Some occupations, like radiologists, have proven more resistant to technological displacement than expected. Others, like bank tellers, did eventually succumb—just to later and different shocks than most predicted.

Sometimes though, displacement happens in straightforward ways, as with travel agents. Airline deregulation in the late 1970s both complicated booking prices and loosened rules on travel agent commissions. Together, these changes made the profession far more lucrative and boosted employment: between 1980 and 2000, travel agent jobs tripled, peaking at about 340,000. But then a prolonged structural decline set in, driven by a one-two punch: airlines began cutting agent commissions on ticket sales in the early 1990s; and internet platforms like Expedia, Travelocity, and Priceline emerged, advertising that everyday consumers could now access the same reservation systems agents once monopolized. The loss of clients to online providers and reduced commissions led many brick-and-mortar agencies to downsize or shut down entirely.

So the decline of travel agents was driven largely by technological displacement. AI is a very different kind of shock from the internet of the 1990s, and its effects on labor markets may turn out to be quite different too. But the story of the travel agent is still instructive, because it demonstrates what happens to workers when a technology renders their profession obsolete. As it turns out, the story is not entirely bleak.

1. Travel agent layoffs came in recessionary bursts, not a gradual decline.

Widespread displacement of travel agents didn’t happen immediately during the dot-com boom. Rather, it was the bust that drove displacement. In the wake of the 2001 recession, employment in the travel agency industry1 fell precipitously and did not claw back prior losses. By the eve of the Great Recession in 2007, there were already nearly 40% fewer workers in travel agencies than at their dot-com peak. Four years later, employment was at less than half of its peak, and today travel agency jobs are 60% lower.

2. Travel agent unemployment rates are still low in good times, but are now higher in bad.

While travel agent employment has declined steadily, so has the travel agent labor force, indicating that many agents have changed careers since 2000. As a result, the unemployment rate of travel agents—measuring the utilization of their labor force—was just 2.8% in 2025, lower than typical even before the dot-com boom.

But this low rate comes with a major asterisk. Travel agent unemployment has become far more sensitive to economic downturns. Before 2000, travel agent unemployment rates typically rose by less than the overall rate during downturns. Between 1979 and 1982, for example, the travel agent unemployment rate rose only 0.8 percentage points despite the overall rate jumping nearly 4 percentage points. The pattern repeated over 1989–1992, with travel agent unemployment rising only 0.9 percentage points versus 2.2 overall. But after 2000 the pattern flipped: the travel agent jobless rate spiked 3.9 percentage points over 2000–2003 versus 2 overall, 5.8 versus 5 over 2007–2010, and 0.7 versus 0 over 2019–2022.2

3. Pay for travel agents has outpaced overall wage growth as they have shifted to higher-value bookings for wealthier clientele.

As the market migrated online in the late 1990s and early 2000s, the remaining human travel agents pivoted sharply upmarket. They adapted by charging planning and membership fees and aligning with luxury consortia like Virtuoso to offer high-end clients exclusive upgrades, complimentary amenities, and personalized services that no algorithm could replicate. This shift is reflected in wages. Average weekly earnings at travel agencies were 87% of overall average weekly earnings back in the heyday of 2000. By 2025, the ratio had reached 99%, meaning travel agency wages had outpaced the rest of the private sector over that span.

4. Economy-wide employment has fully recovered

Travel agent employment is down by more than half from its dot-com peak. This caused hardship for agents forced to switch careers and facing greater risk of joblessness. Decades later, however, the dot-com boom has not lowered aggregate employment. While the employment-population ratio has fallen five percentage points since 2000, this is entirely because of population aging. Adjusted for today’s demographics, the employment rates of 2000 look virtually identical to the present. As travel agent jobs disappeared, new jobs emerged elsewhere, many former agents switched careers, and young workers who might once have become travel agents went into other fields instead.

History doesn’t repeat itself, but it does rhyme. AI’s effects on the labor market may not be identical to past technological shocks, including those on travel agents. But the experience of travel agents highlights risks for us to consider. On the one hand, AI disruptions to the labor market may be delayed and not salient until (perhaps even amplified by) the next recession. On the other hand, the most negative effects may be limited to specific occupations rather than broad-based, and as prices and wages adjust, those occupations may even look more favorable over time. But that’s of little comfort to anyone displaced in the near-term. These risks suggest the policy focus should be more weighted towards easing transitions for whatever displacements do take place rather than assuming mass unemployment.

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The K’s we see: Profits and (possibly) wealth

US corporate profits in 2025 were elevated, with profit margins reaching 17.9% over the year ending September 2025, a level not seen pre-pandemic since 1967.1 But more striking than the average level of profitability is its distribution.

Market concentration is often dismissed as a valuation bubble, but in this case, the divergence between the best and worst performing stocks is underpinned by a massive consolidation in actual earnings. The most profitable third of publicly listed US stocks now account for roughly two-thirds of total market capitalization—the highest share on record, based on data from Eugene Fama and Kenneth French. And the most valuable 10% of the S&P 500 account for approximately 59% of the index’s total profits, well above historical norms.

There are two effects here: the most profitable companies increasing their share of equities, and large businesses getting more profitable and entering the top tercile. The steep jump we saw in 2025 was driven entirely by the latter. That included some Magnificent 7 businesses (e.g., Meta, Amazon, Alphabet), but also many large, non-Magnificent 7 companies such as Netflix, Home Depot, and JPMorgan Chase. That broadening of the profit elite within large-cap equities is a meaningful signal: it suggests the dynamic is structural, not a function of a handful of hyperscale platforms.

