Last year, the Pew Center reported that 72 percent of Americans said they were worried about the impact of automation on jobs – this, despite the unemployment rate at the time being at a twenty-year low (and even lower since).
The fears of a jobless dystopia are misplaced. Despite cyclical ups and downs, economies generate new jobs to replace the old ones disrupted by technological change (or by “globalization,” or increased competition from firms in other countries). There are multiple reasons for this, as outlined in my new paper “Meeting the Automation Challenge to The Middle Class and the American Project,” but the simplest is that the savings enabled by automation do not disappear into thin air. They get spent on other goods and services, which creates more jobs elsewhere in the economy.
WORRY ABOUT WAGES, NOT JOBS
The real concern about automation is the wages those new jobs pay, or more precisely, on the distribution of those wages. If, as automation proceeds, it continues to favor those especially able to use it at the expense of those who don’t have those skills – in economists’ language continues to be “skills biased” – it will further widen income inequality. More inequality today erodes opportunities tomorrow for the next generation (and the ones thereafter) to realize the American Dream. To use an analogy favored by many labor economists, especially Brookings Senior Fellow Isabel Sawhill, if the rungs on a ladder are driven further apart, it makes it that much more difficult for many to climb the ladder, especially those born at or near the bottom.
What, then, should be done? There is wide support for slowing automation down. According to the same Pew survey reporting high levels of anxiety about automation, 87 percent of Americans say want a human in “driverless” cars, just in case. Nearly the same level, 85 percent, favors limiting machines to performing primarily those jobs that are dangerous or unhealthy for humans.
Technological advances don’t work in so discriminating a fashion, however. To be sure, robots can defuse bombs at essentially zero risk to human life and are to be vastly preferred for this task – and other dangerous or dirty jobs – than people. There will always be a market for such innovation. It is safe to count on it continuing.
But most technological advances will be used to reduce the cost of making goods and delivering services, a process that is and will continue to be invisible to consumers. Elected or regulatory officials will not have an easy time to singling out and slowing down or preventing every such improvement, nor should they. If anything, given the slow pace of productivity growth and thus wage growth since the Great Recession, citizens should want faster automation in the future, because it is key to realizing more rapid economic growth.
Here are four ways government can help smooth the transition of workers from jobs that automation will displace to those that automation either will create directly or enable.
CURE #1: MAINTAIN A HIGH-PRESSURE ECONOMY
CURE #2: INSURE WAGES
CURE #3 FINANCE LIFETIME LEARNING
CURE #4: TARGET DISTRESSED PLACES