The End of Labor: How to Protect Workers From the Rise of Robots
Robots Destroy Jobs
The End of Labor: How to Protect Workers From the Rise of Robots
Reuters
by NOAH SMITH | The Atlantic
Technology used to make us better at our jobs. Now it's making many of us obsolete, as the share of income going to workers is crashing, all over the world. What do we do now?
For most of modern history, two-thirds of the income of most rich nations has gone to pay salaries and wages for people who work, while one-third has gone to pay dividends, capital gains, interest, rent, etc. to the people who own capital. This two-thirds/one-third division was so stable that people began to believe it would last forever. But in the past ten years, something has changed. Labor's share of income has steadily declined, falling by several percentage points since 2000. It now sits at around 60% or lower. The fall of labor income, and the rise of capital income, has contributed to America's growing inequality.
WHERE IS THE MONEY GOING? What can explain this shift? One hypothesis is: China. The recent entry of China into the global trading system basically doubled the labor force available to multinational companies. When labor becomes more plentiful, the return to labor goes down. In a world flooded with cheap Chinese labor, capital becomes relatively scarce, and its share of income goes up. As China develops, this effect should go away, as China builds up its own capital stock. This is probably already happening.