Powell Says Automation May Worsen Inequality in Coming Decades

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A rise in American workplace automation could exacerbate inequality in the coming decades, Federal Reserve Chair Jerome Powell said.

“Are we entering into one of those periods where a lot of what is now work can be done much more efficiently through automation, and will that have really challenging distributional consequences, at least for a few decades? That could be the case,” Powell said Wednesday during a “Fed Listens” event at the Kansas City Fed.

“The part of this we control, though, is getting people the skills and talents and aptitudes that they need to be able to benefit from technology,” Powell said. “And I think if we don’t do that, we’re just going to see more and more of this, where some people are just left behind by what work has become.”

The U.S. central bank has organized several sessions this year to gather input from communities across the country on how it makes policy, as part of a broader internal review. A panelist at the Kansas City Fed event raised concerns about the effect of automation on the workforce and asked whether Fed officials were looking into it, prompting Powell’s response.

Inequality has risen dramatically over the past 30 years. The top 10% of American households by income own 57% of the country’s wealth, up from 47% three decades ago, according to Fed data.

Powell pointed to a flattening out of educational attainment since the 1970s.

“The concern that you raise has always been the case, going back years -- and there have been periods when technology disrupts workers, and there’s a long period during which they do not benefit,” he said. “On the brighter side, though, if those people do get those skills, then their productivity will go up, their wages will go up, and everybody can benefit.”

To contact the reporter on this story: Matthew Boesler in New York at mboesler1@bloomberg.net

To contact the editors responsible for this story: Margaret Collins at mcollins45@bloomberg.net, Vince Golle, Ben Holland

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