The mechanism is consistent with superstar firm economics. Returns to scale in software, data infrastructure, and digital distribution create winner-take-most outcomes across a widening range of industries. The equity market is, in this sense, functioning as the sorting machine it is designed to be—concentrating capital and profits toward the highest-return deployments.

The equity divergence has a plausible transmission mechanism to household wealth. The S&P 500 rose 16.5% over 2025, and the top 1% of US households own approximately 40% of all equities.2 And on first glance, that mechanism seems to be firing: the share of total wealth of the top 1% has risen roughly 2 percentage points since 2022. That signal warrants some caution, however, as the rise in the top share began growing at exactly the point this data became less anchored to more-reliable wealth surveys.3 The direction of this recent trend is plausible and consistent with equity market performance, but the magnitude should be treated as provisional until more data lands.

The K’s we don’t see (yet): Consumer spending and wages

The consumer flavor of the K-shaped hypothesis might “feel” right to families because of lingering dissatisfaction with prices and affordability, which we can see in metrics like consumer sentiment. That said, while consumer spending by income group is not tracked well in real time by any single government source, the available data does not support a bifurcation narrative.

Multiple spending surveys show low-income household spending performing at least on par with high-income households over 2025. Households making under $50,000 reported spending growth of 5% over 2025, versus 4.6% for households making over $100,000. While inflation-adjusted retail spending for lower-income households grew modestly slower than it did for top-income households in 2023 and 2024, the gap converged through 2025—low- and upper-income consumption grew at similar rates. This is consistent with lagged but larger and more-reliable government data, which shows the top income decile’s share of aggregate spending at 22.8% in 2024, down from 23.4% in 2023 and below the recent peak of 23.9% in 2016 (economist Antoine Levy has a helpful deep dive on the data here).

Using Stripe data, we can also crudely proxy for consumer spending by income quartile, based on consumer MCC transactions and average income in the ZIP code of the spender. This data similarly shows no evidence of a high-income divergence: if high-income ZIP codes were seeing faster spending growth than low-income ZIPs, the ratio of the two would be rising. But in fact, the ratio has been falling since 2023. So at least on Stripe, lower-income ZIP codes have seen more robust spending growth than the top.

The picture on wages and income—which should be strongly correlated with consumption and which are more reliably measured on a household basis—is similarly undramatic. While real earnings at the 10th wage percentile have grown roughly 0.5 percentage points more slowly than at the 90th percentile since 2022, both cohorts posted positive real wage growth over the period: the bottom did not fall while the top rose. On income more broadly, lower-income households actually outperformed the middle and top from 2022 to 2024, before briefly softening in late 2024 and early 2025 and then reaccelerating. The middle income tier has grown faster than the top in 2025 and on a cumulative basis since 2022.

In short, on current data, the consumer economy looks more evenly distributed than equity market performance alone would suggest.

Why the corporate K but not the consumer K?

Several forces might explain why divergence in corporate profits has not yet translated into divergence in consumer-level consumption patterns. First, although the richest 20% hold a disproportionate share of equities, they account for less than a quarter of all consumer spending. So any equity wealth effect, even if large in percentage terms for the wealthy, is modest in aggregate demand terms. On average, only 3¢ of every $1 earned in stock market wealth is actually spent. The $6.3 trillion valuation-driven growth in equity wealth over the first 9 months of 2025 would thus be expected to support about $200 billion in consumer spending. And higher concentration of equity wealth at the less-spending-prone top can dampen this effect. The very wealthiest spend more like 1¢ for every dollar they make in the stock markets. In other words, the wealthy are getting richer, but they don’t spend enough of that extra wealth to tip the scales of the entire consumer economy. This explanation implies that the run-up in equity wealth would have to be even steeper than what we’ve seen to drive divergence in consumer spending.

Second, real wages at the bottom have been supported by continued labor market tightness and sustained gains from earlier in the pandemic, partially offsetting capital income gains accruing to the top. As the chart below shows, the strongest payroll gains since the end of 2022 have been in the lowest fifth of industries by wage level. This possibility suggests that labor market weakening would be the harbinger of K-shaped patterns in the consumer data.

We are seeing economic divergence, but primarily in business America—in profit margins, market concentration, and equity returns—where the story appears to be largely one of tech versus nontech, rather than the consumer economy, where evidence is much weaker so far.

For investors, the profit concentration story appears durable so long as returns to scale in technology and digital infrastructure persist. The broadening of the profit elite beyond the Magnificent 7 into a wider cohort of scalable businesses supports equity earnings quality over the medium term.

The consumer K meanwhile remains an open question rather than a settled finding. Wealth concentration has risen on the best available real-time data, and the transmission mechanism—equity wealth effect into upper-income spending—is theoretically coherent, but it has yet to decisively show up in what distributional spending data we have. A consumer K could become more evident as wealth spillovers become more salient, or as other shocks such as geopolitical and trade tensions or slowing labor market churn has disparate effects on households. Until then, consumer bifurcation is a hypothesis worth monitoring, not a conclusion to act on.

The K, in other words, is more Wall Street than Main Street—for now.