At last year’s DLD, Uber CEO Travis Kalanick claimed that the company could generate 50,000 jobs in Europe in 2015. He was given a pretty easy ride: no one asked him what those jobs were, who was going to do them, or how many people in work would be displaced to make way for those 50,000 new positions. That technology will have an impact on the future of work is a bland platitude, but what that impact will be divides commentators.
The poster boy for the dystopians is Andrew Keen, author of The Internet Is Not The Answer and a DLD speaker.
His excoriating polemic lambasts the utopians. Keen’s message is clear: technology, while accruing unimaginable wealth to a very select elite, destroys the jobs and livelihoods of others.
He focuses his ire on Instagram. The photo-sharing app had just 13 full-time employees and no discernible revenue when sold to Facebook for $1 billion, yet it felled the once-mighty filmmaker Kodak, which filed for bankruptcy protection in 2012, taking with it 47,000 jobs and turning towns like its HQ in Rochester, NY, into ghost towns.
By no means is Keen alone. Leading Silicon Valley VC Marc Andreessen has said in future there could be two types of worker — those who own the robots and those who work for them. An article in New York magazine opens with a disturbing illustration of the social chasm in which the San Francisco-based journalist hires someone to clean his home through a “sharing economy” platform only to discover the cleaner is homeless.
Guy Standing, a professor of economics and development studies at the University of London, coined the term “precariat” to describe such people, whom he says are “in precarious work, precarious housing and hold precarious citizenship: the perpetual part-timers, the minimum-wagers, the temporary foreign workers, the grey-market domestics paid in cash…the techno-impoverished whose piecemeal work has no office and no end.”
At a recent talk Andrew Haldane, Chief Economist of the Bank of England, pulled no punches when it came to the impact of technology on jobs. “Technology has made it easier and cheaper than ever before to substitute labor for capital, man for machine,” he told an audience of British trade unionists in November last year.
“Across a number of countries, there is evidence of real wages falling short of productivity. In the U.S., this has been evident since at least 1970, with average real wages rising 0.6 percentage points per year more slowly than productivity. In the UK, that gap has averaged 0.3 percentage points per year since 1990.
“Had U.S. real wages tracked productivity since 1970, the median worker today would be 40% better off.
“In sum, the third industrial revolution appears to have resulted in an intensification of trends already fledgling in the first two: a hollowing-out of employment, a widening distribution of wages and a fall in labor’s income share.”
That all seems pretty gloomy stuff. But glass-half-full thinking has brought together unlikely bedfellows. Both Socialist Review and analysts McKinsey take exception to this prognosis. “It is worth noting that one of the trends behind the ‘downsizing’ of manufacturing is that by using newer technology, fewer workers are often needed for the same level of production,” wrote Socialist Review.
“So manufacturing output in Britain actually reached an all-time high in 2007. This means that, while there are fewer manufacturing workers than 30 years ago, each worker is relatively more powerful.”
A view shared by McKinsey’s Michael Chui who suggests, “A focus on occupations is misleading. Very few occupations will be automated in their entirety in the near or medium term,” he wrote in a 2015 report. “Rather certain activities are more likely to be automated, requiring entire business processes to be transformed, and jobs performed by people to be redefined, much like the bank teller’s job was redefined with the advent of ATMs.”
Chui says 45% of the activities individuals are paid to perform can be automated by adapting currently-demonstrated technologies. “Although we often think of automation primarily affecting low-skill, low-wage roles, we discovered that even the highest-paid occupations in the economy, such as financial managers, physicians, and senior executives, including CEOs, have a significant amount of activity that can be automated.”
The benefits — ranging from increased output to higher quality and improved reliability, as well as the potential to perform some tasks at superhuman levels — says Chui, are between three and ten times the cost.
