A century of productivity growth in farming means that now, a couple of million farmers can feed a nation of 320 million. That’s amazing progress, but it also means there are only so many O-ring jobs left in farming. So clearly, technology can eliminate jobs. Farming is only one example. There are many others like it. But what’s true about a single product or service or industry has never been true about the economy as a whole. Many of the industries in which we now work — health and medicine, finance and insurance, electronics and computing — were tiny or barely existent a century ago. Many of the products that we spend a lot of our money on — air conditioners, sport utility vehicles, computers and mobile devices — were unattainably expensive, or just hadn’t been invented a century ago.
As automation frees our time, increases the scope of what is possible, we invent new products, new ideas, new services that command our attention, occupy our time and spur consumption. You may think some of these things are frivolous — extreme yoga, adventure tourism, Pokémon GO — and I might agree with you. But people desire these things, and they’re willing to work hard for them.
The average worker in 2015 wanting to attain the average living standard in 1915 could do so by working just 17 weeks a year, one third of the time. But most people don’t choose to do that. They are willing to work hard to harvest the technological bounty that is available to them. Material abundance has never eliminated perceived scarcity. In the words of economist Thorstein Veblen, invention is the mother of necessity.
Now… So if you accept these two principles, the O-ring principle and the never-get-enough principle, then you agree with me. There will be jobs. Does that mean there’s nothing to worry about? Automation, employment, robots and jobs — it’ll all take care of itself? No. That is not my argument. Automation creates wealth by allowing us to do more work in less time. There is no economic law that says that we will use that wealth well, and that is worth worrying about.
Consider two countries, Norway and Saudi Arabia. Both oil-rich nations, it’s like they have money spurting out of a hole in the ground. But they haven’t used that wealth equally well to foster human prosperity, human prospering. Norway is a thriving democracy. By and large, its citizens work and play well together. It’s typically numbered between first and fourth in rankings of national happiness.
Saudi Arabia is an absolute monarchy in which many citizens lack a path for personal advancement. It’s typically ranked 35th among nations in happiness, which is low for such a wealthy nation. Just by way of comparison, the US is typically ranked around 12th or 13th. The difference between these two countries is not their wealth and it’s not their technology. It’s their institutions. Norway has invested to build a society with opportunity and economic mobility. Saudi Arabia has raised living standards while frustrating many other human strivings. Two countries, both wealthy, not equally well off.
And this brings me to the challenge that we face today, the challenge that automation poses for us. The challenge is not that we’re running out of work. The US has added 14 million jobs since the depths of the Great Recession. The challenge is that many of those jobs are not good jobs, and many citizens cannot qualify for the good jobs that are being created. Employment growth in the United States and in much of the developed world looks something like a barbell with increasing poundage on either end of the bar.
On the one hand, you have high-education, high-wage jobs like doctors and nurses, programmers and engineers, marketing and sales managers. Employment is robust in these jobs, employment growth. Similarly, employment growth is robust in many low-skill, low-education jobs like food service, cleaning, security, home health aids. Simultaneously, employment is shrinking in many middle-education, middle-wage, middle-class jobs, like blue-collar production and operative positions and white-collar clerical and sales positions. The reasons behind this contracting middle are not mysterious.
Many of those middle-skill jobs use well-understood rules and procedures that can increasingly be codified in software and executed by computers. The challenge that this phenomenon creates, what economists call employment polarization, is that it knocks out rungs in the economic ladder, shrinks the size of the middle class and threatens to make us a more stratified society.
On the one hand, a set of highly paid, highly educated professionals doing interesting work, on the other, a large number of citizens in low-paid jobs whose primary responsibility is to see to the comfort and health of the affluent. That is not my vision of progress, and I doubt that it is yours.
But here is some encouraging news. We have faced equally momentous economic transformations in the past, and we have come through them successfully. In the late 1800s and early 1900s, when automation was eliminating vast numbers of agricultural jobs — remember that tractor? — the farm states faced a threat of mass unemployment, a generation of youth no longer needed on the farm but not prepared for industry. Rising to this challenge, they took the radical step of requiring that their entire youth population remain in school and continue their education to the ripe old age of 16. This was called the high school movement, and it was a radically expensive thing to do.
Not only did they have to invest in the schools, but those kids couldn’t work at their jobs. It also turned out to be one of the best investments the US made in the 20th century. It gave us the most skilled, the most flexible and the most productive workforce in the world. To see how well this worked, imagine taking the labor force of 1899 and bringing them into the present. Despite their strong backs and good characters, many of them would lack the basic literacy and numeracy skills to do all but the most mundane jobs. Many of them would be unemployable.