In 2007, Luke Arrigoni pulled in $63,000 as a junior software developer. Fast forward to today, and AI tools that supposedly churn out better code than he ever did are priced at a measly $120 a year. Here’s what this really means: companies are getting a bargain on something that threatens to wipe out entry-level jobs. Arrigoni, now at the helm of Loti AI, which tracks unauthorized deepfakes in Hollywood, sees the writing on the wall. He’s suggesting we hike up AI prices to make hiring rookies more appealing. Sound familiar? It’s the same old story of technology outpacing the job market.
The fear of AI replacing jobs isn’t new. But with AI systems now making sales calls and writing software code, the anxiety is ramping up. Yet, for now, the job market hasn’t collapsed. ZipRecruiter claims summer internships in the US are back to pre-pandemic levels. But don’t get too comfortable; this isn’t the first time we’ve seen this circus. At a recent summit, OpenAI’s Sam Altman likened current AI tools to interns, predicting they’ll soon be as competent as seasoned workers. Some companies are already treating them as such.
OpenAI talks about reskilling programs to ease the transition, but conveniently skips over the idea of charging more to slow down this AI takeover. The real kicker? AI coding agents are dirt cheap compared to hiring a human. Arrigoni’s got a point: if newbies can’t get their foot in the door, who’s going to lead future teams?
AI pricing has been all over the map since ChatGPT’s free debut in 2022. Despite offering some higher-tier plans, AI companies aren’t turning profits or slowing adoption. The game is mass adoption, pure and simple. Unless something drastic happens—like a shortage in GPUs or electricity—don’t expect prices to shoot up.
Take Decagon, a startup selling a chatbot for customer service. It costs less per conversation than hiring a human. CEO Jesse Zhang admits it’s about efficiency and undercutting human labor costs. Profitability? That’s another story. Decagon’s raised $100 million from big names like Andreessen Horowitz, allowing them to focus on growth over profits. Pricing higher? It’s a “what if” scenario they’re not keen to explore right now.
Erica Brescia from Redpoint Ventures had her “aha” moment when she saw Google’s AI plan priced at $250. She thought it was too cheap for the value it delivers. A price hike might make sense, but the market’s not there yet. GitHub’s Copilot started at $10 a month, aiming for user base expansion over immediate profits. Brescia reckons it could be priced 100 times higher today. But GitHub’s sticking to democratizing access, or so they say.
Zed’s Nathan Sobo hopes AI prices will rise, but he’s keen on keeping them accessible for everyone, including junior engineers. Decagon’s Zhang echoes this sentiment, though he admits they wouldn’t pay exorbitantly more.
AI agents could demand higher prices if they were more reliable and user-friendly. But we’re not there yet. Nandita Giri, a seasoned engineer, would pay top dollar for an AI assistant that doesn’t frustrate her. Her attempt at creating a burnout-preventing AI agent? It just canceled her meetings—not exactly the solution she was after.
Companies are hiring “AI architects” to minimize blunders, but who’s going to fill these roles if entry-level jobs vanish? MIT’s Simon Johnson suggests lowering payroll taxes to make hiring newcomers more attractive. Arrigoni, meanwhile, is doubling down on hiring junior engineers at Loti AI, steering clear of AI tools. If the job market implodes, he doesn’t want to be part of the problem.
Here’s the bottom line: AI is shaking things up, but the real challenge will be balancing progress with opportunity. Don’t let the hype blind you to the risks.
