At the Strategic Investment Conference 2018, Karen Harris from Bain & Company gave a thought-provoking keynote titled, “Labor 2030: The Collision of Demographics, Automation, and Inequality.”
She sees a big economic shift that began in the 1980s. Driven by demographics and automation, the world is gradually moving from a supply-constrained to a demand-constrained economy.
Harris said the combination of a demographically shrinking workforce and increasingly cost-effective automation will aggravate inequality, curb demand, and put a cap on economic growth.
This will have massive social and financial implications in the next decade.
Low-Wage Workers Will Be Hit Most
The impact of automation will be unequal.
High-wage workers will reap most of the gains and low-wage workers will bear most of the cost—at least in the short run. This is socially unstable. But in the end, it’s not even helpful to the businesses that automate.
Someone has to buy the goods robots produce. As the middle and lower classes suffer, spending will decline. The result will be “demand-constrained growth.” This isn’t necessarily a contraction, but it will likely limit GDP growth.