An article from money.cnn.com reveals that the Federal Reserve officials had no idea that a deep recession was coming, and thus the hesitation in their action had a deep impact in the US economy as well as its ability to recover.
On Friday morning, Feb 21, the Federal Reserve released more than 1500 pages of transcript, featuring "word-for-word" its 14 policy making meetings and conference call in 2008. These transcript revealed the uncertainty of the Fed's officials about the US's economic outlook leading up to their drastic actions.

"Meeting just a day after Lehman Brothers filed for bankruptcy in September 2008, they couldn't agree on whether their decision to allow the investment bank to fail was the right move..."

 It was long before the magnitude of the crisis was finally sinking in with officials: The Fed decided to retreat interest rate to near zero and remained its position five years later. Even then, the Fed was still overly optimistic in its reports and upcoming forecasts. Predictions indicated that unemployment would peak at 8.25% in 2010, whereas in reality, it peaked at 10%.

Many economists had successfully predicted the recession of the economy long before it ever happened. Why couldn't the Federal Reserve? This is a very good question to ponder. Please give your thoughts on this blog post / articles.

Source:

Federal Reserve underestimated the crisis

 

Study Finds Greater Income Inequality in Nation’s Thriving Cities

http://www.nytimes.com/2014/02/20/business/economy/study-finds-greater-income-inequality-in-nations-thriving-cities.html?ref=economy&_r=0 

If you live in a large, thriving city such as New York or San Francisco, it is much more likely that the distribution of income is much less equitable. This is not as quite as large of a problem in smaller cities like Columbus. Because of this, Bill de Blasio, the mayor of New York City, has promised higher taxes on the very wealthy and has promised better services for the poor. It will be interesting to see how this affects the city and if things will become more equitable.

long term unemployment

http://www.economist.com/news/finance-and-economics/21596529-americas-labour-market-has-suffered-permanent-harm-closing-gap

 

 This article focused on the short term unemployment and long-term unemployment in the last part. Alan Krueger of Princeton University found that in 2010 about 18% of the long-term unemployed quit the workforce each month. That has since risen to 24%.Meanwhile, the rate at which they find work has edged down to 10% per month. The work they find is often transitory or part-time. This is interesting, because even if the long term unemployment workers get a job, most of them again is fear of losing their jobs. The government have to think about how to provide regular jobs for long term unemployment. Most employer may think that long unemployment worker has any problem and that makes long term unemployment more difficult to get jobs. I can understand employer’s mind. Hiring long term-unemployment is risky. Only government can improve this situation. The government should talk with companies more about what long-term unemployment are not so bad, and should improve the quality of the long term unemployment and mind of employers. For example, the government should give money or exempt tax for the company which hires long term unemployment. When the same situation continues, the long-term unemployed person is excluded from the life.

Why is youth Unemployment so High

http://www.economist.com/blogs/economist-explains/2013/05/economist-explains-why-youth-unemployment-so-high

The International Labor Organization estimates that there are about 75 million 15-24 year old looking for work today.  This figure also excludes a large portion of youngsters who are not even considered in the labor market approximately 290 million 15-24 year old's.  Youth unemployment has increased by 30% in the OCED and has doubled to 20%  as proportion of the youth population.  This is not simply just a result of the financial crisis although this is part of the reason.  A second factor is countries with fast growing populations have inefficient labor markets.  A third factor is the skills of the youngsters today and the vacancies that employers want to fill.  Germany has a fairly low level of unemployment and they have chose to focus a lot on vocational courses for students.  These effects can go on for years and eventually lead to lower wages for this generation along with leaving more people without job's throughout their life.

Closing the Gap - America’s labour market has suffered permanent harm

This article, from last week’s issue of the economist, looks at the output gap in the United States. An output gap is an economic measure of the difference between the actual output of an economy and the output it could achieve when it is most efficient, or at full capacity. The United States has a negative output gap, which occurs when actual output is less than full-capacity output. The authors argue that even though the unemployment rate has come down to 6.6 percent, signaling an improving economy, only about 59 percent of people have jobs (down from 63 percent pre-recession). These seemingly contrasting statistics are evidence of the decline in the labor force participation rate, which is down to 63 percent from 66 percent in 2007. The authors suggest that the aging population has a lot to do with the declining labor force participation rate and is the reason that the Congressional Budget Office (CBO) has reduced its estimate of America’s potential output. The reduction of the potential output estimate has reduced the output gap, which the CBO now estimates to be 4% of GDP.

