In 2009 Google began road-testing one of their latest far-reaching projects: self-driving cars. In the years since, the company has demonstrated that computers can replace humans on the road. After driving 1.3 million miles, their computers have only caused one minor accident. Visible technological breakthroughs such as this have rekindled old fears about smart machines leaving humans without work. A central fear is that the next wave of more efficient, less expensive, and more compliant machines might make human capabilities obsolete. Derek Thompson writes, “What may be looming is something different: an era of technological unemployment, in which computer scientists and software engineers essentially invent us out of work, and the total number of jobs declines steadily and permanently.”
Fears of this kind are not new. While the consumers who benefit from a technological advance may be diffuse, the workers who lose their jobs are often concentrated and visible. As a result, it is far easier to count the costs than the benefits, even if the benefits far outweigh the costs. Sometimes dismissed as the “Luddite fallacy,” these fears echo those of the original Luddites: nineteenth-century textile workers who feared the introduction of new mechanical looms. Following their example, each new wave of technology produces earnest prophets of the demise of human labour. And yet, contrary to these fears, even in the midst of extraordinary technological progress, the total amount of work available for people has continued to increase. The Luddites, old and new, have been consistently wrong.
For example, consider a recent study of 140 years of census data from England and Wales. When technological advancement diminished employment opportunities in agriculture and manufacturing, this freed up resources for growth in services. The declining prices of manufactured goods and food items and increasing worker productivity increased disposable income, creating growing demand for services that were deemed luxuries to previous generations. The result is more accountants, more bartenders, and more hairdressers per one thousand people, precisely because the population is now wealthy enough to afford their services.
Inequality, Unemployment, and Skill Depreciation
A close examination of the labour-economics literature reveals that technological advances are unlikely to create a mass of unemployed workers. Technological change can have severe consequences in the labour market, however, by increasing inequality and uncertainty. As a whole, we are all beneficiaries of technology, but economists have documented a broad pattern of skill-biased technological change, in which new technologies complement the work of highly skilled labour but replace the work of low-skilled and middle-skilled labour. The result is increased wage inequality and higher returns on investments in education.
If technological change consistently increases the value of particular skills and education, then the education system becomes an increasingly important part of the economy. Economists Claudia Goldin and Lawrence Katz document in their seminal volume, The Race Between Education and Technology, that education in the United States continually improved until only the 1970s and 1980s, after which educational success started to diverge, with the most well-prepared students moving into college and graduate school, while many others in their cohorts failed to graduate from high school. The first broad concern is this: that technological progress will result in ever-rising inequality. Low-skilled and middle-skilled workers become less valuable to firms that can employ machines to do much of their work, while the best-educated students reap the most rewards.
In addition, some fear that improving technology will bring more uncertainty in the labour market. Rapid technological change can disrupt career plans and require that workers constantly learn, adapt, and change occupations. Moreover, firms will be less likely to invest in the long-term future of workers whose skills may become obsolete when technology in their industry shifts. If workers are not able to adapt, or are unwilling to accept decreases in pay, they may opt to leave the labour market entirely.
This concern is consistent with another labour-force trend: the fraction of people who show up for work each day is declining. Labour-force participation has grown steadily among women but declined for adult males consistently since the early 1970s. Men are leaving the labour force at younger ages, and long-term unemployment rates have slowly increased. Moreover, skill-depreciation, and hence structural unemployment, seems to be occurring even for those with some advanced education.
While there is no good historical precedent for machines replacing workers and leaving them permanently idle, there are historical examples of technological change resulting in decreased living standards for the bottom of the income distribution and gains for the top, with more instability across the market. This was often the result in early phases of industrialization and has likely been going on in the US economy over the last forty years.
For every Luddite who fears a new era of technologically induced poverty, there is usually a technology optimist who foresees a bright future in which humans rest in a life of leisure while machines toil to meet our every desire. Indeed, there is reason for some optimism. Since technological advances increase productivity, there is usually more wealth to go around. Moreover, when workers move toward more leisure throughout the economy, it is usually a result of wealth, not poverty.
Over the last two hundred years, as standards of living have increased, people have delayed full-time entry into the labour force, moved to retire before health requires it, and decreased total hours worked. Some have even argued that, in our status-driven economy, people work more than is good for them, and that we should tax labour heavily to encourage people to move toward more leisure. In this view, work is an unpleasant but necessary evil, and people only work in order to be able to afford goods and services to consume in leisure. This implies that any reduction in work, if it does not result in poverty, will leave people better off.
The optimists and pessimists both see the same future: less work. But their descriptions of the future look radically different. Optimists, on the one hand, tend to imagine a future in which the gains from technological advances are widely shared, so that even those with little to offer in the labour market will still live a rich life of leisure. Pessimists, on the other hand, imagine a world in which a small segment of the workforce reaps most of the gains from technological advancement while others are left in poverty.
Which future is the most likely? History gives us examples of each. In the US economy, the gains from technology have been widely shared when we were able to equip the general population with the skills to take advantage of the new technologies. Replicating that success will be difficult.
