Erik Brynjolfsson and Andrew McAfee, from the Massachusetts Institute of Technology, claim digital technology is restructuring the economy in a way that is ''more profound and far-reaching than the transition from the agricultural to the industrial age''. People and organisations are falling behind because technology is advancing so fast and, as a result, ''technological unemployment'' has emerging as a real and persistent threat to middle-class jobs. In their book Race Against The Machine, Brynjolfsson and McAfee predict gloomy prospects for many occupations as powerful technologies are adopted not only in manufacturing, clerical, and retail but in professions such as law, financial services, education and medicine. ''The pace and scale of this encroachment into human skills is relatively recent and has profound economic implications,'' they say. ''Perhaps the most important of these is that while digital progress grows the overall economic pie, it can do so while leaving some people, or even a lot of them, worse off.''

They see rapid technological change contributing to the stagnation of the median income and the growth of inequality in the United States: ''It may seem paradoxical that faster progress can hurt wages and jobs for millions of people, but we argue that's what's been happening.'' The pair suspect something similar will happen in other technologically advanced countries, such as Australia. Even senior managers may not be spared. An analyst from technology research and advisory firm Gartner recently forecast that many functions which company executives now perform will become automated over the next four decades. Brynjolfsson and McAfee are not the only American researchers concerned about the impact of smart technology on ordinary workers. In a paper titled ''Smart Machines and Long-Term Misery'' another pair of renowned American economists, Jeffrey Sachs and Laurence Kotlikoff, conclude digital technology and robots will compete with workers in a way that leaves some groups, especially the young, worse off in the long-term.

Using a ''stylised life-cycle model'', their calculations show how smart machines substitute directly for young unskilled labour, depressing their wages and limiting their ability to save and invest in their own acquisition of skills and capital. ''What if the Luddites are now getting it right?'' Sachs and Kotlikoff ask. ''Not for labour as a whole, but for unskilled labour whose wages are no longer keeping up with the average?'' Worries about machines eliminating jobs have been around for a long time. As the Industrial Revolution took hold in Britain more than 200 years ago, members of the Luddite movement took sledgehammers to machines in protest at the way workers were being treated. Many economists are not convinced by claims that the economic disruptions triggered by the latest smart machines are any different from those caused by technologies in the past. It is difficult to disentangle the effect of technologies from other forces at work in the economy. One critic, Professor Tyler Cowen, says the economy is being hampered by insufficient innovation rather than too much. He estimates the rate at which ''new ideas'' are being generated today is about one-sixth of the rate in the 1920s and 1930s.

Cowen claims his grandmother, born in 1910, experienced far more life-changing technological change than himself: the mass introduction of electricity, flush toilets, cars, radios, televisions and commercial aviation. ''The culprit'' is too little progress, not too much, he says. Brynjolfsson calls this is a ''misdiagnosis''. Rather, digital progress is so rapid and relentless that people and organisations are having a hard time keeping up, he says. The debate among American economists about smart machines and jobs has raged amid high rates of unemployment in the US and Europe. Australia's recent economic story has been different - job growth has been solid and unemployment low, despite the advent of new smart machines. But there is concern digital technologies could contribute to growing income disparities as highly-skilled workers, who create and manage smart machines, benefit disproportionately. ''It's never been as straightforward as new technologies displacing or replacing labour,'' says Richard Hall, professor of work and organisational studies at Sydney University.

''It's been more of a case of there being winners and losers associated with technological revolutions.'' This underscores the importance of having a well-educated workforce capable of adapting to technologies as they come along. Michael Spencer, from Melbourne's National Institute for Economic and Industrial Research, warns that many without appropriate skills could be left behind. ''That's a grave risk that needs to be tackled in an intelligent way,'' he says. ''We need to be constantly investing in skills development.''

Professor Hall believes ''digital dexterity'' will increasingly determine success and failure in the labour market. ''New technologies have made the need for ongoing training and skills development more important than ever,'' he says. Brynjolfsson and McAfee have expressed similar concerns. ''When significant numbers of people see their standards of living fall despite an ever-growing economic pie, it threatens the social contract of the economy and even the social fabric of society,'' they say. The pair conclude that people and organisations must lean to work effectively with technologies rather than trying to race against them. Why?

''There's never been a worse time for workers to be competing against machines.''