Fed Study Says Robots In Workforce Decreases Paychecks For Labor Workers

Federal Reserve Bank of San Francisco reports that automation has reduced national income going to U.S. labor workers.

Economists conducting a study at the Federal Reserve Bank of San Francisco recently reported that automation has reduced the portion of national income that goes to U.S. workers over the past two decades, according to Transport Topics.

The unemployment rate is currently at its lowest in the past 50 years, but the labor share has fallen to 56% from 63% in 2000. Labor share is an economic term used to describe the part of national income that is allocated to labor or wages. The automation of labor and the increased use of technology such as robots has been an important driving factor, according to the September 30 fed report on the matter.

The use of robots has discouraged workers to ask for pay raises, out of fear that their employer will automate their position and replace them. This claim is evidenced by a tightening labor market and weak wage growth.

The model constructed and used in the study suggests that without automation, the labor share would have stayed around 59.5% through the end of 2018. Robots are officially part of the workforce, and the paychecks of labor workers are feeling the heat.

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