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ai bubble
When the AI Bubble Bursts, Working Families Will Pay the Price
When the housing bubble burst, approximately 10 million Americans lost their homes. What will we lose this time?
Nov 25, 2025
When the AI bubble pops, who’s going to be left holding the bag? Mainstream economists, tech oligarchs, and industry insiders are starting to sound the alarm: the current AI investment cycle is the most dangerous speculative surge in a generation. The question isn’t whether it will burst, but who will pay when it does. History tells us exactly where to look. When this bubble pops, low-income Black and Latine families will be left holding the bag—once again covering the costs of a boom that never included them.
In 2008, when the housing market crashed, it wasn’t the banks that paid the price. They were “too big to fail,” bailed out by the very taxpayers whose lives they ruined. Black and Latine families lost nearly half their collective wealth in a few short years. Entire neighborhoods were hollowed out by foreclosures, predatory refinancing, and austerity that gutted local city and municipal budgets.
We are dangerously close to repeating history. Big Tech is pouring trillions into inflating the AI bubble, venture capital poured nearly $200 billion into AI just this year, and data-center construction has exploded since 2022. Strip those investments out and the US economy would have grown just 0.1 percent in the first half of 2025. The Bureau of Labor Statistics recently revised last year’s job growth downward by more than 900,000 (the largest correction since the great recession), and holiday hiring is projected to be the lowest since 2009. In 2008, we bet America’s future on the strength of toxic mortgages and a handful of big banks holding their value. The American people lost, and now we’re going back to the table with tech companies convinced that a technology already underperforming expectations will someday soon deliver profits and prosperity.
When the housing bubble burst, approximately 10 million Americans lost their homes. This time, they could lose the lights. The AI boom is driving a surge in electricity demand, and utilities are scrambling to expand grids and build new plants to power data centers that each consume as much energy as a small city. Residential power bills have already risen by double, sometimes triple digits in states with large data center projects. For low-income families, especially Black and Latine households that already spend a disproportionate share of their income on utilities, that hit is devastating. Studies show data centers are far more likely to be built in low-income and majority-Black areas, with one recent study finding that nine of the ten counties bearing the brunt of new data center expansion are low-income communities with predominantly Black populations. In other words, the communities least able to afford higher bills are subsidizing the boom that threatens to hurt them most.
The communities least able to afford higher bills are subsidizing the boom that threatens to hurt them most.
The same extraction is happening through public budgets. Cities and counties–many in majority-Black or Latine regions–are issuing bonds, upgrading grids, and extending tax breaks to attract data centers they’re told will create jobs and stability. Utilities are planning massive fossil-fuel power plant and pipeline expansions. When the bubble pops and those projects stall, debts won’t vanish. They’ll sit on the books, forcing cuts to schools, transit, and local services that residents rely on every day. It’s the same shell game as 2008, just in a new form: profits are privatized, risk is socialized, and communities already living on the margins are once again left to clean up the wreckage.
It’s not just utility bills and budgets at risk. Pension funds—retirement systems tied to teachers, municipal workers, and public-sector unions—may be the quietest and perhaps most dangerous fault line in the coming crisis. Black and Latine families hold a disproportionate share of their wealth in public pensions, and those funds are now heavily invested in tech and AI equities, chasing short-term gains just as the bubble swells. In 2008, state and local pension funds lost a half-trillion dollars as markets collapsed, forcing governments to cut benefits and services. Pain from the AI crash won’t be felt by venture capitalists. It will be felt by bus drivers in Atlanta, nurses in Detroit, and teachers in Los Angeles – the people our cities and communities rely on every day.
When the crash comes, as it inevitably will, we need to recognize it not as an accident or market correction but as the predictable result of corporate greed without guardrails.
Like many other progressives and economic scholars, I was no fan of how the Obama administration handled the last financial crisis. He bailed out the big banks, shielded Wall Street executives from accountability, and let millions of homeowners fend for themselves. When this bubble pops, Trump will likely do the same by protecting the interests of the folks sitting behind him at his inauguration—the same tech oligarchs responsible for AI’s rise—rather than the Black and Latine communities he's declared war on.
We can still prevent that outcome. We need local action demanding regulators require tech firms to pay the full cost of their energy and infrastructure demands instead of letting them hide behind public utilities. States and cities should build firewalls—clauses that protect local budgets from stranded assets and pension funds from the AI-market crash. And any jurisdiction approving new data-center projects should require binding community benefits: direct bill credits, hiring guarantees, and revenue-sharing with the neighborhoods that bear the brunt of rising costs.
But policy alone won’t be enough. When the crash comes, as it inevitably will, we need to recognize it not as an accident or market correction but as the predictable result of corporate greed without guardrails. And we need to fight like hell to make sure the richest people in the world aren’t rescued yet again while the rest of us are left to clean up their mess.
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