Although the labor market report on Friday showed modest job growth, employment opportunities remain stubbornly low in the United States, giving new prominence to the old notion that automation throws people out of work.
Back
in the 19th century, steam power and machinery took away many
traditional jobs, though they also created new ones. This time around,
computers, smart software and robots are seen as the culprits. They seem
to be replacing many of the remaining manufacturing jobs and
encroaching on service-sector jobs, too.
Driverless vehicles and drone aircraft
are no longer science fiction, and over time, they may eliminate
millions of transportation jobs. Many other examples of automatable jobs
are discussed in “The Second Machine Age,” a book by Erik Brynjolfsson
and Andrew McAfee, and in my own book, “Average Is Over.” The upshot is
that machines are often filling in for our smarts, not just for our
brawn — and this trend is likely to grow.
How
afraid should workers be of these new technologies? There is reason to
be skeptical of the assumption that machines will leave humanity without
jobs. After all, history has seen many waves of innovation and
automation, and yet as recently as 2000, the rate of unemployment was a
mere 4 percent. There are unlimited human wants, so there is always more
work to be done. The economic theory of comparative advantage suggests
that even unskilled workers can gain from selling their services,
thereby liberating the more skilled workers for more productive tasks.
Nonetheless,
technologically related unemployment — or, even worse, the phenomenon
of people falling out of the labor force altogether because of
technology — may prove a tougher problem this time around.
Labor
markets just aren’t as flexible these days for workers, especially for
men at the bottom end of the skills distribution. Through much of the
20th century, workers moved out of agriculture and into manufacturing
jobs. A high school diploma and a basic willingness to work were often
enough, at least for white men, because the technologies of those times
often relied on accompanying manual labor.
Many
of the new jobs today are in health care and education, where
specialized training and study are required. Across the economy, a
college degree is often demanded where a high school degree used to
suffice. It’s now common for a fire chief
to be expected to have a master’s degree, and to perform a broader
variety of business-related tasks that were virtually unheard-of in
earlier generations. All of these developments mean a disadvantage for
people who don’t like formal education, even if they are otherwise very
talented. It’s no surprise that current unemployment has been concentrated among those with lower education levels.
There
is also a special problem for some young men, namely those with
especially restless temperaments. They aren’t always well-suited to the
new class of service jobs, like greeting customers or taking care of the
aged, which require much discipline or sometimes even a subordination
of will. The law is yet another source of labor market inflexibility:
The number of jobs covered by occupational licensing continues to rise
and is almost one-third of the work force. We don’t need such laws for, say, barbers or interior designers, although they are commonly on the books.
A new paper
by Alan B. Krueger, Judd Cramer and David Cho of Princeton has
documented that the nation now appears to have a permanent class of
long-term unemployed, who probably can’t be helped much by monetary and
fiscal policy. It’s not right to describe these people as “thrown out of
work by machines,” because the causes involve complex interactions of
technology, education and market demand. Still, many people are finding
this new world of work harder to navigate.
Sometimes, the problem in labor markets takes the form of underemployment
rather than outright joblessness. Many people, especially the young,
end up with part-time and temporary service jobs — or perhaps a
combination of them. A part-time retail worker, for example, might also
write for a friend’s website and walk dogs for wealthier neighbors.
These workers often aren’t climbing career ladders that build a brighter
or more secure future.
Many
of these labor market problems were brought on by the financial crisis
and the collapse of market demand. But it would be a mistake to place
all the blame on the business cycle. Before the crisis, for example,
business executives and owners didn’t always know who their worst
workers were, or didn’t want to engage in the disruptive act of rooting
out and firing them. So long as sales were brisk, it was easier to let
matters lie. But when money ran out, many businesses had to make the
tough decisions — and the axes fell. The financial crisis thus
accelerated what would have been a much slower process.
Subsequently,
some would-be employers seem to have discriminated against workers who
were laid off in the crash. These judgments weren’t always fair, but
that stigma isn’t easily overcome, because a lot of employers in fact
had reason to identify and fire their less productive workers.
In
a nutshell, what we’re facing isn’t your grandfather’s unemployment
problem. It does have something to do with modern technology, and it
will be with us for some time.
TYLER COWEN is professor of economics at George Mason University.
