How could Artificial Intelligence become dangerous?

[California]

Are the labor rates included the Loaded labor rates, ie labor burden
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The loaded cost is typically 25% to 40%+ on top of the employee's base wage/salary.
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Analysis: This paints a much tighter picture. At the Moderate Scenario volume, the business is essentially breaking even after accounting for the true, fully-loaded cost of labor.

Huh? We always used 100% labor burden evaluating the reasonableness of consultant proposals. This included retirement contributions and some other indirect costs you might not see in a non union auto shop. The environment would be different between specialist consultants and shop labor, but possibly Workman's Comp, and carrying an employee recovering from injury and not very productive, might bring the figure back up to 100% load there, too.

Seems to me this AI summary is the starting point, where the next step is extensive research into actual costs at the competitors.


And:
Kinda related: Someone starting a business may be just creating employment for themself at the same income as working for others. But a real business has an additional income requirement, a return on the equity invested. In simple terms profit in addition to personal income. If that profit isn't obviously attainable, maybe try something else.

 

[California]

Is anybody reading these two page long posts?

Yes, just glancing through a couple of them to catch the critical points.

I used to do this for a living, among other responsibilities as a government auditor. Our shop was required to provide an independent opinion on the vendor's proposal for anything contracted out, to be performed on a cost +fixed % profit, fixed rate.

My favorite was a retired professor of Southern California archaeology, the recognized expert in what artifacts we could expect to find underground in a new freeway excavation. Digging into her numbers, in the previous year she had retired and made a huge contribution to her retirement savings. Then in her proposal to us she used that one-time real number, as the anticipated annual cost of retirement contributions during the time she was under contract. I told her no way, the limit I would sign off for was an hourly rate matching the Governor's salary hourly rate. She folded. With a lot of grumbling.

Six months later she contacted me asking how to get on lists of consultants for other specialties. Said I was the only person giving her reasonable and comprehensive advice.

 

[paulsharvey]

Huh? We always used 100% labor burden evaluating the reasonableness of consultant proposals. This included retirement contributions and some other indirect costs you might not see in a non union auto shop. The environment would be different between specialist consultants and shop labor, but possibly Workman's Comp, and carrying an employee recovering from injury and not very productive, might bring the figure back up to 100% load there, too.

Seems to me this AI summary is the starting point, where the next step is extensive research into actual costs at the competitors.


And:
Kinda related: Someone starting a business may be just creating employment for themself at the same income as working for others. But a real business has an additional income requirement, a return on the equity invested. In simple terms profit in addition to personal income. If that profit isn't obviously attainable, maybe try something else.

100% labor burden is awful high, but 40% might be about right on target.

AI, as you point out, is a starting point. I noticed the wage cost was pretty low, more like pay vs loaded labor rate, so thats why I re-queried it.

On your 2nd point, I have brought this point up in half a dozen "how much should I charge for tractor work" type threads. Heck, kinda brought it up in one 2 or 3 days ago "do you charge friends for tractor work" or similar.

To me, there is a difference between a business owner (no matter how small), and self employed, and the biggest difference is, you pluck the owner out, is there still value, when you replace him with labor. If not, the business doesn't have value. If the owner operator, can be replaced with labor (no matter how highly skilled), and there is still profit, then we have a business...

 

[paulsharvey]

On consultants, and loaded labor rate, not just labor burden; the cost you pay a consultant vs the hourly rate of the guy, is often 3×. It wouldn't be at all out of norm for a $30/hr guy, to be charged at $90-120/hr. You have $30 in wages, $15-20 in benefits/tax match/ect; $15 for the truck; $7.50 for over head (his managers/admin staff, sending the bills, tracking time, ect); so, $67.50 in expense; and maybe $30-60 in profit, on his Billable hours.

So, it sounds expensive, and it is; but of say, $100/hr; an employee vs consultant; an employee is probably $60-70/hr in cost. So, consultant is 30% more.

 

[paulsharvey]

To add to the above, some times (not always) that Billable rate would be based on a statewide average for the job, not the individual consultant. So, if average pay for a Senior Bridge CEI is say $52/hr; and company X has a senior bridge cei that makes $37/hr; they still may bill him at $161.20/hr. Others, the negotiated rates are based on Bob's pay of $37/hr,

Also, a contract is for 1 senior, 1 junior; and you choose to place two seniors; and no junior; many organizations will only pay senior rate on 1, and junior rate on the 2nd; as thats your staffing issues, not theirs

 

[paulsharvey]

Just cause im sitting here, waiting on dinner; I ran a model of a tractor work for hire, using a MF2860M, transported in 35 mile radius, with a gas ram 3500.
We got $9/hr depreciation; based on 50% retained value, at end of life (4000 hours)
$5-7 for wear items
$35/hr loaded labor on skilled operator (honestly, good luck getting "skilled" at $25/hr, but...)
Fuel, grease, and PM service $10/hr
$22/hr broken down overhead, insurance, licenses, ect
$5/hr paid by the tractor for the truck/trailer
and an actual profit of $25/hr

After a second query, as the purchase price to base depreciation on was too high, we ended up at $125/hr billable, $85 mobilzation charge, and about $25/profit, after paying an operator $25 hour.

So, that would be a "business"; and as the owner, if you operate it, you're at about $50/hr pay, before taxes. You can make money, paying your nephew to run it.

It also built the model on 100 hrs/month of billable work. So, thats why our hourly overhead is so high.

 

[paulsharvey]

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[DarkBlack]

Looks like my initial evaluation was right….most people, including many here, are confusing computer programs, with true AI, calling pretty much every coded computer program available …AI …
Would be a more interesting thread for discussion, if people wouldn’t discuss normal computer programs as if they’re AI… They’re not. They’re simply computer programs.
Sorry if this post offends some..

 

[paulsharvey]

Looks like my initial evaluation was right….most people, including many here, are confusing computer programs, with true AI, calling pretty much every coded computer program available …AI …
Would be a more interesting thread for discussion, if people wouldn’t discuss normal computer programs as if they’re AI… They’re not. They’re simply computer programs.
Sorry if this post offends some..

Well yeah, kinda. Chat, Deepseek are not really "ai" as they are simply gathering existing info and organizing/simplifying existing intelligence. At the same time, I dont think its wrong to call them AI, as they also do.

So, true AI, will we even know when we see it?

 

[DarkBlack]

Well yeah, kinda. Chat, Deepseek are not really "ai" as they are simply gathering existing info and organizing/simplifying existing intelligence. At the same time, I dont think its wrong to call them AI, as they also do.

So, true AI, will we even know when we see it?

True AI can modify its own code. Traditional programs read and modify databases external to the program.
Most programs people encounter are at this stage of the game, simply , very good, sophisticated traditional programs.
For profit software companies, though, are incentivized to make the general public think every piece of software they have available, is part of the latest AI, craze.
People start thinking glorified accounting software, or data mining algorithms are AI, because it returns “smart “ results. It’s not