The 21st century has been hard on American labor. Unemployment soared from a low of 4 percent in 2000 to a peak of 10 percent in October 2009. While the unemployment rate has since recovered to its current 5 percent, labor force participation and productivity have declined, and wage growth is feeble.
Many blame America’s labor woes (which began well before the Great Recession) on China’s surging exports and rapid technological change that seemingly replaced humans with computers and robots. But economists have long insisted that trade liberalization and technological innovation were positive overall economic forces, and that disruptive costs to some workers were small and short-lived relative to total benefits for the economy as a whole.
David Autor of MIT has shone a bright light on the often-downplayed costs. He and co-authors carefully analyzed the impact of technological change and import substitution on U.S. labor and found that the disruptive costs are much larger and longer-lived than previously recognized.