TL;DR
This paper investigates the causes of rising income inequality, highlighting the role of investment income and automation, and proposes a Deferred Investment Payroll plan to promote equitable participation in automation benefits.
Contribution
It introduces a novel Deferred Investment Payroll plan aimed at distributing automation gains more evenly among workers.
Findings
Real wages are flat across various professions.
Stock ownership correlates with higher education and income.
The proposed plan's performance is analyzed.
Abstract
We argue that the recent growth in income inequality is driven by disparate growth in investment income rather than by disparate growth in wages. Specifically, we present evidence that real wages are flat across a range of professions, doctors, software engineers, auto mechanics and cashiers, while stock ownership favors higher education and income levels. Artificial Intelligence and automation allocate an increased share of job tasks towards capital and away from labor. The rewards of automation accrue to capital, and are reflected in the growth of the stock market with several companies now valued in the trillions. We propose a Deferred Investment Payroll plan to enable all workers to participate in the rewards of automation and analyze the performance of such a plan. JEL Classification: J31, J33, O33
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