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can be used to augment the things computers already do well (finance, consulting, software engineering), or those computers won’t be able to mimic until far in the future (gardening, marriage counseling, advertising, management). If you’re looking for job security these days, Cowen writes, “The key questions will be: Are you good at working with intelligent machines or not? Are your skills a complement to the skills of the computer, or is the computer doing better without you? Worst of all, are you competing against the computer?”
But even if you’re in the first or second quintile of wealth, education, and skill, you may not be as safe as you think. There are still a lot of inefficient, essentially guild-dominated professions where huge productivity gains will be extracted once technology starts to disintermediate things, just as it has in manufacturing, the media, and so many other fields.
I’m talking about areas like government, healthcare, education, and law. In each of these fields, Silicon Valley is starting to carve away at the establishment. Just think of services that consumers can use to get a rough self-diagnosis without going to the doctor, such as WebMD or HealthTap; or sites where students can learn college-level material without ever setting foot on campus, like Khan Academy, Udacity, and Coursera; or online legal services sites such as Nolo Press, Rocket Lawyer, or LegalZoom. Such services aren’t putting downward pressure on wages yet, but the technology is still in its infancy. “The process appears to have a long way to run,” Cowen speculates. “To be blunt—while I know I can’t prove this—I wonder how much of the middle class consists of people in government or protected service-sector jobs who don’t actually produce nearly as much as their pay.”
And if true machine intelligence emerges in our lifetimes, all bets are off. So far, progress toward systems that can reason and act as effectively as humans has been limited. Even Google’s self-driving cars only work under normal traffic conditions (which is why there’s always a human in the driver’s seat, ready to take over). But somewhere down the road, maybe a few decades from now, maybe longer, that will probably change. As Robin Hanson, a colleague of Cowen’s at George Mason University, has shown in a widely read paper, an economy where machines can do most jobs will be almost unrecognizable to us. At first, there will likely be rapid and enormous productivity gains and economic growth, as robots build everything people need for ever-lower prices. But eventually, the wages of the remaining human workers will start falling even faster than prices, making it impossible for people to afford the things the machines are making. The potentially dystopian result: impoverishment and starvation for everyone except the owners of the machines.
Scenarios like that are enough to bring out the Luddite in the most hard-core tech optimist. But renouncing technology isn’t the answer to labor market polarization. Short of abandoning free-market capitalism—which even China has embraced, in its own way—there’s no way to stop companies from adopting machines and systems that improve productivity.
So what can individuals do to adapt to an era when skill-biased technical change is the norm? What can policymakers do to put middle-skill people back to work?
Here are some ideas, drawn partly from Cowen, Brynjolfsson, and McAfee, and partly from talks I heard at the Innovation for Jobs Summit. (The meeting was held under Chatham House rules, meaning I can’t reveal who said what.) Some of these proposals are more plausible than others, given the political realities in Washington, D.C., and in the nation’s state houses and city halls. But they’re all worth weighing, and even testing through pilot programs.
1. Get Used To It. Accept the idea that there will be a large and permanent class of unemployed people. Improve and extend public benefits to reduce the stigma and suffering of joblessness. Pay for these benefits partly through increased taxes, and partly through productivity gains from modernizing the agencies that administer benefits. (You might also call this the Nordic Solution, and it has a downside. In countries like Finland and Sweden, which have an overall tax burden in the 45-percent range, unemployment benefits are so generous that—by the admission of the countries’ own policymakers—there’s little incentive for hundreds of thousands of long-term unemployed to look for jobs.)
2. Grow Our Way Out of It. Pursue monetary, fiscal, budget, and tax policies that stimulate economic expansion. In theory, increased demand for goods and services will eventually force companies to start hiring at all levels.
3. Get On the Retraining Train. Reengineer public services to vastly improve the scope, quality, and responsiveness of job retraining programs. The U.S. Department of Labor is beginning to have some with success with career search sites like MyNextMove and the Transition Assistance Program for military veterans reentering the civilian workforce, but the advice these sites offer isn’t always tailored to the skills employers need today. In Finland, an experiment is underway to hand over some retraining programs to the private sector, which presumably understands the job market better, and would be offered financial incentives to get trainees back into the workplace.
