Automation Impacting Earnings Distribution

If your main worry over automation is losing your job, history suggests you’ll probably be just fine. After all, even a century of unprecedented technological advancement in transportation, production and communication hasn’t caused labor’s share of national income to significantly budge.

Economists David Autor and Anna Salomons reckon that’s because the primary driver of employment has actually been population growth, despite all the emphasis placed in academic circles on how machines augment human labor as well as why they will ultimately replace us anyway, Bloomberg reported.

The bigger concern, they say, is how technological advances will affect earnings distribution. Essentially, the argument that the duo puts forth is that as long as there have been humans, there have been jobs–a topic Autor, who works at the MIT Department of Economics, previously explored in a Ted Talk. They suggest that labor supply and final demand for goods and services are what actually determine the level of employment, as consuming workers have more and more needs.

Autor’s research together with Salomons, who works at Utrecht University in the Netherlands, will be presented next Tuesday to central bankers from around the world at the European Central Bank’s forum in Sintra, Portugal.

What has changed as a consequence of greater productivity through technological advances is how jobs are remunerated.  “Although the raw count of jobs available in industrialized countries is roughly keeping pace with population growth,” the economists write, “many of the new jobs generated by an increasingly automated economy do not offer a stable, sustainable standard of living.”

“Simultaneously, many highly-paid occupations that are strongly complemented by advancing automation are out of reach to workers without a college education.”

So if the problem isn’t falling aggregate labor demand, but rather an increasingly skewed distribution of employment–and ultimately earnings–humans may need to redirect the focus of what technology will mean for the future of work.