July 1-7 Week’s Discussion: How Will Employment Change with the Expansion of New Technologies—like Robotics—in Manufacturing? Will We See a New Unemployable Underclass?

The NIC team labeled the blog subject for this week:  How Will Employment Change with the Expansion of New Technologies—like Robotics—in Manufacturing?  Will We See a New Unemployable Underclass?

I’m hoping for a vibrant discussion with good back-and-forth among commentators this week.  I’ve noticed that the blog up to this point has been populated by slightly longer, carefully crafted, ‘point of view’ statements — all of which are quite interesting — but a bit less interactivity than I would have expected.  People will do on a blog what they wish to do… but let me suggest that it might be an interesting change of pace, and a good one, for commentators to feel that the barrier to entry is a little lower.  So, this week, please feel free to throw out short comments, half to three-quarter baked ideas, questions that you’d like to see others take a stab at, etc. etc.  Blog posts don’t need to be fully articulated arguments with careful language; that’s why they call it a blog.  If you have a thought worth sharing, please share it and let others build on it.

I’m particularly excited to be moderating this discussion because I think it is a subject where the blog can really help to press the GT2030 draft document a step or two forward.  I know my friends in the writing team will understand the motivation with which I make this comment:  I think the question needs to be expanded and made much more ambitious.

I mean that in several respects, which I’ll suggest as possible directions for elaboration that I hope might provoke others to comment.

When it comes to manufacturing, robotics is already here, employment is becoming a different thing than it was, there is more or less a permanent underclass…. and it is a long way from 2030.  If you’ve been in an auto factory, a steel mill, or even a semi-conductor fab in the last few years, you know what I’m talking about.

This is one of those (frequent) times when talking about the future, helps us to catch up to the present.  ‘Manufacturing’ can mean different things to different people, but if the image of a ‘factory’ economy comes into your mind, think again.  Emphasizing well-known numbers here:  in the US manufacturing is well below 15% of GDP (and the recent spate of news about ‘insourcing’ back to the US is a tiny phenomenon in perspective, not big enough to move this needle).  In Germany manufacturing is around 20% of GDP; in China, the ‘factory’ of the world, it’s around 1/3.

For the world as a whole, manufacturing as % of GDP is around 20%.  For one fifth of the economic activity in the world, it sure does attract a lot of attention.

We’d need a new, different, and surprising story about the nature of economic growth and change over the next decade, to believe that any of those numbers are going to rise meaningfully, rather than continue to shrink on aggregate as they mostly have been doing for decades now.  Manufacturing right now still has a surprising hold on (some) peoples’ imaginations, but it is hard at least for me to imagine that this will continue for another 20 years.

Robotics, or maybe we should simply say ‘automation’ to make it sound less exotic, is certainly part of the story of the employment trap.  The productivity of what we call a factory has, in most modern sectors, skyrocketed over the last decade — in part because of automation, in part because of management paradigms, in part because of instrumentation and sensorization… and none of those trends is slowing down.  It maybe that impact of sensors and data — measuring what is really happening at a granular level in the manufacturing process and using that to drive constant, incremental improvements — will be more impactful over the next decade or so than will robotics.  After all, computation and data visualization is (right now) easier than robotics and there is a lot of inefficiency to be taken out of most manufacturing processes simply by understanding them better and removing waste.

What about employment?  Could manufacturing employment approach zero, (asymptotically) by 2030, in rich countries?  In medium income countries?  Possibly even in poor countries?  And since the really big benefits to productivity are to be found by incorporating (even fairly simple) ‘robotics’ or at least automation into services, how quickly do we think the question will shift in that direction?

Finally (for now) consider the notion of a ‘permanent underclass’.  Is that 2030, or is it right now?  The proportion of US GDP that goes to labor is at or near an all time low.  Low-skilled manufacturing jobs that haven’t been lost to China, and lost from China to lower-wage locations in East Asia (and probably over the next decade to in turn to Sub-Saharan Africa), already constitute the employment contract for a permanent underclass in the US.  Try living on $13.20 an hour.  More important, try pulling yourself or your children out of the underclass with that wage as a foundation.  If you think it will get easier over the next decade to do that, we need an explanation as to why.

