No, technology isn’t making us more equal.
From Silicon Valley to Zhongguancun, tech hubs worldwide hum with the creative energy of startups aiming to disrupt industries and change the world. The received wisdom tells us that the fruits of innovation raise all boats, creating jobs, prosperity, and opportunity.
But what if this belief only tells half the story? What if today’s high-tech innovations are increasingly winner-take-all, enriching a small elite while leaving most behind? In other words, does tech innovation spur economic growth for all?
The Myth of Shared Prosperity
Modern capitalism propagates a compelling creation myth — that free markets and innovation inherently create shared prosperity. By driving productivity and efficiency, the story goes, technological progress allows companies to create more value with less cost.
New technologies then rapidly diffuse through the marketplace, empowering society. As Stanford economist Paul Romer declared, “Economic growth springs from better recipes, not just more cooking.” From the internal combustion engine to artificial intelligence, human ingenuity develops the “recipes” that raise living standards over time.
Or so the myth often presumes. But looking closely, technology-driven growth frequently fails to deliver shared gains. Breakthrough innovations create huge value, but the gains disproportionately flow to a select few.
Okay — yes, Henry Ford’s Model T automobile paved the way for mass car ownership. But it also birthed vast fortunes for Ford and its shareholders while factory workers toiled for meager wages.
Today’s tech giants tell a similar tale — between 1994 and 2018, Microsoft, Apple, Amazon, Facebook, and Google created over $1 trillion in shareholder wealth, even as median wages stagnated and inequality reached historic highs.
AI, genome editing, quantum computing — these fields may drive future growth, but their rewards will likely concentrate among privileged groups with access to specialized education and resources.
Why has technology yielded such uneven gains? It comes down to power. Innovations often benefit those who hold power and control technology over those who merely use it. The former can restructure markets and institutions to their advantage, as Uber has done by classifying drivers as contractors, not employees.
Breakthrough technologies require huge upfront investments — only centralized authorities like governments and corporations can marshal resources. Early inequality becomes “baked in” as large entities stake claims over emerging technologies.
But the most important reason tech gains concentrate is that innovation has become exceedingly complex. Advancing technology requires years of specialized study and access to cutting-edge tools. This creates insurmountable barriers for ordinary people to participate directly. Whereas anyone could learn basic manufacturing skills during the Industrial Revolution, mastering fields like nanotechnology or gene editing today is virtually impossible without institutional backing. Complex innovation hence facilitates the concentration of expertise and authority among technological elites.
The Great Decoupling
Coinciding with rising inequality, recent decades have seen productivity and wages decouple for the first time in modern history. Previously, workers could expect their pay to rise commensurate with productivity growth.
But since the 1980s, median wages have stagnated while productivity has continued climbing. Employees now generate far more value for companies without seeing comparable income gains.
Technological advances deserve substantial blame for this great decoupling. As Brynjolfsson and McAfee argue in The Second Machine Age, automation and AI drive the wedge between productivity and wages. How? Machines are increasingly substituting for human labor, reducing the demand for workers. And when new technologies complement labor, the gains disproportionately flow to superstar talent like designers and engineers instead of average workers. This winner-take-all dynamic concentrates the productivity benefits of innovation among a shrinking portion of workers.
But the most insidious way tech drives the great decoupling is by shifting power away from labor. In the 20th century, unions and collective bargaining ensured workers shared productivity gains. But today’s technologies are custom-built to shift leverage to companies. Rideshare apps, e-commerce platforms, teleconferencing software, and AI-driven supply chains allow firms to control operations directly, strategically designate workers as contractors, closely monitor labor, and optimize management. Workers’ bargaining power has been disrupted.
Meanwhile, automation pressures middle-skill jobs, dividing work between highly-paid creative and low-paid service jobs. This hourglass economy squeezes labor’s share of income and again concentrates gains among privileged groups in tech hubs. In short, by restructuring institutions and markets to employers’ advantage, innovations like software, analytics, and robotics decoupled productivity from typical workers’ wages.
