Labour Market in the New Era

Labour market largely determines one economy's performance and structure. When wage level is relatively low, the economy is likely to focus on manufacturing; when wage level is high, the economy is highly likely to focus on high value added industries. Labour market is determined by other factors in the economy as well as the society. Usually labour market with a high general wage level is in a society where the population receives high level of education and is productive.

At the moment, labour market is facing another "revolution", which is led by the development of AI and robots. Though I said that AI and robots would not cause an immediate impact, they will inevitably influence labour market as well as economy and cause a structural change. The development will further advance the power of capitalists. There are several factors of production - land, capital, labour and entreprise. What factor of production does the ordinary people control? Most ordinary people have labour as their main contribution to the economy's production, while at least two out of the other three factors are largely controlled by capitalists, who have the wealth to own land and capital. The development of AI and robots can improve the returns of capital investment in AI and robots, making it more attractive to replace human labours by AI and robots. Of course, people with talent and entrepreneurship are and will be always highly demanded in the labour market; however, some talents might be less significant or importance under the threat from AI and robots.

The wage level in the labour market can be pushed down by AI and robots, even in some technical industries. When the use of AI and robots become more widespread, the demand for AI and robots experts will increase and the wage in this field can increase; however, the demand for other field experts, especially where the jobs can be done by AI and robots, can decrease, the wage level will decrease. On the other hand, capitalists are the biggest winner, since they can enjoy from improved productivity and lower costs of production, they will become wealthier and wealthier and the wealth gap between the wealthiest and the ordinary will become larger and larger.