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Illustration: Aïda Amer/Axios

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."

Go deeper

Tyson Foods raises starting pay for frontline workers to $15.20 an hour

Illustration: Brendan Lynch/Axios

Springdale-based Tyson Foods announced Tuesday it increased wages for its hourly workers starting Sept. 5, including for those who work in poultry plants in NWA.

What's happening: Starting pay is now $15.20 an hour, up from $12.50 an hour, spokesperson Derek Burleson told Axios. That's a 21.6% increase.

Surprising pandemic side effect: Soaring trade deficits

Source: Census Bureau and Bureau of Economic Analysis; Chart: Axios Visuals

Inflation and jobs may get all the economic headlines, but meanwhile a big shift is taking place in the underpinnings of the world economy: The U.S. trade deficit is soaring.

What's happening: Americans' spending on imported physical goods has gone through the roof, while exports are growing slowly, making the U.S. the world's consumer of last resort.

Mike Allen, author of AM
2 hours ago - Politics & Policy

Third Way: "Big Lie" could become "Big Coup"

Graphic: Third Way

Third Way, the center-left think tank, is urging fellow Democrats to respond to the Capitol riot with "the size, scope, and seriousness of a presidential campaign," co-founder Matt Bennett tells me.

Driving the news: "For the first time in U.S. history, a party must mount two parallel presidential campaigns: one to win the election, and the other to prevent its theft," Bennett said, calling this "a Paul Revere moment."

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