just ideology, right? My state sure voted for me a Democratic governor, but voted for President Trump by 31 points. Yet his policy has cost us 1600 jobs. We just had in one of those battery plants that now has to pivot, and we're going to be able to fix it over a couple of years. But still, for 1600 people, that is a pretty significant thing. But when I look at jobs, I hope that the company will do the math a little more, complex, that they will look at retention, that they will look at, you know, how, how long and how productive a worker can be that they'll look at if they invest in their workforce just a little bit more over time? Can they make that same profit or have that cost savings, because they don't have as many people that are moving from one company to another or are not able to to, to work as long. So we look a lot at corporate culture as well when we, when we try to recruit, and just always putting our people first and I'll say, you know, in Kentucky, it's worked better than most places. Our people are optimistic. In a pessimistic country, we are less divided than the rest of the country. And it's mainly because if you've got a good job, if you can see a doctor when your kids are sick, if you feel your roads and bridges are in good shape, if you believe the state is trying to give your kids a better education and you feel safe in your community than than all these other things that seem to tear us apart in the United States of America don't matter as much. But when you don't feel secure in those things, those are the only things that matter.
Can I pick up on that point? Just about about doing the math a little differently, which I think is really important. And actually one of the best examples I've seen of this is in Kentucky, where, Newell Brands has a Sharpie factory and Sharpie you would think is the last thing you would make in the United States. It's right. It's a marker. It's a piece of plastic. They've moved almost all of their Sharpie manufacturing from China back to Kentucky. I think it was a couple of billion dollars of capital investment.
When was this?
I believe you would probably know better than I would. I believe it was over the last five years or so. And so, you know, the what's so interesting, why I think the numbers point is so important, is it took both sides. It took a CEO who said this $2 billion in capital investment, a lot of retraining is going to create much more productive, higher value, more automated jobs. We're actually going to get for essentially four times as productive to make the numbers pencil out, which means we're actually going to have the same number of workers all earning more money with much higher output. All of that being said, they didn't even consider it. It wasn't math even worth doing until it became unfeasible to rely on China for that anymore. What they could do in China was going to swamp all of that long term thinking. And so I think you're right that you do need, even as we get the incentives right at the macro level, you do need that further thinking about retention, about the return on investment in people. But I think we also need to be realistic that some of the imbalances in the global economy that have been allowed to build up and persist make that a moot point if we can't get that right as well.
Do you think, Christy, that that the new jobs that are being created, the new, I guess, the new world economic system, do you think it's better for workers? Worse for workers? I mean, unions do tend to be, associated with jobs that are like older jobs. I feel like when you have, like, a new industry that's developing new kinds of jobs, there's usually not a union.
That is true. But I think that's that's true for the United States. Not true necessarily for Europe, not true for the rest of the world. And there's nothing inherent about old job, new job, whether you have a union. That's because the system in the U.S. is really broken and makes it really hard for workers to, to get a union. Unions are at pretty much all time popular. You know, the polling shows that 70% of workers in the U.S. want a union. And, you know, yet 7% in the private sector. So that kind of says there's a big disconnect between what workers really want and what's able to happen. That's 11.. I don't think that's that's because it's new versus old. It's really about, you know, the the obstacles towards creating a union which are have even intensified more under this new administration. But yeah, and I think one other issue concerning new jobs and displacement is that there is this, anxiety across workers union or not, but probably less among those who have a union. But that AI is going to replace so many jobs. And the displacement concern is widespread even across sectors that, you know, where it's not really they're not, you know, at the tip of the spear when it comes to AI. But I think all workers are anxious and the question of displacement is real. And we had some discussions about it yesterday. Where, you know, the head of the IMF said this is a tsunami of disruption to the job market that's coming ahead, and we need to prepare. And part of that preparation is having employers decide they're going to keep people at work and train them for other jobs in there. And that is the attitude that you're thinking about. You know, we don't want to have new jobs and then have them disappear because some AI, you know, is able to replace many of their tasks. We want to have some commitments that workers will be augmented and in their current job, or if not augmented, at least find another opportunity in the same employer. And I also am sort of a veteran of the United Mine Workers, and I'm very, very well familiar with all the efforts at upskilling and reskilling that happened when these coal mines closed down. And I've used this as an example. We have so many places where coal miners are trained to do work in a nursing home, and that just doesn't fly. We have to think about reskilling, upskilling in a more practical way and link to actual work and, and, and choose companies that are willing to say, you know, I'm willing to make a commitment to my workforce and find other opportunities.
