Automation provides us with wondrous increases of production and information, but does it tell us what to do with the men the machines displace.” – Robert F. Kennedy

Since the advent of written language, society has been grappling with the issue of technological unemployment. In Politics, Aristotle speculated that if machines could become sufficiently advanced, there would be no more need for human labor. While this has been a concern for millennia, it took on greater urgency during the onset of the 1st Industrial Revolution when thinkers focused on the effect of technology on workers. In 1872, Samuel Butler in Erewhon ventured that “machines have become an extension of humans, an appendage to increase efficiency, and eventually humans would become appendages of machines”. With recent advances in artificial intelligence, data and robotics, we can foresee “a world without enough work”.

While a school of thought suggests innovation will provide an abundant source of new jobs, the long-term U.S. labor market trend indicates paid labor as a percent of the GDP will continue to decline, with further diminishment of human labor as a driver of economic value. Today, labor’s share of national income stands at 53% versus 58% in 1970. In spite of this trend, those that adhere to the “lump of labor fallacy” hold that the doom and gloom accompanying the discussion of the “future of work” is unwarranted. The optimists maintain job growth will be driven by the needs of the aging population, greater demand for services, and work related to the deployment of new technologies, shift to clean energy and investment in the nation’s physical infrastructure. Will this be sufficient?

In mid-March, the Bureau of Labor Statistics (“BLS”) Job Openings and Labor Turnover Summary (“JOLTS”) reported 7.6 million job openings, 5.8 million hires and 5.6 separations (quits, layoffs and discharges). This is a continuation of the pattern that has been seen over the most recent economic cycle in which job creation outpaced job elimination. The BLS estimates that the U.S. civilian labor force will grow to 169.7 million by 2026.

So, what contributes to the belief that this time is different, and we’re on the verge of an era of “a world without enough work”, in spite the lowest unemployment in 50 years and inability of organizations to fill their open positions. The answer lies in the cumulative impact of the changes that are occurring in the three dimensions of work(1), including work itself (what work can be automated), workforce (who can do the work), and workplace (where the work can be done from).

Much has been written about automation risk, and skills required for success in the future, but little focus has been given to the impact of the portability of work and those left behind. Jobs are no longer bound to place. They can be deconstructed, “componentized”, packaged and distributed to any part of the world. Pervasive connectivity is enabling relatively “frictionless” movement of work based on talent availability, quality and cost without regard to national and regional boundaries, with non-U.S. labor pools having a cost advantage, especially the African Lions and Asian Tigers. In addition, with the implementation of artificial intelligence and other forms of automation, jobs are disappearing into the realm of algorithms. All jobs, except those that are “last mile(2)” in character, are subject to interregional and global competition. While jobs may or may not be eliminated at the rate projected by Frey and Osborne, the pace of technology-driven job dislocation is likely to accelerate, with geographic, age, class, gender and racial implications. Those who lose their jobs and their communities will incur significant economic and social costs.

When I discuss the “future of work” with others, their views hinge on the belief (or lack there of) that the necessary investments and reforms will be made to cope with the challenges posed by a fast moving and fluid global economic system. While there are glimmers of hope, they are dampened by the complexity of the problem, relative slowness of the democratic system, funding challenges at the federal, state and local level, infrastructure weaknesses, detrimental effect of “degree inflation” and institutional inertia, especially the political and educational sectors. In the end, the quality and productivity of U.S. labor pools, not only in the elite urban centers, but broadly across the country, will determine whether we have the capability to effectively compete for jobs in the global market.

As we confront the “future of work”, the “High School Movement”, an early 20th century national effort to overcome challenges affecting the workforce, may be instructive. At the time, the U.S. was confronting issues similar to today, including displacement of workers, influx of immigrants, introduction of new technologies, adoption of scientific management practices (Taylorism), emergence of new business models, and need for infrastructure improvements. These forces drove the recognition of the need for better-educated workers and educational reform. During a period that extended for thirty years (1910 – 1940), the modern U.S. public high school, an American innovation, evolved. It was “generally free, open to all who completed eighth grade, gender neutral in admission, secular, fiscally controlled by local governments, and a guarantor of acceptance to a state college for its graduates, in most states”. While it had its flaws, mass secondary education, and then the GI Bill in the aftermath of World War 2, propelled the U.S. into a position of global economic leadership. Similar to the hidebound educational system that pre-dated 1910, today’s system needs to be reformed / realigned to reverse the decline in academic performance versus other advanced economies, and meet the constantly shifting occupational and skill needs of the workforce in the digital age.

We need to get in front of this problem before it gets in front of us. Perhaps, it already has. The future will be determined by actions we take today. In addition to the need for better-educated and more productive workers, actions are needed across a broad range of issues, including but not limited to the restructure of the rules of economic behavior, enhanced digital access, resilient safety nets, incentives for job protection and creation, and support for mass entrepreneurship. The choices we make now, the big ideas that surface during the upcoming presidential campaign, and actions that accrue as a result of the 2020-election cycle will determine the character of our transition to the “future of work”. Getting this right will dictate the impact technology-driven change will have on the living standards and quality of life of future generations.

After I published my “ten beliefs” in March, I was encouraged to develop an estimate of the number of workers that would be displaced by the changes in the labor market. A lot has already been written on this topic, but little is available concerning the risk related to technology-driven job dislocation. This is an immediate and urgent issue, especially since the buffer of time(3) that traditionally helped economic activity adjust to a new reality is compressed. Over the next month, I expect to complete an analysis of the Department of Labor’s O*NET data to determine the extent of the U.S. workforce that is exposed to job dislocation. By quantifying this risk, the scope of the problem will be better understood and it will be possible to begin to determine the steps needed to mitigate its impact. Time is of the essence, tempus fugit!

Joe Smialowski
May 15, 2019

Follow at Twitter @joe_smialowski

Endnotes:

1 Source: Deloitte Insights, “What is the Future of Work”, 01-Apr-2019

2 Last mile jobs – Jobs that require human workers due to their non-routine nature, defined by complexity and non-standardization, customer / end-user preference for human interaction, safety or regulatory requirements.

3 Buffer time – Each stage of the industrial revolution has been marked by distinct phases, including (1) introduction of technological change, (2) dislocation of workers and turmoil, and (3) stability, with steady decline in the adjustment time, e.g. 1st Industrial Revolution – 200 years, 2nd Industrial Revolution – 100 years, and 3rd Industrial Revolution – 50 years. This pattern suggests that the adjustment period for the current stage will be 25 years, with the problem peaking in 2035.

This Time Is Different

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