OP-ED | Elephant In The Room: Job Losses From Automation
by Terry Cowgill | Sep 27, 2018 4:17pm
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Posted to: Analysis, Business, US Foreign Policy, The Economy, Technology sector, Manufacturing Sector, Retail Sector, Jobs, Labor, Manufacturing, White House
By most accounts, the economy is roaring along. As my quarterly TIAA-CREF reports remind me, the stock market is performing well enough for me to retire on time—which is a great relief after precipitous losses set me on edge as the great recession took hold 10 years ago.
Unemployment is practically negligible. Inflation and interest rates are at manageable levels. Even in dreary, down-in-the-doldrums Connecticut, which is among the last states not to have fully recovered from the aforementioned recession, there are glimmers of hope amid the doom and gloom: our economy recently added 1,100 jobs; the unemployment rate dropped a tenth of a percentage point; the state has seen higher-than-expected revenues, though not nearly enough to stave off an expected $4.5 billion deficit for 2019-21.
So why don’t I feel better? For one thing, I’m worried that President Trump’s bellicose posture toward our trading partners, along with the tariffs he has imposed, will push the cost of consumer goods up and fuel inflation, which typically results in higher interest rates.
But perhaps more importantly, I’m concerned that unemployment will rise dramatically in the next 20 years or so as a result of automation and artificial intelligence. Am I worried that my own job will be outsourced to a robot? Well, not any time soon. Then again, surveys have shown that most Americans think automation will destroy everyone’s job except their own. So I guess we’re all indispensable.
The extent to which AI has already cost manufacturing jobs has been well documented. A great example was that giant hi-tech Mississippi steel mill featured on 60 Minutes almost two years ago. In the glory days of steel, it would have taken 4,000 workers to keep that mill up and running. Nowadays, no more than 650. And don’t get me started on agricultural jobs.
The trend has also hit retail, which for many years had been one of the few stable sectors of the labor market. We’ve all seen the cashier-free checkout lines at the supermarket, but if you’ve been to a Panera lately, you’ve also seen the touch-screen kiosks that eliminate the need for cashiers and order-takers. And there’s a smart-phone app that allows diners to order ahead, pay on their phones and pick up or pay for delivery with minimal interaction with humans. Or if you’re fond of McDonald’s (I’m not), the fast-food giant has not only boosted automation in its tens of thousands of locations, but it has partnered with the ridesharing service Uber for delivery to homes and businesses.
The official word from the fast-food industry is that such measures are not cost-cutting tactics. Rather, companies are merely responding to customer expectations and they say automated ordering will allow cashiers and other upfront personnel to serve customers in more useful ways. Right. If you believe that, I have a vintage Motorola flip phone to sell you.
There’s not a whole lot of issues where I would find myself in agreement with the Connecticut Working Families Party, but party director Lindsay Farrell was spot on when she told Hearst, “I think the kiosks are designed to replace workers.”
McDonald’s is spending $6 billion over the next two years to upgrade its U.S. restaurants. Of that, Hearst says $84 million will be spent to modernize 90 of its Connecticut locations, throwing who-knows-how-many people out of work over the course of the next several years.
We know that the U.S. manufacturing sector lost 5.6 million manufacturing jobs between 2000 and 2010. And don’t listen to what Trump says about trade deals being the culprit. According to a study by Ball State University’s Center for Business and Economic Research, 85 percent of those job losses occurred because of technological advances — not international trade deals. Moreover, these job losses occurred even as manufacturing output grew and the sector became more productive.
So if you accept the fact that over the next few decades, millions of people will lose their jobs because of automation, then what are we to do about it? Government can’t forbid automation and its resulting efficiencies. And even if it could, is it the proper role of government to do so?
Can automation be taxed to pay for the costs of supporting those who are thrown out of work as a result? If so, what kind of bureaucracy would need to be created to police the automation of corporations and assess their tax liability?
There has been talk of a universal basic income, “a periodic cash payment unconditionally delivered to all on an individual basis, without means-test or work requirement.” Hard to imagine that would ever fly in the U.S., where the aversion to paying people not to work runs deep.
I’d advise future candidates for office to think long and hard about this. With each passing election cycle, the subject of displaced workers will gain more currency as the march toward maximum automation proceeds. In Connecticut, whose budget problems are legendary, it’s surely a problem that deserves more attention than which gubernatorial candidate has the most bathrooms.
Contributing op-ed columnist Terry Cowgill lives in Lakeville, blogs at CTDevilsAdvocate.com and is managing editor of The Berkshire Edge in Great Barrington, Mass. Follow him on Twitter @terrycowgill or email him at [email protected]
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