Those voters in Appalachia who convinced themselves that a con artist and grifter, Donald Trump, was going to bring back “good paying jobs” by bringing back 20th Century jobs in coal mining and manufacturing are going to be sadly disappointed and badly disillusioned.
Businesses have no financial incentive to bring back labor intensive jobs when they have modern technology — computerization, automation, robotics and now artificial intelligence — to replace human labor. Tax laws and accounting norms make it easier to invest in robots and equipment than in people.
Ed Hess, professor of business administration at the Darden School of Business at University of Virginia and co-author of the new book, “Humility Is the New Smart: Rethinking Human Excellence in the Smart Machine Age” writes at the Washington Post, Coming technology will likely destroy millions of jobs. Is Trump ready?
American manufacturing job losses to China and Mexico were a major theme of the presidential campaign, and President Trump has followed up on his promise to pressure manufacturers to keep jobs here rather than send them abroad.
What he hasn’t yet addressed — but should — is the looming technology tsunami that will hit the U.S. job market over the next five to 15 years and likely destroy tens of millions of jobs due to automation by artificial intelligence, 3-D manufacturing, advanced robotics and driverless vehicles — among other emerging technologies. The best research to date indicates that 47 percent of all U.S. jobs are likely to be replaced by technology over the next 10 to 15 years, more than 80 million in all, according to the Bank of England.
Think back to the human misery in this country during the financial recession when unemployment hit 10 percent. Triple that. Or even quintuple it. We as a society and as individuals are not ready for anything like that. This upheaval has the potential of being as disruptive for us now as the Industrial Revolution was for our ancestors.
Techno-optimists tell us to relax — don’t worry, technology will produce lots of new jobs just like it did during the Industrial Revolution. History will repeat itself, they say. Well, not so fast.
First, human disruption caused by the Industrial Revolution in Britain lasted 60 to 90 years, depending on the historical research. That is a long time for society to “right” itself, and lot of personal pain. Second, this time will be different because there will be new questions: Will technology produce lots of new jobs that advancing technology itself can’t do? And will displaced workers be able to keep up with the pace of advancing technologies?
These issues should be front and center on the president’s agenda. Planning for how our country will adapt to the coming technology tsunami must start now. We are talking about a major societal challenge — preservation of the American Dream — as well as the future of work in the United States and the world.
Jobs at risk include a diverse range of service and professional positions. Retail and fast-food jobs will be almost entirely automated. Manual laborers and construction workers will be replaced by robots; long-haul truck drivers by self-driving trucks; accountants, clerks, paralegals, telemarketers and customer-service reps by artificial intelligence; and security guards by robots and drones. Even professionals in the fields of accounting, law, finance, consulting, journalism and medicine are at risk of losing their jobs to smart machines.
What jobs will be secure? Well, that will change as technology advances. For now, the consensus is that humans will be needed to perform those tasks that require higher-order critical thinking, innovation, creativity, high emotional engagement with other humans and trade skills requiring real-time problem-solving and manual dexterity. Humans will need to excel at doing those things that are, for now, uniquely human. Good will no longer be good enough.
We need to begin planning for what is coming. Our political leaders need to embrace this challenge. We need an American Dream 2.0 Plan for how we, as a society, will remain the land of opportunity as technological advances cause massive job losses. The stresses upon our system and way of life will be huge. This is not science fiction.
I ask the president to appoint a diverse blue-ribbon committee to study and make recommendations about how we, as a nation, will prepare for the coming technology tsunami and answer the tough economic questions of our time: How will we keep the American Dream alive in the Smart Machine Age? How will people find meaning and purpose in a world where full-time work will be limited? How must our public education system be transformed to better prepare our children for this new world? How do we, as a society, deal with the fact that the future of work for many will be no work at all?
We need to begin preparing ourselves, our families and our nation by mastering those skills that technology cannot replace. We need to rethink human excellence for the Smart Machine Age.
USA Today this week similarly takes a deep-dive look into this topic in a Special report: Automation puts jobs in peril. It is a must-read report that is far too long to excerpt here.
Other headlines just from this week include: Bank tellers are the next blacksmiths: Bank of America has opened three new robo-banks — called automated centers — that have ATMs and videoconferencing but no people.