4. Replace Old Technology Clusters with New Ones. Figure out what skills people in a given region already have, and give private industry incentives to innovate in areas that match those skills. In the Skåne region of southern Sweden, the contraction of companies like Ericsson and Sony Mobile has left many people with skills in the mobile industry out of work. At Lund University, there’s a new research institute, the Mobile and Pervasive Computing Institute, dedicated to supporting startups that are exploring the Internet of Things—the emerging network of distributed, cloud-connected devices, from thermostats to digital contact lenses. Much of the underlying technology comes directly from the mobile industry, and those companies will need experienced workers.
5. Reinvent Education. Shore up mass education by rewarding the best teachers with much higher salaries. Encourage experiments with other ways of learning, such as massive online open courses (MOOCs), and agree on a system of certificates or credentials that will help the people who’ve completed MOOCs find jobs. At the same time, make room for new ways to finance traditional higher education. Look to examples like Pave, Upstart, and Michigan’s proposed pay it forward plan, which help students raise the money for college tuition in return for a percentage of their future income.
6. Outwit the Computers. Through college counseling and retraining programs, nudge future workers and job seekers toward roles that are unlikely to be disintermediated by technology: sales, marketing, finance, support, personal services, management. These are irreducibly complex jobs where the human touch matters.
7. Support Startups and Small Businesses. As the Kauffman Foundation has been arguing for years now, all net new job growth comes from startups. Yet while the overall rate of new business formation is still healthy, many startups have just one employee: the founder. The rate of formation of larger companies is actually falling, perhaps due to immigration restrictions and overly burdensome regulations. It’s time to clear these thickets, and uncork the banking system so that the operating capital small businesses need in order to hire people will be cheaper. Crowdfunding could be a help: sites like Indiegogo and Kickstarter are giving more and more ventures the ability to gauge market demand for their products even as they raise seed funding. But it’s important that the emerging regulations around equity-based crowdfunding aren’t so restrictive that they end up driving investors away. And this isn’t just about technology startups: it’s better to create 10,000 small services companies with 10 jobs each than to create one Google, which has only 44,000 employees.
8. Rethink What It Means to Have a Job. My suggestion above that we just get used to long-term unemployment was mostly facetious. There are good social and moral reasons, not just economic ones, for believing that everyone needs work: it’s one of our main sources of self-worth, dignity, and purpose. But our definition of “work” is curiously narrow. It doesn’t seem to include raising children, for example: stay-at-home moms and dads aren’t counted in the workforce and aren’t compensated for the absolutely vital work they do to give children a foundation of learning and support.
In an ideal world, people who choose to add value to society by caring for children or elders, volunteering for community groups, or maybe even being poets or painters or actors, would be appropriately compensated through mechanisms like a government-guaranteed basic income or a negative income tax. Or maybe we should think about lowering, rather than raising, the minimum retirement age. In such a “pretirement” scheme, people could opt to begin receiving their Social Security and Medicare benefits early, in return for a commitment to doing community service.
Or we can just do nothing at all and wait for technology to evolve, trusting that it will reveal new kinds of jobs that we never anticipated. (In a world where Amazon is sending us packages via quadcopter, for example, I’m betting there will be a need for UAV repair technicians and micro-air-traffic-controllers.) This laissez-faire approach to labor force adaptation is how we’ve handled technological unemployment for the last couple of centuries.
The problem is, it doesn’t seem to be working anymore. There wasn’t a job waiting for you on the other side of the buggy-whip era if you were a horse. Millions of people face the same dilemma today, from warehouse pickers being replaced by robots to postal workers who have less and less physical mail to deliver.
An idea often attributed to sci-fi author William Gibson says that the future is already here, it’s just not evenly distributed yet. And it never will be, unless we come to grips with the fact that technology doesn’t welcome all workers equally. If we want to survive the tsunami, we’re going to need more routes to the hills.
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