Labor Leaders See Focus on Wages as Key to Union and Democratic Victories

In the article “Labor Leaders See Focus on Wages as Key to Union and Democratic Victories,” by Steven Greenhouse, he talked about a gathering that took place in Houston where the nation’s leaders talked about ways to revive union movement and raising wages for American workers. In the upcoming election, an increase in wages will play a big roll who gets elected because America workers are now demanding higher pay. In the 1954 union workers represented about 35 percent of employment, but now it’s no longer the case. Union workers now represent about 11 percent of the work force which is less than it was half a century ago. In Chattanooga Tennessee a worker at a Volkswagen plant voted against the United Automobile Workers, which was very devastating for union members as they struggle to recruit new members.

 President Obama is pushing for federal minimum wage to increase to $10.10 an hour, but I think this will become problematic because this will lead to 500,000 lost jobs. Although the opportunity cost of this implementation does sound tolerable, I feel for those 500,000 workers who will lose their job as a result. Also, I think this will cause an inflation because consumers having more disposable income.

 http://www.nytimes.com/2014/02/20/us/politics/labor-leaders-see-focus-on-wages-as-key-to-union-and-democratic-victories.html?_r=0

 

As Sanusi Is Suspended, Is Nigeria Still The World's New Investment Darling?

The Nigerian economy has experienced a lot of investment for oil.  However, recent suspicions of corruption threaten the stability of Nigeria's economy.  The central bank governor, Sanusi Lamido Sanusi, had to step.  She is being suspended by President Goodluck Ebele Jonathan for suspicions of financial corruption.  Recently, Nigeria has experienced other economic challenges, such as instability in the Nigerian banking system in 2009.  The other problem is that there has been reports that there is corruption within the Nigerian oil industry.  It is suspected that there has been 1 billion dollars per month in fraud and mismanagement of revenues from supplying oil.  There is concern that this corruption will hurt confidence in the Nigerian economy.  If financial confidence is not strong, investors are less likely to invest in Nigeria.

Prior to this, Nigeria has had a stable economy with few concerns.  Nigeria had a strong GDP, a young population for its workforce and revenues from oil.  However, revenues have decreased to $49 billion dollars in April 2013 (a decrease of $7 billion dollars).  Furthermore, the suspension of the governor of Nigeria's central bank has damaged confidence in the Nigerian economy as the naira (Nigeria's currency) has declined due to a lack of bond trading.

Investments in Brazil Rise

Investments in Brazil Rose Last Year, Study Says

Despite economic instability, Brazil saw an increase in private equity and venture capital investments. Investment in Brazil increased from $5.7 billion to $6.04 billion, and investment in the region (Latin America) increased by 13%. Although investment and start-up activity in Brazil has been increasing or at least remaining constant, inflation continues to be a major concern. Brazil's minister of finance estimates that budget surplus this year will be lower and a cut in government spending of approximately $18.5 billion.

Some investors like Mr. Etlin, a managing partner at the private equity firm Advent International, believe that the tough economic times in Brazil present an opportunity for future growth. He believes that even though fund-raising levels in Brazil decreased some last year, they will begin to recover rather soon. This is mainly due to lower valuations, less competition, and a depreciating currency.

Record Japan trade deficit highlights risk economic stumble

Record Japan trade deficit highlights risk economic stumble

According to Record Japan trade deficit highlights risk economic stumble by Tetsushi Kajimoto and Stanley White, Japan has a trade deficit of 2.79 trillion yen ($27.3 billion). Although exports increased by 9.5% in January, import costs for Japan are relatively higher. The government is planning to raise taxes in April to help get out of this slump. However, the Bank of Japan has opted out of using monetary measures to help with this current crisis. The Bank of Japan predicts the economy will recover on its own shortly. They are hoping to see Japan’s inflation rate reach 2% before they take any action. Currently Japan is in a stagnate position. Exports, consumption, and investment are not doing well. Consumers and businesses are waiting for the economy to change before they spend any money.

