Robots Won't Steal Your Job Next Decade (They'll Just Steal Your Raise)

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http://www.theatlantic.com/business/archive/2013/02/robots-wont-steal-your-job-next-decade-theyll-just-steal-your-raise/272885/

Forget Skynet, Hal, and every other dystopian tale of robot revolution -- the real machine menace isn't that we get overthrown, but rather replaced. At least some of us. That's the story Paul Krugman and Iza Kaminska of FT Alphaville have told about labor income collapsing to 60-year lows in the aftermath of the Great Recession. In other words, jobs are so scarce and pay so little, because machines are stealing them. That's great news for the people who own the robots, and horrible news for everybody else.

But not so fast. As my colleague Derek Thompson points out, our jobs crisis is one of too little demand, not too many robots. Technology has always obsoleted some jobs, but that doesn't exactly vindicate the Luddites. As long as there is sufficient demand, better machines free workers to do more productive things. It's the same logic for why free trade makes us better off. But in both cases, this happy story is based off a helluva caveat -- that there isn't a demand shortfall. That, unfortunately, is exactly what we have today, even three years removed from the end of the Great Recession.

But the Congressional Budget Office (CBO) thinks that will change over the next decade. The CBO expects that our economic Godot will finally show up -- the elusive catchup growth we've been waiting for will finally kick in, and bring with it not just more jobs, but more pay. (More on this in a bit). After recently hitting a 60-year low, the CBO projects labor's share of income will rebound to less horrific, but still pedestrian, levels by 2023, as you can see in the chart below from its latest outlook.