Employment and Income

Objective: Discuss the impact of automation on the income distribution. The index for this section is:

• Political-economic stability
• Stability of previous industrialization
• The impact of automation on the economy
  • Income Distribution
  • Manufacturing
  • Services and paperwork
  • Income Distribution: Surf the Net
• Basic assumptions of the political economy
  • Time frame
  • Social nervous system
  • Freedom of location
  • Income Distribution

Political-economic stability

• rising real income
• most groups in society prospering 

Stability of previous industrialization

• England in 18-19th century industrial revolution
  • Agricultural revolution 18th welfare
  • Textile towns vs artisans, but correct is artisans vs unemployed
  • Poor laws 1833
  • Marx vs what actually happened

US in the 19th century

• Labor costs with frontier as an alternative
• Civil war eliminate South's check on the North
• Manufacturers could not import labor fast enough to keep wages down.
• Rising real wages

Shift in emplyment

a. Agriculture

__Date__	__% total emp
1820	70
1900	40
1995	2

b. Nonagriculture

__Date__	__% mfg__	% services
1920	55	45
1980	28	72

The vote

Men: England: Men after 1850 Disrali

US: Few restrictions

Women: In both countries after WW1

The Income Distribution

• 1790-1860
  • Difference between large and small farmer
  • Income levels higher than England
• 1860-1900
  • Industrialization
  • Difference between worker and robber barron much greater than between small and large farmer
  • Gave credence to Marx.
• 1900-1970
  • Skewness of income distribution lessened.
  • Middle class of professionals and middle managers
  • Better trained work force.
• 1970-1990
  • Skewness of income ditribution increased
  • Energy and the environment
  • More entreprenuerial society and downsizing because of increased international competition
  • Nevertheless, family income increased because of smaller families and women working.
• 1990 on
  • Some improvement

Future Income Distribution

Part time workers and fringe benefits

Education

Productivity advances

Productivity Paradox

The data shows a downward trend since the 60s that may have been reversed since 1995. There are several explanations for this paradox:

• With energy crisis investment went to decrease dependence on energy not increase output/worker
• With environmental movement investment went to decrease pollution not increase output/worker
• Diewert and Fox point out inflation can cause three types of measurement error
• Productivity does not measure product improvement.
• Erik Brynjolfsson investigation firms at the micro level has found evidence of increaseing productivity since 1990.
  • He complains that the measurement does not consider such aspects as improved product quality, greater product variety, greater speed to market, customization and so on.
• L. Slifman and C. Corrado make the case that productivity is underestimated

Paul David, "The Dynamo and the Computer: An Historical Perspective on the Modern Productivity Paradox," American Economic Review: Papers and Proceedings (May 1990) points out that it was decades after the introduction of the electric motor that business reorganized production using electric motors to increase productivity.

Future productivity advance: Services through the WEB. Productivity of services is not properly measured. Another problem is the improving quality of goods.

Employment

Displacement will be from routine tasks not creative tasks. Routine paper pushing and sales will be hit the hardest in the near future. Manufacturing employment will gradually decline.

Income Distribution: Surf the Net

Some interesting sites to surf for the change in the income distribution are:

• Income Distribution Among Racial Categories in the US
• BUDGET BILLS' EFFECTS ON POVERTY AND INCOME DISTRIBUTION
• All-Consuming Passion: Waking up from the American DreamAdvocates reducing consumption
• WHY THE INCOME GAP WON'T GO AWAY
• Trends in Income Distribution and Wages
• Family Income Up over Past Year, but still Fails to Regain Pre-Recession Level
• Census Bureau Report Shows Continued Strong Family Income Growth

Basic assumptions of the political economy

Time frame

Since the proposed modifications to government would take several decades to gain popular approval (if ever), the governmental design is proposed for the forecasted political economy of the mid 21st century.

Social nervous system

We assume that the communication system will be a high capacity fiber optics system integrating all forms of communication. Through this communication system, individuals can access all of societies store of knowledge and entertainment.

Freedom of location

Most individuals will have much greater freedom of location than today. As organizations become communication networks, information workers could live vast distances from the physical location of their organizations. As I assume the workweek will continue to decline to say 20 hours a week, even blue collar workers will have greater freedom of location. They could work a week of say 60 hours and then have two weeks off. They might commute great distances for the one week and board.

Income Distribution

I assume the US will partially solve its social problems to return to rising real incomes, which promotes a politically stable society.

Next: Community Up: Informational Society Notes Previous: Automation: Information