In a speech to the Trade Union Congress in London, Andy Haldane discusses how developments in technology are likely to affect labour’s share of national income in years to come – and the implications this may have for policymakers.
Andy notes that arguments about “technological unemployment” – the idea that technological advance puts people out of work and bears down on wages – have been raging for centuries. According to Andy, most evidence shows that over the broad sweep of history technological progress has not damaged jobs but rather boosted wages: “Technology has enriched labour, not immiserated it.”
However, Andy notes that this broad pattern obscures the fact that there has an increasing skills premium has emerged with each passing wave of technological progress. This was especially the case in the late 20th century, as new machines such as computers began replacing not only physical but cognitive labour. He finds that each phase has eventually resulted in a “growing tree of rising skills, wages and productivity”. But they have also been associated with a “hollowing out of this tree”. Indeed, this hollowing-out of jobs has “widened and deepened with each new technological wave”. This has resulted in a widening income gap between high- and low- skilled workers.
You can also download the text of the full speech here.