PHOTO: ASSOCIATION FOR ADVANCING AUTOMARION
BOTTOM LINE — Two leading economists have shown that most of the decline in wages over the last 40 years has come from companies replacing assembly-line workers through automation, deskilling even routine tasks. And the corporations are just feeding their bottom line, not increasing output, say Daron Acemoglu of MIT and Pascual Restrepo of Boston University.
The shift has included industrial robots replacing blue-collar workers in industries and specialized software replacing clerical workers in offices. “We should be worried about the ability of the US economy to create jobs,” they say, “especially good jobs with high pay and career-building opportunities for workers with high-school or less.”
INCOME INEQUALITY — As well, income inequality has risen sharply, the economists write. “While the real wages of workers with a post-graduate degree rose, the real wages of low-education workers declined significantly.” Incomes of men without a high-school diploma are 15% lower than in 1980. “The economy has become much less balanced.”
Automation creates new jobs? Forget it. “What we have experienced since the mid-1980s is an acceleration in automation, and a very sharp deceleration in new tasks,” they say. US businesses have automated excessively — contributing greatly to inequality — without generating significant societal benefits, Acemoglu told a Congressional committee recently.
Tax Code Subsidizes Getting Rid of Workers
SUBSIDIZED — With cheap imports first from Japan, then China rapidly increasing, U.S. corporations got focused on cost-cutting, Acemoglu told the committee. “Automation provided one easy way of reducing labor costs.” Slow productivity growth despite rapid automation is not a puzzle, he said — workers get displaced whether or not the machines do a better job,
In fact, the U.S. tax system encourages firms to substitute machines for workers, even when workers are more productive, Acemoglu told Congress. “Companies can save money when they install machinery to do the same jobs as workers and lay off their employees, because the government subsidizes their investments, and taxes what they pay in wages.”
SONOMA WEEKLY UPDATE – 1-24-22