It is also a view strongly disputed by DLD speaker Navid Hadzaad, founder and CEO of New York-based GoButler, a virtual personal assistant service. “Increased flexibility in the workforce is a natural evolution in the change in this generation of workers as a result of digital age advancements,” he says. “The flexibility to work whenever, wherever has been extremely beneficial to those for whom the traditional work model is not a fit. It allows us to train a new workforce, whether skilled or unskilled, and provides these people with the ability to work on their own terms. Additionally, these new models create a significant amount of new, stable jobs elsewhere.”
What is clear is that the nature of work will change, says British parliamentarian Douglas Carswell, the author of The End of Politics and the Birth of iDemocracy. “We have seen this in our past. Technology allows us to produce far more with far less,” he says. “What we will see is that the nature of work will change profoundly. With increasing automation, people will be free to do things that to you or me may not even look like work.”
That’s a view shared by The Bank Of England’s Haldane: “In a world in which machines came to dominate tasks involving core cognitive processing, the importance of, and skill premium attached to, non-cognitive skills is likely to rise. The high skill / high pay jobs of the future may involve skills better measured by EQs than IQs, jobs creating social as much as financial value.”
However, analyst Forrester predicts increasing automation will have serious implications on employment. It says 22.7 million jobs will be lost by 2025, or 16% of the workforce. While automation will create 13.6 million new jobs, it believes the net effect will be a loss of 9.1 million jobs in ten years, or 7% of the total.
If there are jobs, then where will they be found? Once again the picture is mixed, but not altogether rosy. The hollowing out of the jobs market, with middle management, middle-skilled jobs bearing the brunt, means a relative increase in high- and low-skill employment.
According to the U.S. Bureau of Labor Statistics, the health care and social assistance sector is expected to grow the most, with an annual rate of 2.6% in the decade from 2012. This will add around five million new jobs over that decade. That is about one-third of all the new jobs expected to be created. However, worryingly, of the 10 fastest-growing jobs, four require no degree qualification and only three require a bachelor’s degree or higher level of qualification.
This suggests a discord between the needs of society and the output of the education system. Andrew McAfee, co-author of The Second Machine Age, argues, “It is frustrating that our primary education system is doing a pretty good job at turning out the kinds of workers we needed 50 years ago. Basic skills, the ability to follow instructions, [and] execute defined tasks with some level of consistency and reliability.”
What is needed, he wrote, are people who can do “things like negotiate, provide loving and compassionate care, motivate a team of people, design a great experience, realize what people want or need, [and] figure out the next problem to work on and how to solve it.”
School education has tended to focus on developing the competences of reading, writing and arithmetic. Smart machines have long since surpassed humans in their ability to do the first and third; they are fast catching up on the second. According to the U.S. Department of Education, there will be a 14% increase in STEM jobs between 2010 and 2020. However, “only 16% of American high school seniors are proficient in mathematics and interested in a STEM career.”
Nor is it just in education that public policy needs to adapt. There have been suggestions of a guaranteed minimum salary. The Finnish government is considering a pilot project that would see the state pay people a basic income regardless of whether they work, a view that has been backed by many across the political spectrum, including libertarians like Friedrich Hayek.
The impacts are being felt today. The unpredicted success of Republican contender Donald Trump comes from his tapping into discontent felt by America’s shrinking middle class. There has been a “hollowing out” of the middle class, as a recent study by the Pew Research Center has shown. In 1971, the middle class accounted for 61% of the nation’s population. Today, there are slightly more people in the upper and lower economic tiers combined than in the middle class.
While in 2012 the Republican contender, Mitt Romney, was painted as being out of touch and representing the elite, Trump has successfully targeted this group of angry and fearful voters.
Whatever the future holds, society must grapple with a significant structural change, and questions about the very nature of the relationship between us and the world around us.
As Pope Francis wrote: “we see the need for a correct understanding of work; if we talk about the relationship between human beings and things, the question arises as to the meaning and purpose of all human activity. This has to do not only with manual or agricultural labor but with any activity involving a modification of existing reality.
“It follows that, in the reality of today’s global society, it is essential that we continue to prioritize the goal of access to steady employment for everyone, no matter the limited interests of business and dubious economic reasoning.”