“The difficulty lies, not in the new ideas, but in escaping from the old ones, which ramify, for those brought up as most of us have been, into every corner of our minds.” John Maynard Keynes
According to the labor department, 209,000 jobs were added in the month of July. But if the numbers stay true to last year’s overall job numbers, then a whopping 61 percent of jobs created were low wage and 77 percent were part time. To make matters worse, workforce participation is at its lowest point in over thirty years.
Some will blame Obama and the Democrats for the Affordable Care Act for this growing economic trend. Others will blame Republicans for not raising the minimum wage and not passing a comprehensive national jobs bill. Both arguments may have some merit in the short term. However, in the long term the economic situation may be bleaker then most would care to admit.
Greater productivity due to automation is driving down prices of material goods while killing jobs. As pointed out by David M. Kennedy in his book, Freedom From Fear, by 1925 a Ford model T rolled off the assembly line every ten seconds. A decade earlier it took 14 hours to assemble a single car. Before the automation of manufacturing came agriculture. At the dawn of the 20th century, agricultural output had surpassed demand. Million moved from the countryside to the bustling cities to find new employment. Yet that wasn’t enough. Millions of farmers still looked to the federal government for assistance. Fearful of a farmer’s revolution akin to the French or Russian revolutions, the federal government took unprecedented action to starve off disaster. To this day, farmers are subsidized by the federal government to control prices, wages, and to ensure an adequate food supply. Yet according to a CNN report, there’s still $165 billion in food (40% of the nation’s food supply) lost due to overproduction, distribution mismanagement, or simply individual restaurant or family waste. Agriculture and manufacturing were the first casualties of automation. Many economists added the housing sector the causality list after the Great Recession. Other sectors of the economy are likely to follow.
Former Clinton Treasury Secretary, Larry Summers, recently penned an article in which is asserts that the challenge going forward isn’t scarcity of goods but rather overabundance. Furthermore, Summers states that because productivity is extremely high, producing enough good jobs will be a challenge. Summers isn’t alone in this bleak assessment.
Former aide to Senator Robert Kennedy and professor at Georgetown University Peter Edelman writes in his book, So Rich, So Poor- Why It’s So Hard To End Poverty In America, “The future may be one not only of more low-wage jobs but also of not enough jobs, period.”
A report by Oxford Martin School’s titled, Programme on the Impacts of Future Technology, estimates that 45 percent of American jobs are at a high risk of being automated in a couple of decades. To put that in perspective, there were roughly 143 million people employed in 2012. That means over 64 million jobs lost if such a future became reality today. The author of the study stresses that as technological innovation accelerates, workers will have to transition to tasks not susceptible to automation- such as tasks that require creative and social intelligence. How smoothly this technological transition will occur is anyone’s guess. Since most elected officials and policymakers refuse to acknowledge this crisis even exists, the transition could prove to be difficult if not downright disastrous.
There is much that could be done in the short term to lessen the negative effects of automation. One major step that could be taken is to institute a major WPA-style infrastructure project aimed at bringing United States infrastructure into the 21st century. Investments in traditional infrastructure such as roads and bridges should be coupled with high-tech investments in solar panels and fiber optic cables. With unemployment for millennials accounting for some 40 percent of the total unemployed, there’s more than enough manpower available such an ambitious project. As for the cost of such an investment- all I can say is that it would be better spent then fighting two wars, giving two tax breaks to the wealthy or expanding welfare state. Simply put, while Democrats and Republicans endlessly squabble, jobs are being created at too slow a rate to keep up with a rapidly expanding population. Not to mention that jobs created are not even close to the caliber created in the economic heyday of the 20th century.
An open and frank discussion must occur to address automation and employment. Unfortunately, leaders in Washington are too busy with political posturing and grandstanding to focus on any singular issue. The responsibility of facing growing automation will therefore rest with state and local governments. Success with this approach has been found in regards to gay marriage and raising the minimum wage. In short, the nation must adopt new ideas for the 21st century or be trapped searching for a past that will never return.
-Originally Printed in the Philadelphia Inquirer
-Originally Printed in the Philadelphia Inquirer