Right now we are on the cusp of another industrial revolution, a technological revolution that will change how we work and interact with each other in a very fundamental way. If we don’t take action now, this fourth industrial revolution will result in greater inequality, specifically as the labor markets change.
Income has stagnated, or even decreased, for the majority of our population in the last four decades due to technological advances. The demand for highly skilled labor has increased while the demand for less educated, lower skilled labor has decreased significantly. This has resulted in a job market with strong demand at the high end, some at the low end, but a very hollowed out middle.
Our middle class today experiences a sense of dissatisfaction or even unfairness and many people are worried that their income will continue to stagnate or even further decrease.
As technology and automation replaced jobs, the replacement of people by machines during the fourth industrial revolution will increase the existing gap between returns to capital and returns to labor. The result will be a job market even more divided into “low-skill for low-pay” and “high-skill for high-pay” segments.
Historically, the ones benefiting the most from innovation tend to be the ones providing both intellectual and physical capital, the innovators and their investors and shareholders. Our “winner takes it all” economy with very few opportunities for the middle class has the potential to lead to an increase in social tensions.
Of course we don’t know yet how this ultimately will all shake out, but one thing is very clear, our approach to the fourth industrial revolution must be a comprehensive and integrated one, it should include all stakeholders of the global polity, from the public and private sectors to civil society and academia.
In the end, it all comes down to people and values, we need to shape a future that works for all of us, putting people first and empowering them.