I highly doubt automation and robots are a meaningful factor here, but IP and outsourcing have the exact same as automation.
The fact is capital expenditure from company or investors has bought machinery, compute, pipelines, transport, and massive investment to make those workers more productive for decades. As such, the returns to capital as a share has increased. Those places able to deploy capital to add productivity win over those that don’t.
And real total remuneration across all quintiles has increased significantly. BLS among others has all historical data to check.
If/when there’s a period where there isn’t more gains to be had by more investment per worker, and workers become more productive via their own skill (education, diet, genetic implants,…), then more returns will flow that direction.
This is all well known, and easily checked.
That's both true and false. Yes they need very few people to operate, but building and maintaining still need a lot of people.
This is correct, and it has an impact on local employment and social dynamics, but not at the country level.
> They need fewer people to build and to maintain than older ones did.
That's absolutely not true. Quite the opposite. You do need less people to build and maintain a modern plant than to operate an factory in the past.
Also, you need to clarify what you mean by “older”, because heavy industries have automated steadily between the 50s and the 80s, and that process was mostly achieved by the 90s.
And I can't think of an industry that was still labor intensive by the 20s and that has been more impacted by automation than offshoring.
if you formed a co-op of sorts, with let's say 20 people, starting with no land ownership and hardly any tools, they could try to make a business. Whatever they end up starting would be a fairly low-productivity business- washing windows, janitorial services, lawn service, etc. The more tools and land a co-op has to work with, the more productive they can be. With a few million dollars up-front they could have built a factory instead.
The increased productivity generated can be attributed to the capital share of income.
https://www.stlouisfed.org/on-the-economy/2024/jun/worker-sc...
Outsourcing and automation both reduce worker leverage, which reduces wages, which could explain reduced labor share. I'm not sure how one would weight it all.
There's a return on capital than is not spent on employees. That reflects how much capital is growing and how much can be spent on employees in the future.
Just as are the top executives. And the shareholders that have put money into companies that provide "robots, etc.". All these people, including labor, are stakeholders. If there was 5% GDP growth that got reflected as 5% growth in net earnings for the company, one would expect that all the stakeholders would see roughly a 5% increase in their personal earnings from the company. The dollar amount would be higher for higher earners (5% of $1M is greater than 5% of $50k), but the percentage increase would be roughly in line. The real world results are not even close to this "rising tide lifts all boats" ideal.
In any case, it doesn't follow that wages grow with earnings. Wages have historically been a lagging indicator.
Fair point, though it's not completely clear from the comment.
>Wages have historically been a lagging indicator.
Of course, companies don't know in advance that they're going to have GDP-assisted growth. My point was that growth on the back of GDP growth is a collective windfall, and you'd expect it to be evenly distributed. But it clearly isn't.
All human collective endeavors (with few exceptions) require 3 kinds of human-related input: capital, labor and ideas.
Nobody puts their capital into an endeavor in which the plan is for the that capital to provide renumeration for the labor for more than the shortest possible time (*). The goal is always to generate revenue in sufficient volume to pay for the labor, and when that goal is met, that success is a function of all 3 kinds of contribution.
So no, employee compensation does not come from capital, but from revenue that results from the successful interaction of capital, labor and ideas.
(*) non-profits would be an obvious exception, except that nobody actually talks about investing capital in such organizations, we just make "donations" or "grants". That money plays the same role as capital, however.
Nah, it is just capitalism at work. Winner takes all.