I recently attended a conference and watched as workers moved chairs and tables, served food and drinks, and did the myriad things needed to make a meeting work. What excites me about the future world of work is the possibility that these workers won’t have to do this because technology will do it for them and because of that they and we will all be wealthier.
Rob Atkinson is president of the Information Technology and Innovation Foundation in Washington.
Median household income in America is just $44,000. Worldwide it’s less than $10,000. Humankind would be vastly better off if worldwide median income were an order of magnitude higher ($100,000), but the only way that can happen is if productivity rises by an order of magnitude and the major way that will happen is if better technology replaces more labor.
Yet, for all the hype about us entering a “second machine age” it’s not at all clear that technological change and productivity is likely to speed up. Clearly, some technologies can help—like robotics, artificial intelligence, and information technology breakthroughs. However, the pace of improvement is almost always slower than the techno-optimists expect. But for the sake of boosting incomes around the world I hope it does speed up.
One reason it may not is because technological change is increasingly met with alarm and resistance, not with relief and exuberance. Indeed, nearly half of the 1,896 experts surveyed in a recent Pew study believed that technology would destroy more jobs that it creates by 2025.
Yet these concerns are not new. In 1927 the Secretary of Labor wrote: “Is automatic machinery, driven by limitless power, going to leave on our hands a state of chronic and increasing unemployment? … Is it giving us a permanent jobless class? It didn’t then and it won’t now.”
The reason is that technology has both first- and second-order effects on jobs. The pessimists see only the former. They see a “robot” replace a job and conclude that “tech is killing jobs.” What they don’t see is the next step; the increased productivity saving the organization money and those savings flowing back into the economy through higher profits, higher wages, or lower prices. People then spend this bounty to buy other things, which in turn drives employment in these areas of additional spending.
Some will argue that people won’t spend the money and won’t create the jobs. But I suspect that if you ask the average American if they’d have a problem finding things on which to spend their added income if their take home pay doubled or tripled, they’d show you the shopping list. We only have to look at how the top income quintile in the United States spends their money versus the middle to see where jobs are likely to come from. According to the Bureau of Labor Statistics top-income households spend a larger share of their income on things like education, personal services, hotels and other lodging, entertainment, insurance, air travel, new cars and trucks, furniture, and major appliances. In other words if productivity in the nation were to double, people would spend more than double on these kinds of activities and jobs would grow in these industries.
So we shouldn’t worry about the impact of technological change on the labor force, at least in terms of overall employment. What we should worry about is how well workers who lose their jobs to technology make the transition to new jobs. Imagine the number of university professors falling from 1.7 million to perhaps 500,000 as most students take a bigger share of massively open online courses. Imagine advanced software tools providing many of the services provided by investment advisers and business benefit advisers. Imagine autonomous vehicles reducing the number of long-haul truck drivers and taxi drivers.
Given that the waters will not be calm, it’s incumbent on policymakers in all nations to do two big things. First, do everything they can to accelerate the rate of technological change and productivity. And second, significantly expand and improve labor market adjustment policies, such as workforce retraining efforts, more universal education, and unemployment insurance.
For the Future of Work, a special project from the Center for Advanced Study in the Behavioral Sciences at Stanford University, business and labor leaders, social scientists, technology visionaries, activists, and journalists weigh in on the most consequential changes in the workplace, and what anxieties and possibilities they might produce.
