Thursday, September 20, 2018

Robots Won't Cause Mass Unemployment and Manufacturing Won't Save Us: Meeting the Real Jobs Challenge

I have a new article out with economist Steve Rose in Democracy journal. It contains a very detailed discussion of how jobs in the US have evolved over time and how they are likely to evolve in the future. I think you'll find it provocative, since it challenges much of the received wisdom on the left and has some very important political implications.
Here is the introduction to the article:
"What are we to make of the rise of the new service economy that is radically changing how Americans make their living? Interestingly, commentators on both the left and the right advance a common—and very gloomy—narrative about what’s happening to American jobs. They see an economy out of balance, with low-skill, low-pay, dead-end service jobs replacing the good, high-paying manufacturing jobs of the past. They wonder where the middle-class jobs of the future will come from—or indeed, if there will be any such jobs at all.
For the Trumpian Republicans, this is the “American carnage” that is destroying the middle class and everything it holds dear. Meanwhile, many on the left are scarcely more optimistic: Jeff Faux, the former president of the Economic Policy Institute, writes in The Servant Economy that our failure to protect manufacturing jobs in the 1980s doomed the middle class, and predicts that by the end of the 2020s there will be a 20 percent drop in the real wages of the average American, including a large contraction in professional jobs due to continued outsourcing.
This view is mistaken: It confuses current problems like high-income inequality and stagnant wages, which have many causes, with structural economic shifts that have profoundly and irreversibly transformed how everything in our economy is produced. Where we work, how we work, what we consume, and how we consume it have all been radically altered by the relentless march of technological change and educational upgrading. These shifts reflect our ability to produce more commodities with fewer but more highly skilled workers and to produce a wider range of goods that more consumers can purchase. This is both inevitable and, on balance, a good thing."
And here are the political implications of our analysis:
"First, the common tendency among progressives to lionize manufacturing jobs and disparage service-sector jobs is profoundly counterproductive. Worst of all, such an attitude is at odds with the way the economy is actually evolving. The dominant and growing segment of the economy today is in high-end services; again, we are not exchanging manufacturing jobs for low-skill, low-pay “McJobs.” The central question therefore is not how we can get more manufacturing jobs but rather how we can build on the growth of high-end services by upgrading our workforce and creating an environment where these jobs can flourish, deliver high wages, and generate more rapid increases in our standard of living. This will be a challenge—and it won’t be met by a quixotic quest to reinvent America’s economic past.
Second, it is time for the left to stop worrying about an overproduction of college graduates. It is not the case that the economy is rife with overqualified college graduates filling low-skill jobs. This staple of news stories is yet another myth based on flawed studies that have almost half of all college grads overqualified for their jobs; in contrast, a 2017 study by Rose found that only one-quarter of college graduates were “mismatched” with their level of education at the current time, a figure that has been stable over time. In reality, given the high bachelor’s premium, we are actually under-producing college graduates; we need more than we have now or are projected to have in the future to meet the demands of our postindustrial service economy. Therefore, a central focus of the left should be on dramatically expanding the number of college-educated workers in our workforce.....
[W]ithout in any way making light of the economy’s current problems, or the very real struggles many families have faced in past decades, the left would be well advised to adopt a more positive attitude toward today’s postindustrial service economy. This economy is, by and large, the natural outcome of technological advances and ongoing productivity growth; it represents progress, not decline, for the country and its economic potential. When a society moves from rotary-dial phones to the amazing devices we all carry around now that put a world of information at our fingertips; when it advances from a society of high-school graduates and dropouts to one where most have attended college; when the proportion of consumer spending devoted to food and clothing drops from almost half to less than a fifth; when homes have doubled in size and foreign travel is commonplace, that’s progress.
Thus, the left should optimistically seek to further this economic transition and adapt it better to the needs of the country, not pine nostalgically for the decades immediately after World War II. American jobs will continue to evolve toward higher skills over time; most assuredly, they will not disappear. The left’s challenge is to make sure those jobs pay as well as possible and provide solid economic security for the workers the left aspires to represent. That, in and of itself, is hard enough without chasing the chimera of the manufacturing jobs of a different time."
I do hope you'll read the whole article. Even if you disagree with our conclusions, I think you'll find much to ponder and some very interesting data.
No, robots won’t cause mass unemployment. But our failure to prepare people for the high-end service economy could be a real disaster.

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