A last provocation.  It is conventional wisdom, and correct, to say that your chances of being stuck in this permanent underclass are inversely related to your level of education, at least in the US.  That’s the good news.  The bad news is, the return on investment in higher education — while still positive — has been declining now for 20 years.  (Some of that is attributable to the massive rise in the costs of higher education, and some attributable to the increased competition from larger numbers in the global higher education pool — if anyone has seen a plausible analysis that breaks down those components, please share it).  It seems almost inevitable (at least to me) that the costs of higher education will shrink and the accessibility of it multiply over the next decade as simple e-learning technologies take hold — and that’s just the obvious disruption we can already see coming.  That means a much larger global class of educated workers looking for jobs.  Where will the threshold for ‘underclass’ be then?

In the long run, there need be no negative trade-off between productivity and employment of course.  But the long-run (in a theoretical economics sense) is probably not the relevant time frame here.  Right now, many people are acting as if they believe that a job gained in one place is necessarily a job lost somewhere else.  Jobs mercantilism, if you will.  What are the plausible trajectories out of that dilemma?

Let’s not shy away, in the end, from speculating on what we might end up meaning by the term ‘employment’ — what it implies, for whom, on what terms, with what economic (and broader) impact on human life and meaning.

Some provocations, then, to start.  Please have at it.

15 comments on “July 1-7 Week’s Discussion: How Will Employment Change with the Expansion of New Technologies—like Robotics—in Manufacturing? Will We See a New Unemployable Underclass?

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  2. >”I believe that the roervecy is likely to be quite muted compared with past recoveries.”Well, that’s understandable. Those past recoveries weren’t happening at a time when the largest federal spending increase in history in the form of “TARP”, “stimulus”, “jobs” programs, and a “healthcare reform” package were being jammed down our throats, soon to be followed by “immigration reform” and “cap & trade”.How can anyone, consumer or business, plan for the future or risk spending money when they don’t know what will happen in their lives from day to day?

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  7. From Richard Engel, National Intelligence Council, Strategic Futures Group:

    There are some fundamental changes taking place. My sense is we have reached a point where the classical manufacturing touch labor can be automated and the need for humans is greatly reduced – all the statistics you provided support this observation. This improves the productivity of the individual business. But what is also different is the rate at which this automation is taking place. This is occurring so fast that the displaced labor cannot be trained/educated fast enough to take higher paying jobs up the work-labor scale and those jobs are not being created at a rate necessary to hire the displaced labor. As a result, the displaced workers are forced to go down the work-labor scale and take lower paying service jobs. In a globalized world this is not just a challenge for one nation state, but for multiple states at the same time. To make matters worse, as you observe in part, the education system has produced graduates—in some cases with a considerable debt burden—for which there are no jobs, often because the degrees do not match the need because they contain insufficient technical content: math, engineering, programming, etc.

    Since the human training/education cycle can be long, there are no quick fixes for this mismatch in education/training and job requirements. To make matters worse, consider the impending automation in the agriculture industry that will occur over the next thirty years to produce enough food for a planet with 8+ billion people. If the rest of the world achieves agriculture productivity (measured as manpower vs output) even close to the United States, the global displaced workforce will only get worse. All of this displaced labor—especially if concentrated in cities—can be a dangerous cocktail for social disruption (protests, riots, destruction of property/businesses associated with the “wealthy”). The social disruption can eventually lead to political disruption, protectionist trade policies (to protect vulnerability industries), and pressures against immigration or economic refugees.

    Governments will face very difficult policy choices. New workforce education/training will be expensive (even if the efficiencies discussed above are achieved) and take time. Assuring the workforce is mobile to take advantage of available job opportunities will necessitate working through underwater mortgages, and providing sufficient “social safety nets” that support a mobile workforce. The fiscal burden to governments may very well exceed the capacity for most states to support this transition and of course, different demographics will help or hurt the problem.

    This leads to the last point, perhaps “employment” will be re-defined. Not strictly on the basis of goods and services produced, but considering the path towards productivity. Said differently one is rewarded (compensated) as long as they are producing or are on a path that leads to a greater social-economic need. Different compensation may be appropriate depending upon the path/work, not much different that what we have now, but it will require some choices on what is a valuable path. Should the compensation for an engineering degree, an associate degree in machine programming, or a PhD in history all be the same? How the “compensation” is disbursed and paid for will generate its own set of policy choices.

