The Great Wealth Leak: A Historical Perspective

When President Reagan championed trickle-down economics, the idea was simple: give businesses more resources through tax cuts, and their wealth would flow down, creating opportunities for all. And flow it did—but not in the way most expected. Instead of fueling an economic boom for the American middle class, much of that money trickled down to new middle classes in emerging economies.

Reagan either underestimated or ignored two key forces that would come to shape the modern economy: globalization and automation-technology.

Job Loss Trends: US Jobs vs Emerging Middle Class Growth

This chart demonstrates the decline in U.S. jobs over time (indexed to 1980) compared to the rise of the emerging middle class in developing nations (indexed to 2024).

AI: The Next Layer of Disruption

Fast forward to today, and a new force looms on the horizon: artificial intelligence. If globalization sent jobs overseas and automation took jobs away from human hands, AI has the potential to eliminate the need for workers altogether, replacing them with intelligent systems capable of completing tasks once thought to require human ingenuity.

AI's Impact by Industry

The bar chart highlights the vulnerability of various industries to AI disruption, with manufacturing and customer service being the most affected.

Wage Growth vs Productivity

The gap between worker productivity and wage growth has grown significantly since the 1980s. This disparity further illustrates how technological advancements have not translated into equitable economic benefits for workers.

Wage Growth vs Productivity (1980–2024)

Skills for the AI Era

The Venn diagram below illustrates the intersection of human-centric skills and AI-specific skills, emphasizing the importance of adaptability in the modern workforce.

What Can Be Done?

Faced with these realities, readers must consider their options:

1. Adapt and Upskill: AI is a tool, and those who learn to work alongside it will have a competitive advantage.
2. Advocate for Policy Change: Policies that incentivize job creation, protect workers, and regulate the unchecked growth of AI systems can help mitigate the economic fallout.
3. Diversify Income Streams: Exploring entrepreneurship, investments, or side hustles can provide a safety net in an AI-dominated economy.

The future isn't written yet. Let's make sure it's a future where technology uplifts everyone, not just a select few.

Data Sources

1. Job Loss Trends Data: Based on trends observed from historical economic data (e.g., Bureau of Labor Statistics).
2. AI Impact by Industry: Compiled from industry reports and projections (e.g., McKinsey Global Institute).
3. Wage Growth vs Productivity: Derived from studies on U.S. labor productivity and wage trends (e.g., Economic Policy Institute).
4. Skills for the AI Era: Conceptual analysis based on skill overlap research in AI and human capabilities.