            

Raising minimum wage leads to higher unemployment rate

http://www.washingtonpost.com/blogs/she-the-people/wp/2014/02/19/cbo-minimum-wage-report-creates-quandary-for-white-house/


One week ago, President Obama sighed an executive order to raise the federal minimum wage for workers under new federal contracts from $7.25 an hour to $10.10. Although, according to the news, this policy will increase the income of 16.5 million workers and help about a million people out of poverty. This Tuesday, the CBO reported that "raising the minimum wage to $10.10 would cause 500,000 people to lose their jobs over the next two years." Because requiring companies to pay their workers more will let them hire fewer workers. According to estimation from the National Women’s Law Center, women make up more than three-quarters of the workers in the 10 largest low-wage occupations. These women may be lucky ones see the increase in wages or be unlucky ones who lose their jobs.

California Drought; why farmers are "exporting water" to China

http://www.bbc.co.uk/news/magazine-26124989

Despite the major winter storms that hit most of the country, California is facing one of the worst drought on record. This has caused a major problem as California is the biggest agricultural state in the U.S.

Despite the lack of water for local families, one group of farmers are relentlessly using water to grow alfalfa hay which is then exported to China for cattle feed.
Although some argue that a hundred billion gallons of water (a very valuable and scarce resource) per year is being exported to China in the form of alfalfa hay, which could be used instead to supply for millions of families, farmers argue that they are simply just balancing the trade imbalance of the U.S.
Due to America's cheap water rights and trade imbalance with China, it makes growing hay for the foreign market not just viable, but extremely profitable.

Although exports are all part of an open global economy, benefiting both the exporters (the farmers who make large profits to the high foreign demand of hay) and the the importers (China, who receives relatively cheaper hay compared to growing it in their own country), water- a scarce and finite resource to many people in other parts of the world- is being treated as inexhaustible and infinite in the U.S.

The Beast Known as Inflation

http://www.economist.com/blogs/freeexchange/2013/04/monetary-policy-2

In class we started to learn and understand the purpose of the fisher effect. The fisher effect states that nominal interest rates are equal to inflation plus real interest rates. The fisher effect also helps explain expected inflation which states nominal interest rates are equal to the ex post inflation (or expected inflation) plus real interest rates. This indicates that expectations of the inflation rate has a direct impact on what the actual nominal and real interest rates will be. The International Monetary fund (IMF) states that because the federal reserve would insure inflation rates in the future would be generally low and stable. Due to this inflation expectations became so stable that not even the worst few months of economic performance since the 1930s could produce deflation.

In 2008 America hit a demand vague. Basically this means firms and household perceived the future economy to be bad because of talks of recession. Firms and households decided that holding onto their money by saving instead of investing would be the wise decision. This ultimately made the economy worse and led to the ultimate recession.  Equity prices fell close to 50%. Commodity prices also harshly fell. Crude oil prices fell about 60% from the beginning of the year. From 2008 to 2009 wheat prices dropped by 33%, coal prices dropped nearly 50%, and most industrial metals prices fell by 25%. However wages did not fall by the expected 40%.

Expectations of inflation defiantly do not solely dictate what is to happen to the economy. This was seen through the recent recession where households forgot to think about broad price and wage shifts. Other variables such as nominal output, nominal incomes , or unemployment became worrying numbers during the economic crisis that low inflation could not fix. Luckily because the federal reserve declared short run prices to be sticky and that inflation would be kept relativity low, so there was very little risk that aggressive monetary stimulus leads to rapid inflation.

In conclusion if the Federal reserve believes that its credibility is the reason inflation has been stable during the recovery, then they will do nothing so unemployment will eventually settle at a higher natural rate. If wage rigidities are responsible for stable inflation, then the Federal reserve must set a higher inflation rate expectation in order to increase employment growth.

Tiny loans are getting more expensive

http://www.economist.com/news/finance-and-economics/21595470-tiny-loans-are-getting-more-expensive-poor-service

   Far from the tall towers and flashy cars of Western financial centers, a new financial market is seeing a massive amount of growth and expansion, but not without cost. In the past few years 2 things have begun to happen at Micro-Finance Institutions around the world. The first is that the rapid expansion of MFIs has been much faster than the lenders who give them capital to expand have expected. While it is good that Micro-Finance is growing, giving millions access to resources they dearly need to expand, it does come at a price for customers. The abnormally high interest rates on micro-loans are getting higher as the cost of capital to expand is being passed onto customers.
   While it is easy to say that the customers are better off than before MFIs because they used to borrow from money lenders at exorbitant rates like 100% or more, that misses the point. MFIs have become a major source of lending to many people as is obvious. What I'm curious about is whether the rising cost of MFIs and the rising default rate on their micro-loans will reintroduce the competition of informal money lender that so many poor people left behind. The presence of both an expanding legitimate market and an existing informal market presents an interesting dilemma.
   Is it possible that competition from the "black market" might actually serve to drive down the interest rates of MFIs, or whether prices will keep on rising on an extremely vulnerable population?

