Yes, Robots Are Hurting Your Pay, Fed Study Finds
Yes, Robots Are Hurting Your Pay, Fed Study Finds
- Automation ‘contributed substantially’ to drop in labor share
- Rising use of technology undermines workers’ pay demands
By Simon Kennedy
October 1, 2019, 12:58 AM PDT
Automation has “contributed substantially” to reducing
the portion of national income that goes to U.S. workers over the past two
decades, according to a new study by economists at the Federal Reserve Bank of
San Francisco.
Despite the lowest unemployment rate in around 50 years,
the so-called labor share has fallen to about 56% from 63% in 2000 and the
increased use of robots and other technology has been an important driving
factor, the economists Sylvain Leduc and Zheng Liu wrote in the report
published on Monday.
“Businesses have
more options to automate hard-to-fill positions now than in the past,” wrote
Leduc and Liu. “With rapid advances in robotics and artificial intelligence,
robots can perform more jobs and tasks that required human skills only a few
years ago.”
The upshot is that workers become more reluctant to ask
for significant pay hikes out of fear that their employer will turn to
automation to replace them, the economists said. That potentially explains why wage
growth has been relatively weak despite the tightening labor market.
Their model suggested that without automation, the labor
share would have stayed around 59.5% at the end of 2018.
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