How money get to people in the modern economy

Historically the free market was the mechanism by which money got into the hands of 'the masses'.  A worker worked on a mass assembly line with thousands of other workers, and the compensation from that job was enough to pay all the expenses for that worker.  All the food, housing, medical care and so on for him and his family.  And enough extra money to have some disposable income and help drive the economy.

Your average man stood on his own in many ways.  He was valueable to the production, and got a percentage of the value he added.  And a key point is because there was an overall shortage of workers in the economy through history, firms had to pay more than the firm down the street to attract and keep workers.  This shortage kept the pay of the worker as a large percentage of the value he was adding.  Of course it was never 100%, as there had to be room for the profit of the owners of the firm. 

But by 2010 that mechanism is breaking down in western nations.  There is a severe and growing oversupply of labour.  The firm does not have to pay wages higher than the firm down the street, it only has to pay the legal minimum wage.  The connection between the value being added and compensation has broken down.  You see workers who are fabulously productive, enabled by modern production technology, yet the wages are declining.  So you have situations in industries where pay of new workers is falling like 20% over the last decade, yet productivity at least doubling.

It is so bad that even with the huge productivity gains, now your average man could not mke enough money at the average job to support a family, and cover all the costs, housing, food, medical care, cars, appliances, utilities, dental care, etc.  People tried to keep up by first sending the wife to work, which delayed the crisis.. and then over the last decade going deeper into debt.

But even with that more and more it is the state which is picking up the bills.  The health care costs, housing, food stamps, pension costs, workers insurance and so on.  The state can do this far easier than most pundits realize, because the wealth is really there.  The wealth is the productivity increases which have been so powerful over the last few decades. 

In the USA in the last decade government combined local, state and federal has grown from under 35% of gdp, to 45% of gdp.  And looks set to grow each year now.  For more and more people they exist because the state pumps money their way.  And I believe this trend will continue, until the vast majority of people get the majority of their income from the state.. sometime mid century.

There is no other way, because few people are now needed in modern production.  And that number goes down each year.  And the same computing and robotics technology is moving into warehousing and eventually will go into retail.  It is also in the process of replacing most of the white colar workforce.  But back to that key point I mentioned, automation doesn't need to replace everyone to change the game.  It only has to create a permanent slack in the workforce, in order to destroy the bargaining position of workers.  Once that is done, the link between compensation and production is broken.  And at that point it requires the state to come in with stimulus money, in order for 'the market' to get enough money to buy said production.