LABOR & AI IMPACT

Labor economics & the AI-impact thesis

Revenue per employee and SG&A intensity across all 62 markets. Low rev/employee paired with high SG&A is where AI most directly attacks the fragmentation constraint.

The AI compression hypothesis

Internet and software markets have high revenue per employee because capital investment in distribution and product development produces leverage. Software: ~$600K per employee. Internet platforms: $1.5M–$2M+ per employee.

Cognitive services (legal, accounting, consulting, insurance, IT services) and physical services (trades, cleaning, landscaping) are stuck at $100K–$400K per employee because labor isthe product. These industries carry 30–75% SG&A ratios — a direct measure of how much cost is white-collar back-office work.

AI collapses the white-collar constraint. When routine analysis, quoting, scheduling, compliance, and underwriting are automated, the same dynamics that concentrated software (Aggregation Theory) should play out in these fragmented industries. The charts below rank markets by where that pressure has the most room to work.

Category averages

INTERNET
$1.5M
rev / employee
13% SG&A
avg of leaders
SOFTWARE
$0.6M
rev / employee
30% SG&A
avg of leaders
COGNITIVE SERVICES
$0.4M
rev / employee
23% SG&A
avg of leaders
PHYSICAL SERVICES
$0.2M
rev / employee
14% SG&A
avg of leaders
MANUFACTURING / PRODUCTION
$0.7M
rev / employee
14% SG&A
avg of leaders
Sort by:Filter:
Bar colors:
Internet
Software
Cognitive Services
Physical Services
Manufacturing / Production
Manufacturing sub-types shown at varying opacity: Capital-Intensive (full) · Process (80%) · Discrete (60%)

Markets ranked by leader SG&A % of revenue

Leader = the #1 player in each market. SG&A % is computed from the most recent 10-K income statement as SG&A / total revenue. Private firms (McKinsey, Kirkland & Ellis, Cargill, Stripe) use directional estimates. Click any bar for the market's full calculation.

aggregationtheory.world
Data sources & notes:Leader rev/employee and SG&A % are derived from FY2024 and early-FY2025 10-K filings on SEC EDGAR for public companies (Alphabet, Microsoft, Salesforce, Lockheed Martin, Waste Management, etc.). Private-firm figures (Kirkland & Ellis, McKinsey, BCG, Bain, Cargill, Medline, Stripe) are directional estimates from press disclosures, press releases, and industry reporting — they will be grounded in specific filings in a future refresh pass. Industry averages come from BLS QCEW, the Economic Census Service Annual Survey, and representative public companies weighted to the market. Bar colors encode category following the same scheme used across the rest of the site (see legend above).

Operating Overhead vs. Concentration

Each dot = one market. Y-axis: SG&A as % of revenue (top-3 revenue-weighted avg where researched, leader-only fallback otherwise). X-axis: CR3 = top-3 combined market share. Dot size scales with market size ($B). Click a dot for full market detail.

● 55 markets · top-3 weighted (researched)◐ 6 markets · leader-only (research pending)○ 0 markets · no data yet
SG&A = -0.034 · CR3 + 17.6 · R² = 0.009 · n = 55
Categories:
Method: SG&A% is the revenue-weighted average across the top-3 players in each market, where we have research-grade data (most recent 10-K, 20-F, or annual report). Where research is pending, the chart shows the leader's SG&A% from lib/labor.tsas a placeholder. Markets where the leader is private and no public filings disclose SG&A are excluded — see “no data yet” count above.
aggregationtheory.world

Source Quality Hierarchy

Every market has a primary source plus 1–3 validation sources. Revenue numerators come from SEC 10-K filings; denominators validated against the Economic Census where available.

TIER 1Authoritative anchorsGovernment data + SEC filings
US Economic Census (data.census.gov) · SEC EDGAR / Company 10-Ks · BEA Industry Value-Added (FRED) · BLS QCEW · USGS Mineral Commodity Summaries · EIA Refinery Capacity Report · FDA device listings
TIER 2Leading commercial trackersIndustry-standard paid trackers
IDC Semiannual Software Tracker · Gartner Market Share & Magic Quadrant · IBISWorld NAICS reports · StatCounter Global Stats · eMarketer / Insider Intelligence · Synergy Research Group
TIER 3Category specialistsBest-in-class niche authorities
SIPRI (aerospace & defense) · IQVIA (pharma) · TrendForce (semiconductors) · CIMdata (CAD/PLM) · Nilson Report (payments) · Am Law 100 (legal) · ENR Top 500 (A&E) · AM Best (insurance) · SIA (staffing) · Ad Age (agencies) · Barron's / Cerulli (wealth) · Evaluate MedTech · Nielsen Gauge (streaming) · Gridwise (ride-hail) · Bloomberg Second Measure (delivery) · RC Top 100 (roofing) · SDM Top 100 (fire/safety) · Big 4 annual reports · ALM Intelligence (consulting)

Data vintage: Q2 2025 research compilation. Labels updated 2026-Q2. Tier 1 sources refreshed from FY2025 SEC filings where available. For full methodology see the Methodology page.