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The New America: Rich Get Richer, Poor Get Replaced By Robots

Trump has spent a lot of time during his first couple of months in the White House ramping up the rhetoric over all the jobs that are flowing out of the country into lower-cost labor markets like Mexico, China and elsewhere.  And while that may be true, as we’ve pointed out multiple times in the past, part of the issue is also related to good old-fashioned capital allocation decisions whereby the combination of rising labor costs in the U.S. and declining technology costs makes capital investments in automation much more attractive.

The problem, of course, is that low-skilled labor (e.g. making a Big Mac or taking an order at McDonald’s) is much more susceptible to automation than higher-skilled positions which results in expanding income disparity.

In fact, as Bloomberg points out in a series of charts today, the growing income divide, just since 2010, is fairly staggering.  The rich-poor gap – the difference in annual income between households in the top 20% and those in the bottom 20% – ballooned by just over $29,000 between 2010 and 2015.

 

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