Robots Are Slashing Wages and Worsening Pay Inequality

Robots Have a Real Impact on Jobs and Wages, New Research Shows

Aether Films

Robots have long been maligned for job-snatching. Now you can add depressing wages and promoting inequality to your list of automation-related grievances.

Industrial robots cut into employment and pay for workers, based on an new analysis of local data stretching from 1990 and 2007. The change had the biggest impact on the lower half of the wage distribution, so it probably worsened America's wage gap.

Industrial robots have had a "large" and negative effect on U.S. employment and wages in local labor markets, according to new research by Massachusetts Institute of Technology's Daron Acemoglu and Boston University's Pascual Restrepo.

One additional robot per thousand workers reduces the employment-to-population ratio by 0.18 percentage points to 0.34 percentage points and slashes wages by 0.25% to 0.5%, based on their analysis.

To put that in context, the U.S. saw an increase of about one new industrial robot for every thousand workers between 1993 and 2007, based on the study.

"The employment effects of robots are most pronounced in manufacturing, and in particular, in industries most exposed to robots; in routine manual, blue collar, assembly and related occupations; and for workers with less than college education," the authors write. "Interestingly, and perhaps surprisingly, we do not find positive and offsetting employment gains in any occupation or education groups."

Worth noting: the authors estimate that robots may have increased the wage gap between the top 90th and bottom 10% by as much as 1 percentage point between 1990 and 2007. There's also room for much broader robot adoption, which would make all of these effects much bigger.