Here are some principles I’ve drawn out of my research and reading for this blog.
The basic concept we’re discussing here has a name: ”technological unemployment.” The Wikipedia definition:
Technological unemployment is the loss of jobs caused by technological change.
Core questions are:
- Is this correct? Many claim that any jobs lost to technological unemloyment are made up for in other areas.
- Even if this wasn’t correct in the past, is it correct now? Is what we face today somehow different? Many claim that the pace of automation now has vastly increased which means today’s economy hasn’t been able to adapt.
Martin Ford, in this book “Rise of the Robots” lists seven reasons why this time is different. See the reasons here.
Automation cannot be stopped. Throughout history, workers have attempted to prevent automation and technological unemployment to no avail.
If a more efficient way of accomplishing something is found, industry will start using it over the objections of workers and their attempts to prevent it through work stoppage, collective bargaining, ir legislation. Labor might succeed in slowing it down, but efficiency and automation will eventually win, every time.
The reality of competitive capitalism dictates that industry will not voluntarily avoid using automation over the long term to protect workers' rights or jobs. Even if Company A chooses to avoid automation, Company B eventually wil not, which will place company A at a disadvantage. This ensures industry will move towards automation in aggregate.
Someone who is against technological change is sometimes referred to as a ”Luddite.” The Luddites were actually a group of textile workers in the early 19th century who destroyed automatic looms which threatened to take their jobs. (Wikipedia)
The group is thought to be named for Ned Ludd, one of the participants.
Software is enabling employers to move employees to contractor status, and to reduce the minimum billable unit (MBU), to the employers advantage.
Traditionally, an employee might work an eight-hour shift, but encounter natural inefficiencies that only allow them to perform six hours worth of work, interspersed among the eight. But, the MBU is eight hours, so they get paid for the eight, and employers just suffer the gaps in productivity as a cost of doing business.
Software is changing this. Now, the employee might have multiple “gigs” a day, that last 15 minutes. The employer only pays for these 15 minute blocks—the MBU of the employee has bee reduced from eight hours to 15 minutes. Now, the employee suffers the inefficiencies—the gaps between trackable units of work—not the employer. They have to be at work for eight hours, but they only get paid for the actual six hours they do productive work.
This is ”the gig economy.”
Increasingly, technology is enabling employers to shift inefficiencies to the worker.
Software enables employees to schedule employees sometime down to the minute, and to wring all downtime out of a job. An accepted part of a job used to be that some inefficiency benefited the employee—when the coffee shop was slow, employees worked without a lot to do.
But this has changed. If the coffee shop is slow, the employer will know this and schedule less people, or schedule them with a “hole” that allows the employer to not pay wages during that time. What used to be an accepted inefficiency is now being rooted out and “resolved” by technology.
This results in a general degradation of working and living conditions to the worker, with the upside of less need for manpower for the employer.
In general, automation favors employers, and it tilts the balance of power towards them and away from the employee, Employees do not pursue automation, employers do.
This means the automation and technological unemployment is inextricably linked to beliefs about income inequality and workers rights. As the automation of an industry increases, employees have less power, and with less power comes fewer rights and less security.
Many people favor a basic income, which is an income paid to people for not working. The idea is that society is simply automating all of the jobs away, and eventually there will not be enough jobs remaining for full employment.
Basic or universal income is an economic concept where people are paid an automatic income which is enough to live on, for no reason at all. They may choose to work to increase that, but they can not work and pursue leisure or charitable activities as they see fit. Many believe that a basic income would result in an improved society as people are liberated from the idea of work to survive, and embrace the idea of simply working to create a better society.
Several basic income experiments have been conducted, with mixed results.
Notions of basic income are highly controversial as there are considerable political and philosophical implications (especially in the United States).
Empathy and the ability to be human might be the next wave of employable skills. Computers might never be able to replicate human empathy, so jobs where those skills/traits are required are jobs where it would be hard to automate them. These are jobs like being a pastor or a doctor or a counselor.
From the book “Humans are Underrated":
...] the meaning of great performance has changed. It used to be that you had to be good at being machine-like. Now, increasingly, you have to be good at being a person. Great performance requires us to be intensely human beings.
The background question to all of this is, who benefits from the increased profits that automation brings?
We can’t even try to answer this question, as it brings with it an avalanche of other questions about political philosophies, Some would say the employer has more to invest in expanding business, while others will say the employers are just keeping all the money and increasing the inequality gap.
Answering that question is far beyond our scope.
Investments in business used to expand workforces. A car manufacturer would take profits, invest in a new factory, and employ a bunch of workers to staff it.
Technology has now advanced to the point where business investment is often about reducing workforces. Employers now might be able to invest funds in automation technology which puts employees out of work, so business investment is just as likely to contract the workforce than it is to expand it.
Increasing revenue is only one way to increase profits. Reducing expense is the other path, and investments in technology and automation can easily reduce headcount and expense.
Employers need to be careful they don’t automate away their own markets, Henry Ford famously doubled the salaries of his assembly line workers so they could buy the cars they were building, Conversely, while an assembly line robot doesn’t fight for better wages, it doesn’t buy cars either.
As automation increases and workers are increasingly displaced, a negative effect on the economy might drag down employers with it, Do they respond by increasing automation to cut costs and increase profitability, or do they take the completely counter-intuitive step of increasing employment in an attempt to strengthen the market for their products?