This paper studies the effects of automation in a task-based economy in which some jobs pay workers rents—wages above their outside option. The authors show that automation targets high-rent tasks, dissipating rents, amplifying wage losses, and reducing within-group wage dispersion in exposed groups. This form of rent dissipation is inefficient and offsets the productivity gains from automation. Using US data from 1980 to 2016, they find evidence of sizable rent dissipation and reduced within-group wage dispersion due to automation. Automation accounts for 52% of the increase in between-group inequality since 1980, with rent dissipation explaining one-fifth of this total. Their estimates imply that inefficient rent dissipation has offset 60–90% of the productivity gains from automation over this period.