What if technology has become a substitute for labor

Since the industrial revolution, when machines replaced human labor there was an offsetting demand for "complementary human skills — like those performed by eyes, ears or brains."

But will this always be the case? Information technology threatens "occupations that have historically relied mostly on brainpower ... leaving ... many fewer good jobs for people to do."

Economist are changing long-held beliefs. For 50 years, Nobel prize winner Robert Solow believed that the "share of an economy’s rewards accruing to labor and capital would be roughly stable over the long term."

But that's no longer valid. The share of the economy going to workers is falling, and corporate profits "take the largest share of national income since the government started measuring the statistic in the 1920s." Solow now thinks that "“Over the last few decades something structural might be happening to the economy that seems to want to increase the capital share.” These global structural changes include:

• erosion of the minimum wage

• weak trade unions

• anti-labor legislation

• technology

This is a major global trend. Porter believes that: "As the cost of capital investments has fallen relative to the cost of labor, businesses have rushed to replace workers with technology... the vast disparities in the distribution of income that have been widening inexorably since the 1980s will widen further."

Not everyone agrees. But Porter conclude with the observation that "It is becoming increasingly apparent that ... the skills-heavy narrative of inequality is not as straightforward as economists once believed. The persistent decline in the labor share of income suggests another dynamic. Call it “capital-biased technical change” — which encourages replacing decently paid workers with a machine, regardless of their skill."

Read the full story at The New York Times