Technology at Work, the Future of Innovation and Employment is a lengthy report and well worth a read if you are thinking about where things might be heading from a technology perspective. It is not an encouraging view of the future.
From where we are:
Instead of labour, the greatest beneficiaries of the digital age have been shareholders. According to a recent estimate, the three leading companies of Silicon Valley employed some 137,000 workers in 2014 with a combined market capitalisation of $1.09 trillion. By contrast, in 1990 the three largest companies in Detroit had a market capitalisation of $36 billion while collectively employing about 1.2 million workers.
Fewer workers are creating substantial wealth and only a small fraction of those highly skilled workers will see their wages rise over their lifetime.
The report puts forward a scenario where almost half of the labour force will be at risk of automation as a result of recent trends in technology. Significant job loss, coupled with income inequality, will force dramatic changes to our current economic system although societal and political impulses will be slow to respond.
Given the abundance of material wealth that now exists, the problems will be of a different nature. They will naturally involve the issue of wealth distribution and, within the psychological realm, questions of how to live with dignity in a world that no longer values one’s work, at least in dollars and cents.
Such a world is likely to demand more than the kind of incremental reform that seems to limit modern politics. Tinkering with the progressivity of income tax rates won’t be enough.
Governments will try of course. It has already happened in Ontario where the marginal rate for high income earners has topped 50%. The problem is that there are too few high-income earners to redistribute income in any meaningful fashion. In all of Canada, there are only about 250,000 tax filers in the top 1-percent of income. And the income threshold to be included in the top 1-percent is about $215,000.
We should not confuse high income with high wealth.
And technology will continue to displace human labour at an incredible rate in the years to come.
We seem poorly prepared for this new world.