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Automation: AI and New Technologies The Culprit Behind the Growing Wage Inequality?
There is a growing gap of income inequality in the United States. Twenty years ago much of the gap was explained by practices like outsourcing that would send jobs to foreign countries where work could be done significantly more cheaply. While the outsourcing trend continues strong, other factors are at play too.
A study from the National Bureau of Economic Research suggests that core to the growing inequality is increased automation. The study found that “the real earnings of men without a high-school degree are now 15% lower than they were in 1980.” Further, it claims that 50 to 70 percent of changes in wages from 1980 are because automation pushed wages of blue-collar workers lower. Much of the decline is due to “numerically-controlled machinery or industrial robots replacing blue-collar workers in manufacturing or specialized software replacing clerical workers.”
The World Economic Forum (WEF) concluded in a recent report, “But a new generation of smart machines, fueled by rapid advances in artificial intelligence (AI) and robotics, could potentially replace a large proportion of existing human jobs. While some new jobs would be created as in the past, the concern is there may not be enough of these to go round, particularly as the cost of smart machines falls over time and their capabilities increase.”
