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Report

The Future of Work in the Age of the Machine

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Introduction

Recent developments in technology, including the proliferation of smart machines, networked communication, and digitization, have the potential to transform the economy in groundbreaking ways. But whether this rapid technological change will lead to increased economic prosperity that is broadly shared is far from clear.

The productivity of the U.S. economy has grown substantially since the 1970s, but the median American male worker’s wage rose by just 3 percent from 1979 to 2014 (DeNavas-Walt and Proctor 2014). This so called wage stagnation is not unique to the United States: over the past several decades, wages for middle-income jobs have increased at an anemic pace in developed countries around the globe. Meanwhile, the wages of the highest-skilled and highest-paid individuals have continued to increase steadily. There are growing gaps in wages and employment opportunities between these individuals and those at the middle and bottom of the wage distribution, and there is no reason to think that these labor market trends will be reversed any time soon.

Economists attribute tepid wage growth at the middle and bottom of the distribution to various secular trends, including enhanced globalization of the economy and the shrinking role of labor unions. But one factor in particular—technological change—might be playing an especially important role in driving the divergent labor market experiences of those with different types of skills.

As rapidly advancing computer power and automation technology change the nature of work and the future of the economy, our nation will face new and pressing challenges about how to educate more people for the jobs of the future, how to foster creation of high-paying jobs, and how to support those who struggle economically during the transition. A commitment to economic growth that is widely shared has been a fundamental tenet of The Hamilton Project since its inception. The Project has released numerous policy papers focused on the issues of access to higher education, effective training and skill development, and investments in our nation’s infrastructure and workforce. In this framing paper, The Hamilton Project explores the debate about how computerization and machines might change the future of work and the economy, and what challenges and opportunities this presents for public policy.

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