Yeah.
And I think on when you look at where we are right now on the concerning side, wages versus costs in the United States, is somebody getting ahead? Are they staying afloat? I will say on the positive side, we have seen the best safety track records in our facilities across every industry that we've seen in our history. And we have seen an investment from our employers on technology that reduces the wear and tear on people while they are in those facilities. So that idea that you can go home, feeling healthy, feeling happy, and you can experience that part of your life outside of work in a better place. But if you can't afford to do anything in that period of time outside of your work, it doesn't it doesn't translate. But I do want to say that on the safety, on the reduction of the wear and tear, I think we've seen technology play a really important role in helping our people.
I'd love to hear from you because I know Infosys has has added jobs, but a lot of companies in tech have been shedding jobs a lot. And I feel like AI is probably having the the, the quickest impact in, in the tech sector. So what kinds of jobs do you see going away getting replaced? Are the jobs that are that will be replacing the jobs that are going away? Are they better jobs, more skilled or. I'd love to hear.
From you. Yeah. First, some.
Sort of data on what what we've done at Infosys this year. So our year ends in March. Up until now, we've hired 18,000 college graduates. That's a huge expansion for us. We'll be up to 20,000 by, by the by March of this year. And for next year. Our plans are already for 20,000 college graduates. So my sense is stepping back from Infosys. AI will actually enable us with new jobs. I don't think net, the jobs are going away anywhere. They'll be different types of jobs. So this is more in the tech space first and then where AI impacts other because it does impact white collar work, which traditionally we've not seen technology doing more much of that. So we see that with AI new types of things are coming to the fore. So for example, if you look at the last several years, someone who was building technology typically had one type of education more in engineering or sciences. Today, the technology enables a broader set of people, if they have a view in their mind of what a business issue is, to build software for that business issue by simply working on what we call prompts or just instructions or guidelines, which then are translated by AI into software. So you essentially have a much broader set of people who can do software work. This is just in software. Then you go to other things where people are looking at specialized skills, whether you look at things in finance or accounting or legal, the AI becomes an enhancer of those sorts of jobs. So the skills that people develop are can we do much better credit analysis as opposed to the basic things that people were doing some years ago because AI is supporting them? So my sense is actually the jobs will change and we will have more jobs than less jobs. So I'm not maybe I'm optimistic, but I'm not of the view that jobs are disappearing with AI.
Orin, I'd love to hear from you on this, because I've heard AI kind of referred to as a new industrial revolution. And typically the way industrial revolutions go is eventually people standards of living do raise, and new great jobs and exciting industries crop up. But there's very often a gap that is very difficult. Do you see that happening now? What is your perspective on AI and jobs?
Well, I think the first thing to say is that I think AI is going to be very different from the sorts of shocks that we've gone through recently. If you think about the sort of the China shock globalization, you know, that was in a span of a few years shutting down entire industries. If you think about what happened with coal, there's a huge difference between the the gradual shift in energy mix away from coal that had been happening for a generation, and a set of regulatory policies that say, essentially, we're just not going to use this anymore. When you have that gradual change, what you find is, you know, first of all, solely through attrition, you have maybe less hiring in an industry. You don't have the mass job loss, and you create those opportunities that you were just talking about for upskilling, for figuring out what comes next. It's it is entirely different to have a factory outside of town that is automating and changing the jobs it has, maybe becoming more productive and shuttering the factory. And economists have typically made the mistake of treating those two things as equivalent, because we haven't tended to actually think about workers as mattering. All we cared about is the output and the price of the thing, whether it was coming from China or whether it was coming from that factory near town. And so I think, you know, if you think about past technological revolutions, what you see is the impact on workers is pretty much agnostic to what the technology is. You're right that we've had huge technological shifts, like the original Industrial revolution that initially went very badly for workers. We also then in that case, saw it ultimately was good for workers. We've had other technological shifts, electrification, the sort of initial wave of automation, even computerization, I would say, were generally almost entirely to the benefit of workers. We don't have that negative story. And so I think it's important not to take technological change as as a threat per se. It's a question of what is the context in which it's happening. I think the best explanation for why the Industrial Revolution was such a disaster initially is that it enabled child labor. You all of a sudden didn't need somebody who was strong to do the work.
Well, the jobs also required fewer skills, so they paid differently. They were less competitive. I mean, it also.