  8. This is one of the issues I think will really matter in 2030. I have yet to hear any argument that persuades me we will need anywhere as many people to run this planet in the 2nd half of the 21st century as we do now. In essence, the decline of work as the organizing principal of society will require significant adjustment to how we think about ourselves. (We are still adjusting to the decline of religion. (I would argue that dynamics such as Islamic extremism are a type of reaction against an overall decline in religion.) We will also be dealing with how to organize society using something other than the current concept of government.) In the end the decline of work will be one of the factors that will lead to a decline in overall world population. Why have children if there is nothing for them to do? You see early stirrings of this in countries such as Japan and Italy. So my completely cosmic, way-out there idea is that by the second half of this century we will be in the middle of a dialogue about sustainability, but it will mean the exact opposite of what it means today. We will be thinking about how many humans we need to sustain this planet and how in fact it will be done.

    I know, it’s way out there and probably not helpful to GT2030 but I thought I would throw out what I see as the next step after the decline of work. In the spirit of blogging.

  9. There are two questions here that need to be unpacked: 1) the size of the manufacturing sector (employment and output) and 2) the existence of an economic underclass. The two are partly related — but only partially.

    Changes in employment in manufacturing (as in any tradable sector) is a function of both doing more with less (productivity) and doing it elsewhere (off-shoring). The nature of manufacturing is shifting from low cost mass production to more customized (knowledge-intensive just-in-time just-for-me) production. As this shift occurs both productivity and output goes up. The net effect may be more employment (or at least not a huge decline). And the location of production shifts to being closer to the consumer (on-shoring). Thus, the forces behind the decrease in manufacturing employment (off-shoring and mass production productivity) may be giving way to a set of new forces promoting localized co-production that either increase or stabilize what we call “manufacturing” employment (i.e. people involved in the production of goods).

    What the income of those people will be is a different question. Whereas manufacturing was the engine of an increased middle class in the past, there may be many routes in the future for a middle-class income. That is as much a political question (taxation, role of unions, etc) as it is an economic one.

  10. Given ongoing advances in computing, robotics, and automation, it is tempting to assume that long-term structural unemployment is here to stay—both in the developing world, where automation threatens manufacturing and industrial employment, as well as in the developed world, where machines tend to replace jobs in the service sector and process improvements render other tasks obsolete. And while the erosion of human employment opportunities due to technological advancement has proven to be overestimated in the past (often called the “Luddite fallacy”), some analysts posit that there is something fundamentally different at work today: Namely, that the exponential trajectories of Moore’s law and similar phenomena have the effect of increasing the overall pace of change itself, leaving human institutions scrambling to adapt. Current skill gaps are exacerbated by the ongoing transformation of every industry (into an IT industry), and if educational policy fails to transform, current wealth inequality will also be greatly exacerbated, decimating the “middle class” and leaving a massive, low-skilled underclass and an upper class with access to extravagant wealth and technology.
    Under the current dominant system of employment, countless are overworked, while numbers of the underemployed and jobless have never been higher. Over several decades, working hours have climbed while wages have largely stagnated and productivity has skyrocketed. And while all of that working enables purchasing power for consumption, it leaves little room for much else. This stark situation has led the New Economics Foundation to propose a 21-hour workweek, shifting the work-life balance so that more people can be employed for less time and thus potentially breaking the fundamentally unsustainable cycle of consumerism. A reduced standard workweek could help lay the foundation for a “steady-state”—sustainable—economy. Even John Maynard Keynes believed that the “economic problem” (struggle for subsistence) was not a permanent condition of humanity. In fact, he believed that by the 21st century, the standard workweek would be 15-21 hours.
    Others have asked the question: do we need jobs at all? Keynes believed the post-economic problem would be how to meaningfully occupy time, once survival—and even abundance—had been secured. Douglas Rushkoff, author of Life Inc., argues that fundamentally speaking, humanity has already entered the post-scarcity economy, though it still operates under the old principles. Citing estimates from the FAO, Rushkoff argues that enough food is currently produced to provide everyone in the world with 2,720 kilocalories per person per day. Arguing that “we are attempting to use the logic of a scarce marketplace to negotiate things that are actually in abundance,” Rushkoff suggests that “What we lack is not employment, but a way of fairly distributing the bounty we have generated through our technologies, and a way of creating meaning in a world that has already produced far too much stuff.” With communism and libertarianism at opposite ends of the ideological spectrum, Rushkoff suggests that a middle ground exists that has not yet been popularly imagined: “We no longer need to make stuff in order to make money. We can instead exchange information-based products” (see http://articles.cnn.com/2011-09-07/opinion/rushkoff.jobs.obsolete ).
    While the above theories and suggestions will be tested by ongoing advances in automation and by our ability to adapt training and education to rapidly shifting industries, a fundamental mismatch between global “free market” capitalism and a sustainable and prosperous future for humanity is already clear. In a world of relatively limited resources, when the bottom line is growth and expansion, sustainability is not an option. Maintaining a majority middle class will require serious rethinking of the national narrative, an overhaul of educational philosophy (Finland is a good place to look for ideas; ironically, they have borrowed American ideas to setup a successful educational system. See http://news.stanford.edu/news/2012/january/finnish-schools-reform-012012.html ), and massive investment in R&D and infrastructure to ensure that the country remains competitive. The amount of political energy exerted debating the legislation of human bodies would be better spent on these much bigger issues.

