From the cute little vacuum Roomba to Siri or Alexa and cars that drive themselves, we are at the beginning of the end of work. In 2013, a now-famous Oxford University analysis forecasted that 47 percent of all jobs are threatened in the United States. There are already signs from shuttered shopping malls to the fact that robots and artificial intelligence are taking over factories, offices, and cash registers. Clearly, they will win the job stakes because they don’t ask for raises or take sick days.
All of which is to say that winter is coming to America’s middle class.
The late physicist Stephen Hawking warned that this would result in income disparity and chaos. “Everyone can enjoy a life of luxurious leisure if the machine-produced wealth is shared, or most people can end up miserably poor if the machine-owners successfully lobby against wealth redistribution. So far, the trend seems to be toward the second option, with technology driving ever-increasing inequality,” he wrote.
Hawking’s warning may be regarded by some as hysterical, but it should be heeded. Deniers maintain that automation triggers “creative disruption” or a transition from lousy jobs to better ones. For instance, Silicon Valley types trot out the fact that in 1900, 40 percent of people slogged daily on farms, and now only 2 percent do. However, their example disproves their point: The transition in the United States from farm to city took generations and was grueling, scarred by social disruption, mass underemployment, unrest, sweatshops, urban slums, forced urbanization, poverty, crime, worker struggles, and enormous socioeconomic upheaval and strife. This time will be different, and possibly worse, unless brakes or policies are put in place as automation increases.
The automation trend clearly makes workers uneasy, but hard facts are unavailable because technological unemployment is not identified and highlighted in economic reports as it should be. This lapse lulls some into disbelief about dire predictions because, after all, unemployment levels are relatively low, (though so is labor force participation), and job creation growth appears respectable. But a glimpse into what’s underway was contained in a 2014 study by the U.S. Bureau of Labor Statistics which measured hours of work (whether by self-employed, part-time or full-time workers) and not jobs over a 15-year period from 1998 to 2013.
During that time, economic output in the United States increased by 42 percent (or $3.5 trillion after inflation adjustments). But the number of hours worked remained exactly the same, at 194 billion hours in total. This is technological unemployment: Zero growth in the number of hours needed to create wealth despite a population increase of 40 million people. The study, not replicated since, proves that work itself is shrinking.
Robots and AI are going to cut an even deeper swath through the middle class, blue and white collar, and there are no replacement jobs. A landmark 2017 study by the National Bureau of Economic Research found every industrial robot from 1993 to 2007 replaced 5.6 workers and lowered wages of remaining workers by 0.5 percent. During that time up to 670,000 jobs were erased, with no new jobs to replace them.
These figures are miniscule in a full-time job market of 127 million, but the wake-up call is nigh. Millions of truck drivers and retail workers are about to be automated out of their jobs. The driverless vehicle is the first shot fired in the political battle against automation, and the Teamsters Union is demanding a ban on autonomous trucks. The significance cannot be understated: The most common job held in 29 out of 50 states is as a truck driver, and an estimated one in eight workers drives a vehicle of some sort for a living. This means robot vehicles and drones will take jobs away from tens of millions of breadwinners and those who provide services for them. This carnage is being mimicked by Amazon’s voraciousness: Another one of America’s most common jobs is as a retail clerk or cashier.
As these disruptions take hold, technology will be increasingly demonized, which is why Silicon Valley’s billionaires are trying to get out in front of the issue. Some have proposed universal basic income (UBI), or cash for life from governments. But that amounts to a disingenuous attempt to get governments to socialize the costs they have created for society. The best idea so far has come from Microsoft founder and philanthropist Bill Gates.
“Right now,” he said in an interview with Quartz, “the human worker who does, say, $50,000 worth of work in a factory has that income taxed. If a robot comes in to do the same thing, you’d think that we’d tax the robot at a similar level.”
In February, European Union lawmakers considered a proposal to make robot owners to pay for worker retraining. But the backlash from technology companies led to its rejection on the basis that such a tax would be a competitive disadvantage and slow down innovation.
But Gates suggested that a slowdown was a good idea: “We ought to be willing to raise the tax level and even slow down the speed of that [technological] adoption to figure out … where this has a particularly big impact.”
Others rich guys have waded into the discussion but shouldn’t have. Alphabet co-founder Larry Page suggested a “French” solution of drastically cutting work hours and granting more vacations. In other words, workers would share the pain by making half as much money without affecting corporate bottom lines. Mark Zuckerberg, the founder of Facebook, devoted a chunk of his Harvard commencement speech to guaranteed income, paid for by government and not the likes of Facebook. Another Facebook billionaire, Chris Hughes, suggested a real non-starter in this Trump era: that workers making less than $50,000 a year get $500 a month from the government paid for by taxing the country’s wealthiest 1 percent.
Universal basic income is not a new idea and there are several pilot projects around the world. But to date, such a scheme has been politically dead on arrival. A recent Gallup poll revealed only 48 percent approval for a universal basic income for those displaced by AI or robots. Significantly, however, the same polled group overwhelmingly supported taxing tech companies and robots to pay displaced workers severance and retraining costs.
There’s also the Common Wealth argument that the tech sector owes the public huge dividends because all its underlying technologies are based on trillions of research dollars invested by the government and the military. The argument is that technology is a public good, much like an oil field in Alaska, and despite being captured and monetized by private entities, deserves to earn a royalty that should be passed along to taxpayers. It’s a valid point.
A separate issue is that tech companies should pay the public for the data they have monetized for years and which are the basis for the biggest fortunes in Silicon Valley.
Interestingly, Chinese billionaire Kai-Fu Lee, chairman of Sinovation Ventures in Beijing, has another view. He dislikes universal basic income but believes everyone should be guaranteed free health care, food, shelter and access to jobs that benefit society. “UBI doesn’t address people’s loss of dignity or meet their need to feel useful,” Lee rightly notes. “It’s just a convenient way for a beneficiary of the AI revolution to sit back and do nothing.”