When firms substitute machinery and automation for labor, fewer workers are needed, increasing unemployment and putting downward pressure on wages. Lower earners can therefore face fewer job opportunities and stagnant pay even as productivity per worker rises.

University of Michigan - Ann Arbor

Google

“In Marxian analysis, capitalist firms increasingly substitute capital equipment for labor inputs (workers) under competitive pressure to reduce costs and maximize profits. Over the long-term, this trend increases the organic composition of capital, meaning that less workers are required in proportion to capital inputs, increasing unemployment (the "reserve army of labour"). This process exerts a downward pressure on wages. The substitution of capital equipment for labor (mechanization and automation) raises the productivity of each worker, resulting in a situation of relatively stagnant wages for the working class amidst rising levels of property income for the capitalist class.”

Learn Before

Related