http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/10638811/Chinese-bank-bad-debts-hit-crisis-level-high.html

As growth rates are considered to be one of the most important benchmarks to view the performance of an economy, we forget to look at some underlying factors which show the performance of an economy. According to this article, China’s non-performing loans given out by banks have reached approximately $97 Billion and even though just this just makes up 1% of the total loans, the number is increasing. If this number keeps rising, there is a possibility of a credit bubble which could cause China’s economic outlook to tumble in the coming years.

A Number of Great Import

http://www.economist.com/news/china/21596568-china-has-worlds-biggest-trade-deficitin-services-number-great-import

In recent years, China's exports have greatly exceeded its imports, however this imbalance has been offset by the component of services. The article says, "At $122 billion in 2013, China's services deficit is by far the biggest in the world." Tourism is what is said to lie behind this gap, for the past five years, this gap in tourism has been growing larger and larger. Predictions have been made that China's surplus will narrow further.

Stephen Green, of Standard Chartered writes that "2014 is likely to be the year when China’s balance of payments re-emerges as a problem for the world." What do you predict? Will this continue to be a problem for China? 

Homebuilder Confidence Sinks in February

In one month, U.S. homebuilder industry has suffered its largest drop ever. The housing market has declined greatly due to the severe weathering affecting much of the nation, which is keeping potential buyers at home. The cold weather is keeping buyers out of the market across the nation. However, the bad weather will only slow down growth temporarily as the majority of consumers and firms are putting off their purchases. Therefore, if the temporarily slow growth is due to the weather then we should expect the trend will reverse once the temperatures turn higher and consumers want to spend again.

Weather isn't the only factor effecting the decline in U.S. homebuilder industry. There is also a lack of building resources - raw material and labor. The majority of workers are concerns about being able to meet future demand due to the shortage in labor, lots, and supply. NAHB Chief Economist David Crowe made a statement saying, "The weather also hurt retail and auto sales and this had a contributing effect on demand for new homes."

http://www.usatoday.com/story/money/markets/2014/02/18/homebuilder-confidence/5578845/

American Borrowing Increases

http://money.cnn.com/2014/02/18/news/household-debt/index.html?iid=SF_E_Lead

This article points out the fact that Americans are borrowing more than they have since before the recession. The question that naturally follows is "is that a good thing?"  The article seems to imply that it is a sign of confidence in the economy which would be a good thing.  Another thing to think of, however, is the fact that taking on more debt than can be handled responsibly is one thing that can cause recessions.  So, while the optimism about the economy is certainly a good thing, it is important to also be wary of too much debt.

China's Economy: The World's Second Biggest Consumer

http://www.economist.com/blogs/analects/2014/02/chinas-economy

China is usually thought of as a producer and not much as a consumer. In 2010, China surpassed Japan as the worlds second largest economy (after the United States), however not in consumption. It was not until 2013 that China surpassed Japan as the world's second largest consumer. Japan just released information stating that their private consumption was 292.9 trillion yen, about $3 trillion dollars, and government consumption was about 98.5 trillion yen.

Although China has not released their numbers for 2013, the Economist knows enough to conclude that Japan indeed has fallen into third place. Japan's private and government consumption are only about 43% of China's total GDP. This comes from the fact that the yen is losing value to the yuan. It is thought that China was the country that provided the most economic growth to the world economy is 2013.

Nobel Prize Winner’s Frank Advice to China’s Leadership

http://www.nytimes.com/2014/02/18/business/economy/nobel-winners-frank-advice-to-chinas-leadership.html?ref=business
 
         A. Michael Spence (2001 Nobel Prize winner economist) has some advice for China's economy.
           
           He opines that as the global economy is largely dependent on China, China should move past low wage exports and generate demand domestically too, or else "they'll fail."

           China is currently facing a challenge- middle income transition.  A challenge faced by developing nations. Only South Korea, Taiwan and city states of Singapore and Hong Kong have made it from a  middle income status to a high income status.
     
