The economic and social impact is potentially corrosive. A survey we conducted as part of our research found that a significant number of those whose incomes have not been advancing are losing faith in aspects of the global economic system. Nearly one-third of those who are not advancing said they think their children will also advance more slowly in the future, and they expressed negative opinions about free trade and immigration.

If the low economic growth of the past decade continues, the proportion of households in income segments with flat or falling incomes could rise as high as 70 to 80 percent over the next decade. Even if economic growth accelerates, the issue will not go away: the proportion of households affected would decrease, to between about 10 and 20 percent—but that share could double if the growth is accompanied by a rapid uptake of workplace automation.

The encouraging news is that it is possible to reduce the number of people not advancing. Labor-market practices can make a difference, as can government taxes and transfers—although the latter may not be sustainable at a time when many governments have high debt levels. For example, in Sweden, where the government intervened to preserve jobs during the global downturn, market incomes fell or were flat for only 20 percent of households, while disposable income advanced for almost everyone. In the United States, lower tax rates and higher transfers turned a decline in market incomes for four-fifths of income segments into an increase in disposable income for nearly all households. Efforts such as these—along with additional measures such as encouraging business leaders to adopt long-term thinking—can make a real difference. The trend of flat and falling real incomes merits bold measures on the part of government and business alike.

Eoin Treacy's view

With so many voters, internationally, expressing dissatisfaction with the economy and their role within it, there is already evidence this is going to become an election issue in almost all upcoming elections whether in the USA or Europe. 

The populist answer to inequality is to support protectionism and there are already signs of electorate unease with additional international trade harmonisation. However despite likely support for protectionism the march of automation means these types of policies are unlikely to result in significant additional jobs in developed economies. It is no exaggeration that China and other Asian counties are engaged in the equivalent of an arms race to boost automation in order to make sure the jobs that moved there in search of lower labour costs stay there as wages rise. 

The Robo-STOX Robotics & Automation Index experienced a very sharp drawdown during the September 2015 flash crash but rebounded impressively from the intraday low and has held a progression of higher reaction lows since. It moved to a new closing recovery high yesterday and a sustained move below $24 would be required to question potential for higher to lateral ranging. 

An additional consideration raised in the above story is that the answer suggested to the problem of income disparity is higher taxes. Better quality education, higher skilled job training and infrastructure development are also important but the threat of higher taxes, particularly for those deemed by populists as having assets, represents a potential medium-term threat to companies with large cash piles. That could represent an incentive to increase buybacks, dividends and/or investment.