> every AI-generated image one sees represents an instance where someone who might have contracted for an image did not

This is not at all true. Some percentage of AI generated images might have become a contract, but that percentage is vanishingly small.

Most AI generated images you see out there are just shared casually between friends. Another sizable chunk are useless filler in a casual blog post and the author would otherwise have gone without, used public domain images, or illegally copied an image.

A very very small percentage of them are used in a specific subset of SEO posts whose authors actually might have cared enough to get a professional illustrator a few years ago but don't care enough to avoid AI artifacts today. That sliver probably represents most of the work that used to exist for a freelance illustrator, but it's a vanishingly small percentage of AI generated images.