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Income inequality is primarily automation-driven, economists argue

Automation technology has been the primary driver in U.S. income inequality over the past 40 years, according to a new paper by two prominent economists in the field.

Why it matters: Offshoring, the decline of unions, and corporate concentration have all played a part in widening the gap between lower-skilled and higher-skilled workers, but automation is the single most significant factor, and will likely grow even more important in the years ahead.


By the numbers: The real wages of low-education workers have declined significantly over the past four decades, with the real earnings of men who lack a high-school degree now 15% lower than they were in 1980.

  • Over the same time, real wages for workers with a post-graduate degree — and to a much lesser extent, those with a bachelor's degree — rose sharply.

The big picture: In their paper, MIT's Daron Acemoglu and Boston University's Pascual Restrepo calculate that 50 to 70% of the changes in the U.S. wage structure since 1980 can be accounted for by relative wage declines among workers who specialize in routine tasks in industries hit by rapid automation.

  • Workers who perform tasks that can be increasingly automated — think manufacturing work done by robots or clerical work performed by software — lose out on labor share.
  • They're then forced to compete with other lower-skilled workers for fewer remaining jobs, further bidding down wages.
  • Higher-skilled workers have largely escaped this trap not so much because of a rising demand for those skills, but because they perform tasks that can't be — or haven't yet been — automated.

What's next: More of the same, barring major political changes.

The bottom line: As Acemoglu wrote in a recent essay, "The only path out of our current predicament requires both robust regulation and a fundamental transformation in societal norms and priorities."

Biden administration offers temporary "safe haven" for Hong Kongers in U.S.

President Joe Biden on Thursday directed the Department of Homeland Security to defer the removal of Hong Kong residents currently in the U.S. for 18 months, offering them a "safe haven" to those who fear returning home.

Why it matters: The move, which could potentially extend the stay of thousands of Hong Kongers in the U.S., is the latest step the Biden administration has taken in response to Beijing's crackdown on democracy in the semi-autonomous territory.

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Massive California blaze levels town, threatens others as it burns out of control

The small Sierra town of Greenville, Calif., was heavily damaged on Wednesday night into early Thursday as the Dixie Fire surged northward amid high winds, extremely dry air and hot temperatures.

The big picture: The Dixie Fire, California's biggest blaze and the sixth-largest wildfire in state history, razed houses and businesses as it ripped through Greenville and surrounding areas in Plumas County.

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Moderna says COVID-19 vaccine "remains durable" with 93% efficacy through 6 months

Moderna said Thursday that its coronavirus vaccine was 93% effective against COVID-19 through six months after receiving the second dose.

Why it matters: The number shows that efficacy "remains durable" through that time, and hardly wanes from the 94.5% efficacy Moderna reported last November. But the clinical trial, which started in July 2020, was conducted before the Delta variant became the common strain in the U.S.

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U.S. women's soccer team beats Australia, wins Olympic bronze

The U.S. women's soccer team won the bronze medal on Thursday after beating ninth-ranked Australia 4-3.

Why it matters: Thursday's victory marks the U.S. team's first bronze in Olympic history, handing the team a medal after it failed to earn one during the Rio Games in 2016.

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Top Democratic operatives mapped out how to defend Kamala Harris at high-powered dinner

A group of the Democratic Party's most influential women met for dinner at a home in the nation’s capital last month to game out how to defend Vice President Kamala Harris and her chief of staff, Tina Flournoy, against a torrent of bad press.

Why it matters: It's telling that so early in the Biden-Harris administration, such powerful operatives felt compelled to try to right the vice president's ship.

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In photos: Tokyo Olympics day 13 highlights

Day 13 of the Tokyo Olympic Games saw Team USA's men's basketball team beat Australia 97-78 on Thursday to advance to the gold medal game.

The big picture: Kevin Durant led the charge with 23 points to help the U.S. secure a final spot against either France or Slovenia on Saturday local time. Elsewhere, the U.S. added to its gold medals count, with shot putter Ryan Crouser and teenage canoeist Nevin Harrison both winning their events.

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Judge to Capitol rioter: Insurrection is "not patriotism"

A federal judge sentencing a Michigan man in D.C. Wednesday over his role in the U.S. Capitol riot dismissed any notion that he's a political prisoner.

Driving the news: U.S. District Court Judge Amy Berman Jackson said that she wasn't sentencing Karl Dresch, of Calumet, "because he is a supporter" of former President Trump, noting that "millions of people" had voted for him "and did not heed his call to descend on the nation's Capitol," per the Detroit News.

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2 wildfires ravage Northern California homes as thousands evacuate

Two massive California wildfires have triggered new mandatory evacuation orders for thousands of people and destroyed homes and businesses in the state's north overnight.

Details: The Dixie Fire, California's biggest blaze, razed houses and businesses as it ripped through the Greenville area of Plumas County Wednesday night, per AP. The rapidly spreading River Fire burned "multiple" homes as it tore through Placer and Nevada counties, KOVR notes. Mandatory evacuation orders were in effect for both fires.

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