“This is the beginning of the end of the American bank branch,” said Peter Fitzgerald, a former U.S. senator from Illinois, lifelong banker and founder of Chain Bridge Bank in McLean, Va. “Bank branches are dead. They were killed by the iPhone. It’s like the horseshoe when the automobile came along.”
Similarly, Will IBM’s Watson be an accountant killer? The company sure hopes so:
“IBM has shown how complex, data-rich industries such as healthcare, retail and education are being transformed through the use of Watson,” David Kenny, senior vice president of IBM Watson said in the New Atlas report. “Now with H&R Block, we’re applying the power of cognitive computing in an entirely new way that everyone can relate to and benefit from – the tax prep process.”
And Peter Cappelli, a management professor at the University of Pennsylvania’s Wharton School explains the financial incentives in tax laws and accounting norms that make it easier to invest in robots and equipment than in better managers and training for workers. How to save good jobs (excerpts):
The job prospects for blue-collar workers is one of the hottest topics in U.S. politics. The current fascination with the potential of robotics has helped reveal the important truth that productivity increases have been the biggest and perhaps the inexorable factor reducing the number of manufacturing jobs, and that’s increasingly true in service sectors as well. Most observers expect to continue.
So far, the options for what to do about the loss of good jobs are pretty bad. Changes in trade policy have lots of drawbacks, but even if they could be enacted, they won’t address the massive productivity-driven job losses in industries like manufacturing. Retraining workers who lose jobs sounds like a good idea if there were lots of good jobs available for which they could be retrained. But that has not been the case, and it is unlikely to be so in the foreseeable future. What can we do to help increase the number of good jobs in the United States?
One limitation of the current debate is that it ignores the choices individual employers make about how to get work done and how to improve productivity, something employers have to do. But substituting machines and software for people is not the only way to do that. And it is not necessarily even the most effective way.
Why have businesses been so inclined to go in that direction? Because we’ve stacked the deck with policy decisions that favor buying equipment over investing in employees and management.
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So why aren’t we seeing more of a focus on upgrading management and employee skills rather than replacing workers with machines?
For-profit businesses, especially public companies that have extensive reporting requirements for investors, hate fixed costs or those that can’t be adjusted down if business falls. That’s a reason we typically hear for why CFO’s in particular hate adding workers, because they represent fixed costs.
Robots and technology are massively bigger fixed costs than workers. We can’t layoff robots or reduce their hours if business goes down as we can with employees. You might think that would scare investors and businesses away from that approach. What we can do with robots and tech under contemporary accounting rules and can’t do with investments in employees or management is amortize investments in robots and depreciate them over time, spreading the costs out. There are also a range of special tax breaks for investments in capital that aren’t there for management and employee spending. Tax laws and accounting principles do not recognize training and management interventions as investments even though they surely are by any other definition.
Another way in which accounting stacks the deck against investments in human capital and management systems has to do with how those investments are reported, or not reported. An investor looking at any company can tell pretty quickly how much it has invested in capital improvements because the figure is right there on the balance sheet along with related investments like leased capital and even fuzzy assets like “good will.” Those investments are seen as a good thing for the business and are counted as “assets” held against “liabilities.”
But if I wanted to see investments in training and in management, where would I find those? You can’t.
They are lumped in with “general and administrative expenses,” typically described as “overhead” costs. These are liabilities on balance sheets, and investors like to see them as low as possible. Businesses that spend a lot on training and management improvements can look to investors like they are blowing money on office furniture. So we have the irony that business is rewarded for investments in capital that raise productivity by eliminating jobs but punished for investments in people and management that raise productivity and save jobs.
The Federal Government has been also spent billions directly and through agencies like the Department of Defense to develop robots and other manufacturing technology that displaces workers. The Centers for Advanced Manufacturing spread the knowledge of how to use them to businesses. There is little attention given to how workers might fit into these new systems.
Given all this, it’s not surprising that businesses favor spending to replace workers with capital equipment.
As I have said before, I do not hear any politicians in this country, at any level of government, addressing this technology revolution that is transforming the economy and displacing human labor. They buy into the Techno-optimists who tell us to relax — don’t worry, technology will produce lots of new jobs (someday). I strongly agree with Ed Hess that this issue should be front and center on the policy agenda. Sadly, our political leaders are either uninformed and/or indifferent to this issue.