There are many theories as to what is causing the income gap that just seems to be growing at an increasing rate. Some attribute to the policies of the Federal Reserve making money cheap, something the wealthy through corporations take advantage of. Others point to the fact that jobs were outsourced to other countries, especially in manufacturing.
However, there is a point that should not be overlooked. Automation is a jobs destroyer and it is only growing in scope.
For the last 35 years, robotics have advanced on a consistent pace. Over the time, the number of robots per 1,000 workers increased. This means that jobs were eliminated in favor of automation.
Now we are seeing them move into the white collar realm. Artificial Intelligence are automating a lot of the things office workers once did. For example, a program like Quickbooks crushing the bookkeeping industry. In the field of accounting, TurboTax took the 1040 return out of the hands of the CPAs.
When middle class jobs are reduced in favor of automation, more service tends to be created. The challenge with this is the fact that this pushes people down the income scale. As service providers, the jobs tend to be low-paying and not enjoyable work.
The biggest aspect to this is the ownership of the automation. While people are losing their wages, the shareholders and corporate executives make out like bandits. The value of their stock skyrockets as profits follow the same path. Labor tends to be the largest expense move companies have. Reducing this can have an enormous impact on profitability.
It is a situation that is not going to change anytime soon. In fact, it is only going to get worse. Companies such as Amazon are picking up even greater market share due to the fact that they can automate aspects of their system faster than physical retailers are able to adapt. This is an example of a company that seeks to automate the entire process, from ordering to delivery, with no people involved.
COVID-19 is also contributing to this. Corporations are now making a big push into technology to automate as much as they can. After have the global economy shut down due to the threat of people, companies are working to make sure this does not happen again.
This has caused many to call for government action to step in and provide some type of income. Universal Basic Income is starting to gain some greater attention with many trials appearing all over the world.
Ultimately, cryptocurrency could be the solution that people are looking for. Since this does not deal with governments nor taxation (or debt), there is the possibility to generate wealth for the masses that provides an income to each person. The innovation is just starting to be focused upon this area.
How this all pans out is difficult to state. What we do know is that automation is not going away. As Elon Musk said, we might have no choice but to seriously look at something like UBI.
Technology is only advancing, causing more disruption in the job market.
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