But it was it was. entirely different jobs. Think about the industrial revolution. It was bringing people out of agriculture altogether and into these urban areas. And so the you see, particularly in the UK, when you implement child labor laws, all of a sudden that's a perfect example of a constraint that says, okay, industrialists, you actually now need to figure out how to run these factories in a way that's that's going to work for workers also. And so it's it's those kinds of things, I think, that are going to determine whether something like the AI revolution generates, better, more productive jobs or, you know, the other way you could tell this story is, well, actually, all these tools mean you don't really need American workers. I mean, you're taking what were previously very high value coding jobs. Now, you could probably just send that all overseas. That's what's going to determine whether or not AI works out well for that worker or not.
Governor, I'd love to hear what role you think regulation can play. Or I guess what you've observed in in trying to to find jobs and attract companies in the AI or AI adjacent space.
Well, I find.
Those comments interesting because I think a lot about the location of data centers. In the same kind of rubric, I think that, the, the ultimate end users need to get very involved in these much more so than they are right now, because I think we are at the precipice of a major American backlash against data centers. And the reason is it's not the Meta's or the Googles of the world that are out there talking to these communities, trying to strike a fair deal. It's developers and speculators that they've hired that are trying to get the best deal that they could, then sell to one of these companies and then take part of the profit from that deal. And what that means is there's some data centers going up that are a significant net negative to the community, both in the in the short term and in what the long term potential for that site and that power could have brought. So when I think about the location of a data center, maybe you get 100 or 200 jobs in an area where you could have gotten 1000 to 2000 jobs. And so what is it about the location of that center that creates a net positive for the community? So for me, I think about it in three parts. Number one, you can't ask Kentucky families to subsidize your power, right? You've got to be paying for your full power and for the new means of generating it that are going to need to come in. And we've got to be able to tell our families that, number two, you've got to pay your fair share of taxes. And it doesn't mean we don't need to look at the overall property tax. If you're building a $15 billion facility, which we haven't had before, then maybe we look at things. But the overall net positive to a community isn't the employment, though. It's okay depending on where it is, because if you go to rural America, it makes a lot more, more sense, but it's how much you pay into the school system. Because if you can take a school system that was struggling and suddenly they can provide state of the art education because of the additional funds coming in, you got a better argument? What can you provide to the county and the services that they can provide as they're trying to reskill and do some of the rest? What's the the tax amount ultimately going to the state? And then the third piece and I started there is do the work, get in that community. It can't just be that we have a Google or a meta or a something data center that's that's out there. You've got to become a part of that community again, because you're asking them to give up the amount of power that could have brought in something else, and the number of jobs that could have gone on what is basically an industrial site. And so as I think about AI, I have to start there as governor, because that's where we are. But but I'm also thinking about what are the trade offs, right. What is an investment and recruiting company A versus company B, the positive side of AI and AI companies is it's the future and we know it's coming. I think it needs to be properly regulated. And my concern against the push against the States isn't anything philosophical. I get that there needs to be at least some level of consistency. It's that if you don't allow the states to regulate at all, they don't come to the states, you don't have that dialogue and that relationship on the other side. We're still going to need to make things. We just got a Irish company called Tate that's actually going to build the racks for data centers, and they're creating 400 jobs in in Glasgow, Kentucky, which hadn't had that big of a jobs announcement in a while. So I even think about AI in terms of what's it going to take to make AI work, and we want to be a part of of that too. But but it is, it's it's one of those where you've got to weigh each part and determine how much of one versus the other you want to be. And I'll just close with, the initial argument, on, on this, what was sold to a lot of states was faulty. It's that tech is cool. And if you have a data center, you can say you have tech and more tech companies will come just because of the data center. That wasn't real. And so I now hope we're having a much better conversation knowing how important these data centers are to these companies. But, how they've got to be a bigger part of each community than they're in than just 100 jobs.
I mean, Christy, you mentioned a lot of workers all over the world are very nervous about the security of their jobs. Is that because of AI, or is the nervousness coming from other places as well?
