Ryan Holeywell | @RyanHoleywell | November 7, 2016
The Kinder Institute for Urban Research is a co-sponsor of the upcoming De Lange Conference X: Humans, Machines and the Future of Work, December 5-6 at Rice University in Houston.
We interviewed two leading economists attending the event about how increased use of automation and artificial unemployment will affect workers. These interviews have been condensed and edited for clarity.
First, we spoke with Richard Freeman, a professor of economics and Harvard University who directs the Science and Engineering Workforce Project at the National Bureau of Economic Research. He says that we’re in trouble if we can’t figure out a system for workers to share in the economic gains brought on by automation.
Urban Edge: Who should be concerned about technology’s effects on jobs?
Richard Freeman: Artificial intelligence is affecting skilled workers as well as unskilled workers. The substitution of capital for labor has been going on for a long time. The share of our national income that goes to capital has increased. My thesis is simple: Unless workers have part ownership of these new technologies, new machines, or their companies, then we’re not going to see a decline in inequality, which most people believe is already too high.
UE: So technology is part of the broader conversation about inequality we’re seeing today?
RF: Who owns the robots rules the world. We’re not going to stop technology. If we don’t spread the the ownership of this, it’s going to be all different kinds of workers who will have problems — not just low-skilled people.
Look at this way. You have a tractor that replaced farm labor. That’s good —if the farm laborer can get to a better job. But then he tries to go to a factory, and he gets replaced there too. That’s not so great. Say he gets more education and becomes a bookkeeper. But that gets replaced too. So he gets even more education — or maybe his children gets more education. Say they come a surgeon. This is happening across the spectrum.
Look — these machines should be doing good and letting us live better lives. But the problem is, if ownership is concentrated in a few people … it’s not going to be a healthy society, as far as we can see.
UE: So what could the workplace look like?
RF: Think about a steel mill. There will be a fairly-skilled worker watching over the machines on a computer screen. That might be an okay job. But all the money is going back to the people who own those machines. Maybe all the waiters and waitresses are going to be robots, and you need someone to clean the robots or something. Those are early examples. My message is ‘Hey, computer science guys — what are you going to do when you have artificial intelligence who will do your work?’
This could all be a wonderful thing, where people wind up with a lot of leisure time. We can use technology to resolve great problems or improve something. But it comes down to this: Are we going to do something where workers have ownership of parts of their companies? This isn’t anti-business or anti-capitalist. It’s about extending the virtues of ownership to more people.
UE: So are you optimistic the country could develop that system of shared-ownership, so we’ll all benefit from the technology?
RF: At one point, I was quite optimistic. There are a lot of people of different political perspectives who see this as part of the solution.
The reason we have health care plans for workers is that you can’t legally deduct as a business expensive health care for only your top people — it has to be done for everyone proportionately. So we could do something like that with capital ownership. Hillary Clinton’s campaign publicly endorsed a mild form of this — a temporary tax cut for companies that do profit sharing. But this hasn’t moved as quickly as I thought it would.
But we don’t have much in our basket of tools to address inequality. You can increase the minimum wage, but that doesn’t affect the average middle-class American worker. Unions want more collective bargaining, but unions are on a downward trajectory. I’m less optimistic, because I hoped the Republicans would step forward with a scheme of their own.
We could encourage employee stock ownership plans. They already have twice as many owners as there are members in unions. If it got more backing from the White House, I think that number would grow very much.
Then, we spoke with Larry Mishel, president of the Economic Policy Institute. He says income inequality is a big issue in this country — but not because of technology. He warned of conflating the two issues.
Urban Edge: How do you think automation and artificial intelligence will affect wages and jobs?
Larry Mishel: Most of the people who project we’ll have a jobless future on account of technology tend to believe that these trends are already starting to develop. I can’t document the future, but I can document the past. And I don’t think the data lead us to believe there is some explosion of technological change over the last 10 years.
The usual thing people point to — labor productivity — has actually decelerated. And if you look at investment in computers, information equipment and software, we see a dramatic deceleration in investment of those types.
UE: So you don’t expect to have major job losses associated with new technology?
LM: Technologists tend to reason that as technology is implemented, many jobs will be lost, and workers will be displaced from a particular job or industry — so they reason that will happen in the aggregate too.
But look at this way:
Employers only introduce technology that reduces jobs if it lowers their costs. If it lowers costs and increases profits, we know the prices of those goods and services will become relatively cheaper. If that happens, people may buy more of those goods and services — which leads to more jobs. And even if they don’t spend all their money on the same item — say, cars become cheaper — then the money they would have spent on cars they can spend on something else.
So we observe over history that there’s been lots of technological change, but there has never been a period of growing unemployment that is technology-based.
UE: So we don’t have much to worry about?
LM: What may be different this time is you could have more technology, more quickly. That means you could have a problem. But it doesn’t mean you couldn’t work through it. It wouldn’t be permanent.
I think this whole jobs issue is the distraction. We do have slower growth. We do have job problems. But it’s not because of technology.
My view is that technology was a plausible though incorrect explanation of wage inequality in the 1980s and 1990s. And since then, it’s prima facie implausible. The reason is that the jobs we’re creating are largely low-wage. Wages at the top grew because of financial expansion. But the only reason you could say technology leads to inequality is if high-wage jobs are expanding and low-wage jobs aren’t.
So wage inequality and technological change are two conflicting narratives.
UE: So you’re saying the workforce has bigger problems that aren’t necessarily related to technology?
LM: My view is that the rules of the game have been rigged against working-class people. That’s the power of rich people and corporations to change the rules. That’s the good news — because it means there are no economic laws that are at work here. It just means you have to change it through politics and policy.
To keep the economy growing and expanding, you need to bring more people into the labor market. That will make wages grow faster. And we need to protect and enhance labor standards. Raising a minimum wage would help somewhere between a fourth and a third of the workforce — that’s not nothing. We can help restore collective bargaining and stop misclassifying people as independent contractors. I’m for driving up wages of low-wage workers.