  11. Just as the agricultural sector has yielded itself to technology, so has and will manufacturing.

    The real question to be addressed is how do we make productive use of the “bottom half” of our population in an increasingly complex and intellectually demanding world.

    Our course, the “general” population doesn’t have to “understand” the technologies they use (thanks to human factor analysis, etc.). However, I think the real question you are asking here is how do we (society) find a useful role for the “bottom half” (intellectually) of our population. For the moment, there are only so many toilets that need to be cleaned, sandwiches served, and personal care assistants that are needed.

    In a “higher” tech society, is a smaller and smaller segment of our society “needed” to develop and implement new technology as our “artificial intelligence” abilities continue to grow. What happens when man is surpassed by machine in not just physical matters but also in intellectual matters?

    How is man then expected to spend his life productively?

    Will we finally realize the importance of ideas (beliefs and values) as the driving force of the individual and/or societies? Will mankind spend more time in the study and contemplation of religous and philosophical matters?

  12. There will be stickiness in employment and pricing for a period of time while the market adjusts. Afterwards there will be an increased focus on education and training – unskilled workers who do not adapt to the new technology will find themselves out of work.

    On a positive note, prices will drop along with production cost which may impact relative buying power.

  13. Anxiety about technology and its relation to employment is definitely a global concern. This video from Singapore’s MTI (http://www.youtube.com/watch?v=amKgAQDf9RM) refers to “bot-sourcing” (8:15-10:45) but along with that, a parallel thread is the ageing demographic and the need for human contact.

    The other thing to note is that 3D-printing and other forms of alternative manufacturing might complement the gaps in the market, and not supplant it. Despite the evangelism and effectiveness of the open-source software movement, proprietary software remains the main form of business. The market of human desires has space for all kinds of business models and they are all going to co-exist – not to mention there’s the infrastructure of manufacturing and the sheer scale of current industrial models to deal with.

  14. Whether performed by assembly line robotics or skiiled assembly teams of human workers, the nation must recoup and retain its manufacturing base, train individuals in relevant skills and ensure that enough designers and engineers in all disciplines are being recruited into key sectors and strategic industries. No RMA can occur on the technology front without an eye to the future of the technicians and skilled labor. And while it is a generationaaspiration to earn a ciollege degree, the types of degress and the manner in which they are awarded has become diluted. To many seek the easy path an are reluctant to accept the science, math challenge that exists. No Child Left Behind and other minimal performance programs are depleting the ranks of aspiring geeks. The question of robotics int he work place becomes moot if there is no on to design and engineer the system.

  15. A couple of thoughts/questions to add. First, our current (U.S.) education system does not teach critical thinking (a few Texas legislators are currently trying to outlaw that) or meta-views or problem solving. There’s a big gap between the skill sets coming out of high school and going into college, and as college gets more expensive (and elite), less kids will be “trained” in or find the environments to promote the curiosity and thinking skills needed to participate in the new economy. This is now, not 2030.

    Second, as 3D printers become more prevalent and flexible with printable materials, and as other new robotics and service-goods come online, that changes the need for other semi-skilled work like shipping, trucking, delivery.

    How do these people fit into “work” as we’ve known it? How does work need to change to address the common needs of society?

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