Well, I think AI is generating a lot. And specifically when you look at, for example, call centers, right. Those jobs are distributed all over the world. There's quite a few in Asia, quite a lot in India and Philippines, 10% of the GDP of the Philippines. They're heavily impacted by AI, and there are constant threats that we could wipe out. Many of these call centers replace these workers with AI. So okay, maybe that's a net. You know, part of the all the big math equation. The net is there. Summer will go and some will come. But for the Philippines, if it's 10% of their GDP, that's a huge cut. And who is responsible for that. So it's get back to gets back to are you putting all of the burden on the social the government of the Philippines or or India or what is the social responsibility or the state in that case? I think there's there is anxiety about job loss, but there's also anxiety and, and or skepticism. And, some negativity about sharing in the gains of AI. And I think that's a really important point to put on the table when it comes to talking about the middle class, is that we hear all, you know, and we're in it, you know, we want shared prosperity. We want sharing the gains that AI can be good for everyone. It's going to lift our standard of living. It's going to improve our productivity. But if that call center worker gets to be like right now, there's that, say 15% productivity improvement just from the augmentation is that workers seeing like 7% or 8% out of that 15%, not really, unless they've got some negotiating power. And I think that's just in a, you know, small scenario that I'm describing. But I think writ large, there is a like, well, if we're all more productive using AI, where is the redistribution of that, of that wealth of that, you know, of that newfound, profit? And how do we make sure that workers are getting a slice of that pie? And it's not just going to the the big tech companies or even the other companies that are using or deploying AI. And I think that that's like a, you know, big question, you know, hanging over, all of AI.
Yeah. Oren, I'd love to turn to you on this because we have seen companies associated with AIS in the US just absolutely have the most amazing year last year, stock price. At the same time, the job market has been really flat in the US. How do you see AI affecting the whole economy and why maybe haven't a lot of people seen gains from the tremendous growth and prosperity of AI?
Well, I think the the job market in the US has actually been quite healthy. The number of jobs being created each month is way down, because we've gone from massive net influx of migration to outflow of migration. And the you had forecasts in advance. If that's what happened to the population, you would see the lower job growth numbers. Obviously, the unemployment rate has stayed quite low. Real wages.
It has been rising.
I mean, 4.2 to 4.4%. I still I remember the days when 6% was the natural rate of unemployment. Yeah. So in that respect I think it's a fairly healthy job market. I think what you're seeing with the sort of valuations of the AI companies, it's important to remember that that that is purely paper money. There is no I mean, the data centers haven't even been built yet. The AI doesn't actually do any do any of the stuff yet. So, you know, I in a lot of respects, I think it's an illustration of, the extent to which we are allowing our perception of financial markets to swamp our focus on on what actually is happening in the real economy. I think the point is exactly right, that the question is, what's going to happen with this productivity if we do get it? And I always, you know, going back to the early industrial revolution, I think it's so interesting to think about. It's not the mechanization of agriculture that created the prosperity. If we had mechanized agriculture, said we only need 2% of people working on farms, and the rest of you can sit at home and will mail you a transfer payment, that would not have been prosperity. The prosperity was the creation of the new thing that people could do, so that we had then more output for everybody to share. And so what's what's going to create profits for companies? Just cutting the existing workers creates profit for companies. What's going to create prosperity for the society, for the middle class is if we actually have a focus on investing in, okay, what can we now do more of? And, you know, that doesn't even necessarily have to mean new jobs. I always try to remind people, just think about the living standard of the upper middle class today in the US. Think about what a family that has $250,000 of income consumes in a year. Now think about how much more we would have to produce so that every family could consume that. You don't have to. You don't have to invent a single new thing to see the next 50 years of economic growth for the typical family. So I think we have enormous room to run again, if that is the way that you make money. And so that is the piece we have to get. Right. The one other thing I want to pick up on, because I thought Governor Beshear made such a great point about this in terms of being part of the community where these things are being built is we've been talking about the middle class almost entirely in economic terms. We are at the World Economic Forum, but a huge part of what has been lost and what actually saving the middle class would mean, is actually ensuring that the places where most people actually live actually remain integrated into and a crucial part of society. Part of what what was real when the middle class was thriving, at least in the United States, is that that's where the business leaders lived. Also, everybody's kids were going to school together. Everybody had a stake in the success of the same places. And as we've moved to a situation where there's this divergence and you have essentially a, a thin class of people whose stake is much more tied to that same thin class of people elsewhere in the world. It leaves everybody else behind. Yes, in economic terms, but but in, in a broader social sense that that you don't solve through redistribution, you don't solve by building the data center. You actually need an economic model in which the incentive is is to, is to go back to living and working together.
Well, amazingly, we're out of time. I don't know how the time went so fast, but this has been a really wonderful discussion. Please thank our our fantastic panelists for their brilliant thoughts. Thank you very much. And thank all of you for for your time and attention. Thanks, everyone.
Thank you, thank you, thank you. All right. Excellent.
I love hearing you talking about the coal miners and the coders. I mean I've.