            The middle income transition requires a much better and sophisticated economic strategy such as production of more complex industrial goods and strengthening  domestic demand for consumer goods.  The Asian Tigers prospered through exports strategy in the 20th century.
   
   But now Europe and Japan's current  stagnant economies decrease this demand for export goods and  only USA is a stable economy which is demanding for export goods. Thus the strategy of  exports to run the economy is not the best measure.
       
    The Chinese economists want to push firms into more innovative, productive sectors, expose huge public sector banks and often inefficient state-owned companies that control more than half of China’s fixed investment. But these measures will only bring short term gains.

    So China needs to increase consumer demand internally to prosper in the long term.

        
      

Unemployment in America: Closing the gap

In December job growth slowed sharply and continued to remain weak in January, suggesting that more than bad weather is to blame. However, the unemployment rate tells a slightly different story. In January it dropped to 6.6% from 7% in November. If the unemployment rate were to hit 6.5%, the Federal Reserve may consider raising interest rates.

The Fed and other researchers have downplayed the significance of the UR, as discouraged workers stop looking for jobs. On February 11th Janet Yellen called the recovery in the labor market "far from complete" in her inaugural appearance before congress.

Figuring out the gap between actual and potential output is tricky because potential is hard to discern, and it is more uncertain than usual. In a recent report from a bank called Lewis Alexander of Nomura Securities, this bank calculated the output gap using three different market indicators (see chart in link). The proportion of people with jobs went down from 63% of the population in late 2007 to below 59% in 2009. It has barely moved at all from there since, which suggests that the output gap has not closed at all. In contrast, the unemployment rate is 1.1 percentage points above its estimated natural rate of 5.5% which suggests that most of the output gap has disappeared. In conclusion, if one were to look only at those who have been employed for less than 6 months, the output gap appears to have been closed completely.

http://www.economist.com/news/finance-and-economics/21596529-americas-labour-market-has-suffered-permanent-harm-closing-gap    

Crossing Borders and Changing Lives, Lured by Higher State Minimum Wages

The minimum wage has sparked much attention recently. They're many Americans who would like to see the minimum wage raised, as prices steadily increase. In the article, Crossing Borders and Changing Lives, Kirk Johnson discusses several instances in which people travel across state borders just to make a decent wage. The minimum wage in Oregon is $9.10, which is $1.85 more than the national average and the second highest in the nation. This has resulted in workers from nearby states commuting to Oregon for work. Kirk Johnson explains how employers in Oregon and Washington (highest minimum wage) expect their employees to go above and beyond to earn their high wage. Carly Lynch worked 3 tables at a bar in Idaho, but when she began working in Oregon she was forced to work five while also helping with dishes. It is common for workers in this area to work long continuous hours of manual labor. Though the work load is tough, many are content due to the amount of money they're recieving.

Though most of the people in this article were happy with the high minimum wage, one owner talked about the negative effects it has on everyone. Oregon is 1/10 states that adjust its minimum wage with CPI.   Therefore when the wage rises, owners raise their prices, in which the outcome can be loss of certain customers.  It will be interesting to see if the minimum wage is raised, and also how/if any states will adopt adjusting their minimum wage to CPI.

Obama Signs law to raise U.S debt ceiling

On Saturday President Obama signed a legislation that will raise the U.S. debt limit through March of 2015. Raising the debt limit through March 2015 but to what. With no specification of what the limit has been raised to in the article, seems like there will be a unlimited debt ceiling until March 2015. Did the government set this up to have no restrictions on spending and debt this year? The past 13 years the national debt has increased by 13 trillion dollars. They could be potentially be creating a finical crisis. 

On March 20, 2006 Senator Obama stated, "The fact that we are here today to debate raising America's debt limit is a sign of leadership failure." at the Senate Floor Speech. He continued to say, "It is a sign that the U.S. Government can't pay its own bills." "Increasing America's debt weakens us domestically and internationally. 

