A new study has suggested that automation in many industries led to income inequality as it played a major role in replacing uneducated or less educated workers. This newly published study suggested that in the US, automation increased the wage gap as machines replaced hardworking workers. MIT economist Daron Acemoglu, the co-author of this study along with Pascual Restrepo, said that replacing workers with machines does not change productivity. He gave the example of self-checkout kiosks installed at many supermarkets and other stores, having just replaced the workers who did the job with similar productivity. The study said that these machines, instead of increasing productivity and assisting the customers, only favor the owners of these stores who get free labor through automation.
Industry automation is not a new concept. Since the start of the modern era, automation has allowed industries to implement new technologies and increase their productivity and volume. Implementing automation in industries offered many advantages over traditional labor as it significantly reduced the chances of human error. Along with reducing the chances of production errors, automation also assisted these industries to use their financial resources more efficiently, allowing them to focus more on the quality of the product while also significantly boosting the quantity. The saved labor cost also allowed them to focus more on research and development to introduce new and innovative products, which have increased the quality of life in general. But during all this development, human labor suffered the most as automation technology significantly replaced low-skilled workers and workers who had low knowledge about technology. For such workers, the wage gap increased exponentially, which pushed many people into tough financial situations.
Previously, automation significantly allowed large-scale businesses to increase their productivity. But the current trend of automation in small businesses such as supermarkets, drug stores, hotels, etc. is leaving many hardworking workers either without jobs or forcing them to work on much lower wages. Automation using smart technologies such as self-checkout machines, call-center systems, assembly-line technology, or other devices has completely replaced the human workforce. The worst thing about such automation is that it does not serve as a means of increasing productivity but as a means of eliminating the human workforce which requires to be paid. It is much cheaper to install a machine and automate the task than to pay a worker who does the same job with similar productivity. Although it does reduce the chances of errors, the work is small enough to not have a major impact on results.
Daron Acemoglu and Pascual Restrepo, the authors of this study, used the U.S. Bureau of Economic Analysis statistics related to 49 industries. This analysis showed that there was a much more intense effect of automation on income inequality. The study concluded that from 1980, the wages of men with a high school degree have been reduced by almost 9% and for women without a high school degree, the wage has decreased by almost 3%. These numbers make a much higher impact when you factor in the inflation which the world is facing right now.