From the Bureau of Labor Statistics, as shown at the blogsite Modeled Behaviour.
Karl Smith, co-author of the blog is an economics and government professor at the University of North Carolina. He cites this figure and maintains unskilled labor will never get paid much from here on out: That the Industrial Revolution was unique in that unskilled labor made income gains.
I want to make the point that this consistent with my long thesis that we are returning to an environment where productivity gains do not accrue to unskilled labor because they are imbedded in the brains of the innovators.
A factory is really big and hard to keep secret. Computer code less so. When you simply write down the process you want or draw the object you want and the computer translates it for you the seep down will grind to complete halt.
What this chart hides, but I believe is also true is that capital is facing a similar collapse.
At its heart the issue is that Industrialization Really Was Different, and there is no reason to think it will come again.
The reality of this new world is that you cannot simply work hard and make a good living. Nor, should you expect that if you save for your future you can support yourself.
As for now, it is still in the interest of innovators to tap public equity markets and doing so means that they come under some – but not absolute – pressure to pay a dividend.
However, I have a hard time believing this will not come to an end. The money available in private pools will be sufficiently large that innovators can strike side deals that let them walk away with almost all the profits.
Beezer here. Not sure I agree with Smith’s prediction that what we’re seeing now is the end of the Industrial Revolution. But what I do obviously see is where the money went: Right to the top where most of the money already resides. Thus we get huge income gaps where the vast majority of working households (unskilled and skilled, something Smith seems to overlook) haven’t seen their real incomes rise. And that’s a problem for the economy. Whether innovators now possess the real stuff ‘embedded’ in their brains?? and can get all the capital they need anyway from private capital pools (Smith forgets what public markets are for–insurance!) is from our perspective unsubstantiated opinion. Hat tip to Mark Thoma’s economist’s view for highlighting the graph and Smith’s blogpost.