Miles on Money: The race against machines
Friday, April 25, 2014 7:00 AM
The importance of gainful employment, not just to our economy, but to each of us individually, can scarcely be overstated. As Gallup CEO Jim Clifton put it in his 2011 book “The Coming Jobs War,” “The primary will of the world is no longer about peace or freedom or even democracy; it is not about having a family, and it is neither about God nor about owning a home or land. The will of the world is first and foremost to have a good job. Everything else comes after that.”
If it seems to you that we “should not be defined by our jobs,” consider that three key ingredients to what makes people feel happy and fulfilled – what Daniel Pink called mastery, autonomy and purpose – often come from the work that we do, to say nothing of the wages we earn and reinvest in our communities.
Jobs are important on multiple levels. And yet, since the Great Recession ended June 30, 2009, recovery in the job market has been maddeningly slow. Nearly five years later, unemployment still stands at 6.7 percent, and 2013’s labor participation rate reached its lowest level in 35 years. Measured by job growth, this is the most tepid economic recovery in US history.
What is perhaps even more troubling, is what Erik Brynjolfsson and Andrew McAfee term “the great decoupling.” In their new book “The Second Machine Age: Work, Progress, and Prosperity in a Time of Brilliant Technologies,” the authors note that from 1953 through 1981, four key economic indicators – labor productivity, gross domestic product growth, private employment and median household income – all moved up together. This meant that as the economy produced more and workers became more productive, the number of jobs grew and so did household incomes.
Since 1983, and in particular since the Great Recession, we have experienced a decoupling between labor productivity and GDP growth, on the one hand, and employment and household incomes on the other. Since the end of the Great Recession, GDP has been growing at a slow but steady pace for nearly five years, corporate investments have returned to 2007 levels, and corporate after-tax profits have risen to never-before-seen levels. By contrast, median household incomes have fallen to 1996 levels, and the recovery in private sector employment has lagged badly.
In “The Second Machine Age,” Brynjolfsson and McAfee argue that the primary cause of this decoupling is technological progress. Computers, which have for some time been able to do routine work, have progressed to a stage where they can perform tasks requiring what were once considered to be uniquely human capabilities – autonomous mobility and fine motor control, language and complex communication, and pattern matching and unstructured problem solving. What’s more, digital technologies are advancing at an exponential rate, organizations and individual skill sets are not keeping pace, and, say the authors, millions of people are being left behind.
As technology continues to become both cheaper and more advanced, they see a growing preference among businesses to buy more technology rather than to hire more workers.
In the near term, owners of capital must surely welcome higher returns brought by technological advances. Longer term, however, the advance of digital technology must cause us to explore what policies will not only grow our economic pie, but also provide an opportunity for broad participation in those gains. Whether from egalitarian motivations or purely capitalist impulses, it is apparent that not only is our economic engine dependent upon consumer demand enabled by gainful employment, but so is the strength of the communities to which we belong.
For those who know me, I see at least a partial answer in higher education. The race is on for each of us to develop ever more advanced skills at an accelerating pace. This can be accomplished not only by improving college graduation rates, but by also increasing the number of individuals with postgraduate degrees. Only through advancing our personal skills can we hope to race with the machines, not against them.
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