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Causal Factors

The Inequality of the Future?

Research & Commentary
November 05, 2015

by Larry Checco

No workers are free from the risk of losing their jobs to automation.

By Larry Checco

Credit: Solidsmack.com

Credit: Solidsmack.com

 Forty-five years ago futurist Alvin Toffler, in his book “Future Shock”, wrote that many people would be incapable of keeping up emotionally with the rapid pace of change that he predicted was yet to come.

That was 1970, before the democratization of technology—meaning before most of us had ever heard of desktop computers, laptops or cell phones, and tablets were pills one took for headaches and such.

Well, folks, the future has not only arrived, it has arrived with a vengeance, and keeping up with it emotionally may be the least of our problems.

Today’s income and wealth inequality may look like gentle ripples on the shore compared to the tsunami of change that robotics and artificial intelligence are whipping up.

There was a time when capitalism—and capitalists—could not exist without labor, sometimes needing vast amounts of it. But the days when companies had to deeply concern themselves with labor unions, contract negotiations, healthcare benefits, employee sick and vacation leave, defined benefits or define contribution retirement plans are fast fading.

Companies “have discovered that robotics, machine learning and artificial intelligence can replace humans and improve accuracy, productivity and efficiency of operations,” writes Darrell West, founding director of the Center for Technology Innovation at the Brookings Institution (http://brook.gs/1i9xRDl)

Amazon, for example, currently employs about 50,000 people in its warehouses. The company already uses 15,000 robots and is experimenting with how robots can “autonomously grab items from a shelf and place them in a tub,” which some fear may reverse these numbers—namely 50,000 robots verses 15,000 employees.

The concern is that as technology inexorably marches on, it will not only eliminate jobs, but also reduce incomes, as well as create a permanent underclass of unemployable people, with all that that entails for society.

Former U.S. Treasury Secretary Lawrence Summers pessimistically predicts that “if current trends continue, it could well be that a generation from now a quarter of middle-aged men will be out of work at any given moment.”

And it appears that few—white-collar and blue-collar workers alike—are free from the risk of losing their jobs to automation.

Experts say that everyone from telemarketers, title examiners, mathematical technicians, insurance underwriters, tax preparers, library technicians, and data-entry specialists have a 99 percent chance of having their jobs computerized. Some predict that by 2030, 10 million to 12 million truck drivers, alone, may lose their jobs to self-driving vehicles.

Optimists predict that this new age of technology will be a boon to some.

“There’s never been a better time to be a worker with special skills or the right education because these people can use technology to create and capture value,” economists Erik Brynjolfsson and Andrew McAfee write in their book “The Second Machine Age: Work, Progress, and Prosperity in a Time of Brilliant Technologies”.

Brynjolfsson and McAfee go on to say “However, there’s never been a worse time to be a worker with only ‘ordinary’ skills and abilities to offer, because computers, robots, and other digital technologies are acquiring these skills and abilities at an extraordinary rate.”

The seminal question is: When masses of people are unemployed—and perhaps unemployable because they don’t have the skills to compete in a highly technologically driven society—what impact will that have on income inequality, not to mention social order?

For example, most people rely on their jobs to provide them with health care, disability and pension benefits. But as West writes in his paper, currently “people who haven’t worked are not eligible for retirement benefits so we need to figure out ways to take care of those people in the newly emerging economy.”

Do we give everyone a basic income guarantee, meaning the government would simply provide people with X amount of dollars a month to give them the opportunity to live reasonable lives? But what implications would that have on work and its relationship to human worth or even the incentive to work if people were given an income guarantee?

We could expand the means tested earned income tax credit (EITC) that would provide income support while also giving people the incentive to work.

Or we could provide incentives for lifetime learning and job training in areas like health care, professional services, construction, leisure and hospitality, state and local government, finance and education, which experts tell us are expected to grow with respect to job opportunities.

West explores these and other public policy options in his paper. He and others caution that if we don’t address these issues “There is a danger of disruptions and unrest from large groups of people who are not working….There needs to be ways for people to live fulfilling lives even if society needs relatively few workers. We need to think about ways to address these issues before we have a permanent underclass of unemployed individuals.”

In short, if we don’t address these issues, the gap between the haves and have-nots will not only widen and deepen, but also place our entire social structure in great jeopardy.

Larry Checco is the president of Checco Communications and a columnist for Accountability Central, where he writes on economics, politics, and income inequality. He holds a degree in Economics from Syracuse University and an MA in Journalism and Public Affairs from American University.

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