Robots and Income Inequality

Income inequality has steadily risen in the United States since 1980. What’s the cause? The decline of unions? Shareholder capitalism? Milton Friedman? Wall Street greed?

EconomistĀ Pascual Restrepo blames robots.

Actually, Restopo’s research blames automation in general, not just robots. Jobs that can be automated, either by robots or by software, are under threat. Welders can be replaced by robots, so there are fewer jobs available for human welders. The remaining human welders are all in competition for the smaller total humber of welding jobs, so the supply is higher relative to demand.

Supply and demand adjustments cause the value of welding to fall, so welders’ incomes do not rise.

Bots, not robots

Office clerks aren’t being replaced by robots, but many of their tasks are being replaced by bots — software solutions that can do clerical tasks quickly and accurately without coffee breaks or benefits. The value of office clerks falls, and their wages stagnate.

“We document that between 50% and 70% of changes in the US wage structure over the last four decades are accounted for by the relative wage declines of worker groups specialized in routine tasks in industries experiencing rapid automation,” begins the academicĀ paper by Restopo and his colleague Daron Acemoglu.

Undereducated Americans’ jobs are under threat from automation, the argument goes, and that means that less educated workers will be left behind.

But, really…

Our first reaction is that this is coming from someone who hasn’t tried to hire a welder. The average welder is now 55 years old, and young people aren’t going into the field in the needed numbers. The shortage of welders is becoming acute.

Robots may take care of this before things become acute, but it’s hard to believe that supply and demand has led to income inequality if welders are an example.

Technologist Robert D. Atkinson points out that this argument also ignores the fact that the income inequality is greatest not between welders and designers but between the top 10% of wage earners and the other 90% of Americans.

That’s not caused by education or automation.

An interesting question

It’s an interesting suggestion, and we’ll watch the controversy with interest.

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