Obama Signs law to raise US debt ceiling

Increasing the Minimum Wage

http://money.cnn.com/2014/02/12/news/economy/obama-executive-order-minimum-wage/index.html?iid=SF_E_River

President Obama recently issued an order that will bring the minimum wage up from $7.25 to $10.10 starting in 2015. The $2.85 increase to the hourly pay of  min. wage workers in the US comes from the gradual urge of liberals who believe that lawmakers are not going to move fast enough to make the increase happen. This is undoubtedly big news, however it isn't exactly what it seems. The order merely applies to "...contracts and subcontracts that provide the federal government with concessions, services, and construction." In other words, the push will affect less than 500,000 workers. It is, however, a good starting point to urge Congress to make it the same increase for all workers. The White House states that the increase in minimum wage will provide positive effects such as increased productivity and lower turnover. Some say that the move with cause employers to higher less and cut hours. The outcome will be exciting to see.

Most Americans Plan To Save Their Tax Refunds

With tax season starting as W-2s come out and the IRS April 15th filing deadline approaching, talk turns to what will Americans do with their tax refunds.  Last year's average refund came out to $2744 and Millennials are more likely to expect tax refunds due to taxes on paychecks throughout the year.  If the article is accurately predicting a rising trend to save tax returns, this could indicate a decrease in MPC and a corresponding increase in MPS.

Read the article Here

Long-term unemployment leading to fewer in labor force in Colorado

Although the unemployment rate in Colorado has dropped from 9.1 percent in 2010 to 6.2 percent in December 2013, this statistic does not necessarily signify an improvement in labor. Since the recession of 2009, about 250,000 people have dropped out of Colorado's labor force. A number of factors contribute to this drop in the labor force, including giving up on looking for a job due to frustration and students going to college, but the largest proponent is the number of people going into retirement; this accounts for about half of the drop in labor participation. Many of Colorado's older residents are baby boomers who are now beginning to retire, which hits the labor force hard. In addition to the baby boomers situation, adults are also retiring at a much earlier age now than before the recession. And as for those who are still looking for jobs, the opportunities for potential jobs are decreasing significantly the longer people are out of work, so people who are officially unemployed are running out of options.

http://www.denverpost.com/business/ci_25147885/long-term-unemployment-leading-fewer-labor-force-colorado

Overview on growth of Korean Economy

The article begins with a short exemplar of shortage of labor to fulfill the drastically increased amount of demand of interior design. This provides a thorough outlook of the growth of Korean economy over the past three years, as home decoration is a type of luxury, which one would most probably not order when he/ she is having economic problems.

However this does not interpret the entire economical situation over Korea, because although Busan is one of the most populated cities, the circumstances are totally dissimilar in Seoul, the capital city.
Usually a single apartment room that is approximately around 100 square meters in Busan will cost 0.2 Billion Won or a little higher than it to purchase. However houses of the same size in Seoul or regions nearby the capital would cost more than 0.25 Billion Won to rent in deposit basis. A house that is smaller than 100 square meters would cost approximately 0.6 billion won to purchase. Thus the citizens living in Busan are relatively less pressurized to buy a house and decorate it.
Moreover, to state the obvious, gross domestic product increase does not reflect every aspect of economic positivity. Some businesses that treat industrial products such as phones, cars, etc., that are usually exported to the international market, which Korea owns above 35% of the share in the Ship market and are keeping up sales in miscellaneous other machinery products still maintain or are having increased profit every year, since demands for such items are consistent as of now. However not all businesses are facing benefits, but crises that might shut them down. Gigantic firms are dominating the markets, eventually making medium/ small sized companies to exit the market or either become absorbed to them. Moreover the consumer confidence is low on most products as well, since most people are actually indebted in a huge amount of money, burdening them greatly. Thus, in conclusion, the economy in Korea is a growth but not everyone is benefitting from this improvement. If the article focused more on the other areas, not only on grandiose companies such as Hyundai, the details would have been more reflective of the actual situation.



Original Article:
http://www.ft.com/cms/s/0/4a7c74aa-83cf-11e3-aa65-00144feab7de.html#axzz2tWCXk6xq

Coming to an office near you

The increased use of technology in the work place has had both positive and negative effects on jobs. On one hand, the production and development of technology creates jobs, but the utilization of it can replace workers. About a third of workers worked on a farm in the early 1900s, now less than 2% do.  This article explains that with the advent of technology, in the short run income gaps will widen.  In short, in the long run labor receives most benefits of increased productivity. Workers were formerly most threatened  by production equipment, but now powerful computers have risen as their biggest threat.

http://www.economist.com/news/leaders/21594298-effect-todays-technology-tomorrows-jobs-will-be-immenseand-no-country-ready