This is why Bill Gates and others have proposed a “robot tax,” and why I think it’s a good idea.

Originally shared by Cyndi S. Jameson

“The authors find some good news: automation doesn’t reduce the number of jobs available—if anything, it creates them. Although some industries have lost jobs due to automation, the productivity spillovers accruing to customer and supplier industries (what the authors call “the Costco effect”) and to overall consumer spending (what they call the “Walmart effect”) more than offset the direct losses to specific industries. The net effect is a slight increase in employment, cumulating to some 6 percent over the 1970-2007 period.

But here’s the catch: While automation has created jobs, enhanced the size of the economic pie, and increased total worker earnings, it has not raised the share of national income allocated to wages as rapidly as it has raised productivity. In short, the part of the economic pie that belongs to worker earnings has shrunk. This finding holds whether automation is measured by productivity gains, by industry-level patenting flows, or by adoption of industrial robotics. In net, the effect of automation on the share of national income allocated to wages is negative because industry-level loses are not fully offset by either “Costco” or “Walmart” effects.”