Advances in digital technologies and artificial intelligence (AI) hold great promise to boost economic prosperity, but academic leaders warned this week that the technologies also are reshaping growth and distributional dynamics in ways that can increase economic inequality.

David Autor, a Ford professor of Economics and Margaret MacVicar Faculty Fellow at the Massachusetts Institute of Technology, believes that the greatest worry from technology growth is longer-scale, tech-driven unemployment.

“The labor market is the foundation of a healthy economy and a healthy democracy. People’s perception of having great opportunities and a stable place in society through their job ensure contentment within communities,” Autor said during a Brookings Institution virtual event on Dec. 8.

Advanced technologies have already displaced people from what academic leaders referred to as middle-skilled activities – including office clerical work, production, sales, and other roles.

“Consequently, individuals who would be doing that middle-skill work are now in service jobs like food services, cleaning services, or security – which are valuable professions, but they use generic skill sets, and so they tend not to pay well, especially in the U.S.,” Autor said. “Technology has added to inequalities due to the hollowing out of the middle.”

Dani Rodrik, a Ford Foundation professor of International Political Economy at the John F. Kennedy School of Government at Harvard University, added that as technology evolves into a more skills-intensive environment, it fundamentally undermines the labor force.

“These rising disparities have been stoking social discontent and are a major driver of the increased popular disaffection and political polarization that are so evident today,” he said.

Heather Boushey, a member of the White House’s Council of Economic Advisers, said at the Brookings event she believes the issue is more nuanced, and thus it’s difficult to decipher whether technological advancement is the driving factor in growing economic inequality.

“We need to recognize other policies impacting our labor markets that have affected our working communities, such as minimum wage, employment benefits, and so on,” Boushey said.

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Lisbeth Perez
Lisbeth Perez
Lisbeth Perez is a MeriTalk Senior Technology Reporter covering the intersection of government and technology.