The Geography of Tech
Not only has tech-driven rising inequality between individuals but also between regions. The economic geography of innovation has centralized gains in small coastal tech hubs like Silicon Valley, leaving rural and manufacturing communities behind.
Why has tech become so geographically concentrated? In part because innovation proceeds cumulatively. Knowledge builds on prior advances, relationships, and expertise. Successful clusters like Silicon Valley become hubs that attract talent, funding, and support infrastructure in a virtuous cycle. Attempts to spur isolated tech hubs flounder since they lack complementary assets like specialized suppliers, experienced mentors, and tacit knowledge.
Moreover, today’s complex technologies often rely on direct human collaboration and problem-solving. This anchors industries in physical ecosystems where people can interact face-to-face. Startup founders cluster in the Bay Area alongside venture capitalists, programmers, designers, and legal experts — meanwhile, old-line manufacturing towns hemorrhage jobs as automation and offshoring hollow-out factory work.
Technology has thus bifurcated regional economies. Coastal cities with outsized shares of high-tech sectors and college graduates pull away, while rural areas and Rust Belt manufacturing hubs face declining prospects. Workers in economically distressed regions bear the brunt as low-skill jobs are automated or offshored. Lack of mobility further traps such workers since moving requires resources they often lack. Technology can therefore reinforce geographic inequality.
Seeds of Change
Must innovation inevitably enrich a small elite at the expense of the broader populace? Some techno-optimists counter that we haven’t reached the inflection point where innovation benefits all. But waiting around expecting the mythical tide to lift all boats is passive, risky, and inequitable given decades of stagnant median wages. Moreover, there are good reasons to doubt technology’s gains will suddenly diffuse broadly. Complex 21st-century technologies inherently concentrate expertise and value. Meanwhile, market forces and policies favor capital over labor.
But we need not be technological fatalists. Society shapes how innovation impacts the economy, and thoughtful reforms can distribute gains more evenly. Education and labor policies should help workers adapt to the high-tech economy. Strengthening collective bargaining can also give labor leverage in capturing productivity growth. Antitrust enforcement is critical to prevent behemoths like Amazon from monopolizing markets. Tax incentives can encourage research in disadvantaged regions and stimulate local entrepreneurship. Platform cooperatives like Fairmondo offer alternative models to extractive sharing economy giants. And policymakers should consider universal basic income and wealth taxes to redistribute innovation gains.
Technology can still uplift society — advances in renewable energy, medicine, agriculture, and materials science hold boundless potential. But growth will remain lopsided unless we reshape policies and institutions to ensure innovation serves the entire populace. This begins by questioning the technological myth of shared prosperity. Innovation alone cannot mend soaring inequality or benefit forgotten communities. Progress demands that we temper faith in technology with an understanding that how we develop and employ, innovations matters profoundly. After all, breakthroughs like CRISPR or quantum computing could either liberate humanity or devastate society, depending on who controls them and for what purposes.
The issue is not innovation itself — it’s power. We must restructure socioeconomic institutions to distribute power and agency more evenly, not just assume “free market” tech progress will uplift all. This undertaking will demand struggle and as much creative ingenuity as engineering new gadgets. But reshaping the rules that determine who benefits from innovation constitutes the great challenge of this century.
Getting there necessitates moving beyond naive techno-optimism to ask the complex, essential questions: Innovation for whom? Growth for whom? If correctly harnessed, technological advances can propel broadly shared prosperity. But nothing guarantees they will.
True progress demands we collectively take up technology’s immense promise while honestly confronting its perils — including how innovation concentrates riches for a few at the expense of many. The future won’t f**king build itself.
I’m Joan. Transgender. Solopreneur. Tech writer. Founded studio self, a marketing agency, community, & product lab. We publish The Index, an indie tech publication & more.
