AI, automation among technologies shrinking salaries nationally – Information Management

(Bloomberg) -- The advance of technology is the biggest reason workers are earning a shrinking slice of the income pie, according to a new study by the International Monetary Fund.

Labors share of national income declined in 29 of the worlds 50 biggest economies between 1991 and 2014, the IMF said in a study released Monday.

Analysis suggests technology is the largest contributor to the change in labor shares in the large majority of countries, it said. Several other studies and recent reports suggests that technologies such as artificial intelligence, automation, robotics and machine learning are all contributing to that outlook.

The second main component of income is capital. When wages grow more slowly than productivity, labors share of income falls as the owners of capital reap gains at a quicker pace. That often worsens income inequality because capital tends to be concentrated in the hands of a few, the IMF said in a blog accompanying the research.

The IMFs finding is significant because economists have been debating whats to blame for decades of sluggish wage growth. President Donald Trump has blamed trade with countries such as China and Mexico for hurting American workers and hollowing out the nations manufacturing sector. The IMF study suggests technology is a bigger driver. Some recent studies suggest that automation will decimate the labor force in certain industries over the next 20 to 30 years, which will put an enormous drain on wages for existing workers.

About half the decline in national labor shares can be traced to the impact of technology, according to the study, which is part of the World Economic Outlook. The full outlook, including the funds forecasts for global growth, will be released April 18 in Washington.

Workplace Robots

The study notes the rapid advance of information and communications technology has accelerated the automation of routine tasks, causing firms to substitute capital for workers.

Global economic integration has also played a part in labors declining share of income, the IMF said. The impact of changes in policies and institutions appears to be limited, though its difficult to say how much of the slump has to do with the decline of labor unions, according to the fund.

The IMF has warned before of the threat from from the growing use of robots. A paper by fund economists in September drew on science fiction as well as economic analysis to show the likely profound negative implications for income distribution of increased automation. It even depicted an extreme scenario, or singularity, in which capital takes over the entire economy to the exclusion of labor.

See the rest here:

AI, automation among technologies shrinking salaries nationally - Information Management