Monday, December 29, 2014

[NJFAC] McKinsey: Automation, jobs, and the future of work

Interview| McKinsey Global Institute

Automation, jobs, and the future of work  December 2014

A group of economists, tech entrepreneurs, and academics discuss whether technological advances will automate tasks more quickly than the United States can create jobs.

The topic of job displacement has, throughout US history, ignited frustration over technological advances and their tendency to make traditional jobs obsolete; artisans protested textile mills in the early 19th century, for example. In recent years, start-ups and the high-tech industry have become the focus of this discussion. A recent Pew Research Center study found that technology experts are almost evenly split on whether robots and artificial intelligence will displace a significant number of jobs over the next decade, so there is plenty of room for debate.

Matt Slaughter:....It's quite clear, in the US in recent years, that we're not creating enough good jobs. People care a lot about their W-2s—what incomes are they earning? If you segment this by educational attainment, 96.2 percent of the US workforce since 2000 is in an educational cohort whose total money earnings, inflation adjusted, have been falling, not rising.

That includes even people with four-year-college degrees and nonprofessional advanced degrees. The only ones that have been rising are the PhDs, on average, and then the professional degrees: the doctors, the lawyers, and the MBAs. So that's a little sobering if you think about whether we are going to create good jobs. And a big open question that we'll probably talk about—and our panelists already rightly pointed to—is public policies.

Laura Tyson: I am with Matt on this. We live in a market economy. Supply and demand ultimately determine the level of employment. So a number of jobs will be created, but the quality of jobs is a huge question, I think. What's happening with the technology, which is skill biased and labor saving, is that it's eliminating middle-income jobs but is complementary to high skills. The jobs are high-income jobs because some smart people have to work with the technology. But there's a very large number of people who are being pushed down into lower-income jobs.

The second thing that's really important—it's been with us for a long time—is the growing gap between productivity and wages. And you can see this in the gap between productivity, a measure of the bounty of brilliant machines, and how it's being distributed in terms of wages.

If we had an inflation-adjusted, productivity-adjusted minimum wage today, it would be something like $25 [an hour]. We would not be arguing about $10. Public policy is, if anything, moving backward. It's certainly not moving forward at the level of the race. So the policy makers lose the race, and a lot of displaced workers, a lot of American families, lose the race. And that is my concern.

We're talking about machines—machines displacing people, machines changing the ways in which people work. Who owns the machines? Who should own the machines? Perhaps what we need to think about is the way in which the workers who are working with the machines are part owners of the machines.


Job quality and fiscal policy

Martin Baily: I was struck recently by learning that in one of our largest banks, the turnover rate for bank tellers is 50 percent a year. So, being a bank teller now is no longer a sort of skilled job; it's no longer really a well-paid job. We've had this change in technology, obviously. We've put a lot of the intelligence into the IT systems, so we don't need such skilled bank tellers. But if you ever go inside a bank, you sort of long for the days when the bank teller was more skilled.

The banks obviously have decided, as have Walmart and many, many other companies, that it's more cost effective to use workers that don't have much training, that probably don't have a lot of education—although I think training is more important—but instead to build productivity into the production system. They're very good at that. But it does create a huge number of not-very-good jobs, together with a set of jobs for the conceptualizers, the people that can take advantage of the technology, that have high incomes.

So this has obviously created a problem of inequality in our society. But also we're seeing that people who cannot get or don't have the gumption to get—you can go both ways on this—a good job are actually deciding not to work at all. So they're ending up unemployed. They're ending up on disability. They're ending up leaving the labor force.


Watch the extended version of this roundtable discussion at Silicon Valley's Churchill Club on YouTube.

National Jobs for All Coalition

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