Will Automation Lead to a Basic Minimum Wage for the Jobless?
This article first appeared on the American Enterprise Institute site.
Here is what Facebook boss Mark Zuckerberg told graduating Harvard students about jobs, technology, and “a new social contract” (via Business Insider ):
You’re graduating at a time when this is especially important. When our parents graduated, purpose reliably came from your job, your church, your community. But today, technology and automation are eliminating many jobs. …
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Our generation will have to deal with tens of millions of jobs replaced by automation like self-driving cars and trucks. … Every generation expands its definition of equality. Previous generations fought for the vote and civil rights. They had the New Deal and Great Society.
Now it’s our time to define a new social contract for our generation. We should have a society that measures progress not just by economic metrics like GDP but by how many of us have a role we find meaningful. We should explore ideas like universal basic income [UBI] to give everyone a cushion to try new things.
We’re going to change jobs many times, so we need affordable childcare to get to work and healthcare that aren’t tied to one company. We’re all going to make mistakes, so we need a society that focuses less on locking us up or stigmatizing us. And as technology keeps changing, we need to focus more on continuous education throughout our lives.
It’s the bit about UBI that is getting the headlines today, though his mention of healthcare, prison reform and education are also important. As for UBI, it seems like lots of technologists have embraced this idea to one extent or another.
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Embedded in that curiosity, I think, is an aggressive forecast about technological unemployment/underemployment (This time it’s different!), and some fear of an anti-automation backlash.
Economists, generally, are less confident advances in AI and robotics will disrupt labor markets so thoroughly that a UBI is a must. As economist David Autor has put it, “Journalists and expert commentators overstate the extent of machine substitution for human labor and ignore the strong complementarities that increase productivity, raise earnings, and augment demand for skilled labor.”
Or this from an new Economic Policy Institute report :
… automation can create jobs that potentially offset the jobs lost in industries affected by automation and thus leave overall employment and unemployment unchanged. The machinery used to replace human labor must be built and installed, creating jobs. Complementary jobs are created in activities that necessarily accompany the investment, such as programming and maintenance.
The main dynamic, however, is that employers deploy automation because it will lower costs, and lowering costs will ultimately lower the prices of the goods and services produced (in addition to raising profits). These lower prices mean that consumers who purchase the less costly goods and services will have income left to purchase other goods and services—unless, of course, consumers run out of things they want to buy, which we doubt. …
Despite many decades of ominous warnings, we have not seen evidence of automation leading to large-scale overall joblessness. That is, automation has been proceeding for many decades. If automation were creating increased joblessness we would have expected to see an ever-rising unemployment rate, but we have not seen that.
The failure of past automation to cause increased overall joblessness has led economists to believe that automation displaces specific jobs but does not increase aggregate unemployment.
The notion that automation has led to a rapid surge in joblessness is also hard to square with recent trends in unemployment: aggregate unemployment fell from 10 percent in late 2009 to under 5 percent in 2017.
They could be wrong. This time could be different. Maybe some form of UBI — and there are many permutations — is the “late capitalism” end game. But that is just a forecast that may or may not pan out. And it could distract policymakers from thinking hard about ways to empower humans to race with the machines as opposed to against them.
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In a new analysis, McKinsey, like Zuckerberg, does suggest governments should explore a safety net rethink. But the consultancy also suggests a lot more in terms of both public and private sector invesment in human capabilities.
As I wrote in my The Week column not long ago, “Maybe the real policy priority should be making sure that workers can do more of what robots can’t and a dynamic economy produces a never-ending supply of new jobs for the robots to try and steal.”
James Pethokoukis is a columnist and blogger at the American Enterprise Institute.