An Abundance of Good Work
If we envision work as merely toil—something unpleasant that we engage in only because it allows us to purchase the goods we need—then a future with less work can seem appealing. More time outside of formal labour, it might seem, could free people up for those things that really matter: more creative endeavours and more investments in their families and community. But while a utopian vision of life that involves wealth without work is alluring, ultimately it is dishonest.
There are two problems with this negative view of work. First, it contains an unhealthy vision of the labour market. It rests on a reductionist view of labour that sees work as only a means to a material end. Moreover, too often, it pushes toward an equally reductionist view of humanity. If the highest end that humans can aspire to is leisure and consumption, then work must be viewed in a negative light.
In fact, humans find their highest end not in consumption but in creative service to those around them. Work, therefore, is best envisioned as a vocation that is worth a significant investment. It is true that not all jobs clearly contribute to the common good, nor are all jobs personally fulfilling. In their daily work, however, people often gain much of their self-regard and establish their place in a community. People may, in fact, have the opportunity to do more good for their community in the workplace than they do outside it.
The second problem with this negative vision of work is that it assumes nonwork activities tend to be ennobling. While less time in the formal labour market can free people up to be a blessing to their families and communities, this is often not the case. On the contrary, much of our free time is clearly wasted. The average person in the United States spends over half of their leisure time watching television. Moreover, while work time is often other-oriented, providing goods and services to other people, our leisure time can become overly self-oriented. We might imagine that if we did not work we would be more involved in our communities, but those who are unemployed or not in the labour force, on average, spend less time volunteering than those who are employed.
In fact, leisure is not our best path toward progress. Many of the biggest challenges we face today are not the kind of problems that can be solved by leaving formal work. If employment increasingly requires specialization, so too does public service. A brief survey of the many challenges facing us—poverty, environmental degradation, social isolation, and loneliness—indicates that there is much good work left to be done. If technology leaves people without jobs, it is not because there is no good work for them to do. If work is service to those around us, then a world without work is impossible.
Moreover, leisure will not result in progress. The social and political challenges facing us justify extended, specialized focus: the kind of focus that usually comes only in the world of formal employment. Technological advances that make our skills obsolete in the formal workplace can make service to our communities similarly difficult. However, the labour market builds communities and networks of people with specialized skills in ways that other areas of life rarely do, and so work often provides people with the best opportunity to tangibly serve people around them. A loss of work, then, would leave us ill-prepared to engage in true service to our community. Our true challenge is not to avoid work but to figure out how to do the most good possible as we participate in commercial life.
This high view of human labour does not diminish worries about the effects of technology. On the contrary, it raises the stakes. The prospect of technological change making a person’s skills obsolete is a real one. In this view, the greatest tragedy of a modern technological age is not the prospect of poverty; it is the prospect that a large portion of our population could be left without a clear opportunity to serve those around them. The challenge, then, is to build an economy in which people are equipped to do good work and then have the opportunity to do work that is genuinely good.
It is tempting, in the face of technologically induced wealth and inequality, to turn to public redistribution to allow all to share the gains. If progress is measured in terms of only material gains, and if work is only an unpleasant toil, then this approach would make sense. But if productive labour is a central part of how we flourish as human beings, then a generous public safety net only solves half of the problem. The state might be able to keep people from material deprivation, but social insurance cannot create opportunities for people to invest their skills in the lives of those nearby. Such opportunities are best found in the family, private commercial activity, religious vocations, and civic life. While paid work cannot substitute for the kind of investment that happens in the family or the church, it has a similarly central role in a community that is hard to replace, and must flourish on its own terms.
If the spectre of technological obsolescence cannot be eliminated by state redistribution, what role can public policy play in shaping a healthy labour market? At least two opportunities remain. First, the government can play an important role in investing in the skills and capabilities of citizens. Education is becoming more important as technological progress accelerates, even if schools are not able to predict and directly teach technology-specific skills. A broad liberal education can give workers the foundation necessary to move to new careers when technologies shift the labour market.
Unfortunately, uncertainty about jobs tends to push schools and parents toward specific vocational training programs. Moving in that direction, however, does students a disservice. Too often such programs prepare students for a job that may be obsolete in a decade, while neglecting the skills that could prepare them to adapt when those career opportunities end. It may well be that a future of rapid technological change will have to be one in which formal education becomes a lifelong endeavour, one that we can prepare for by building broad skills early in life.
Another positive role the state can play is to enable and support a set of institutions, laws, and policies that shield individuals from the pain of creative destruction, even as products and firms are forced to compete. A comprehensive social safety net can minimize the downside risk that people face in an uncertain economy. Instead of trying to shield firms or industries from pressures to innovate, the government should invest in aiding worker transitions and ensuring that temporary unemployment does not result in dire poverty. This could take the form of investments in midcareer education, the separation of health benefits from employment, the provision of unemployment insurance, or making it easier to start a small business. Such measures would keep the proper goal front and centre: keeping people engaged in creative and productive enterprises that serve the common good. This goal should never be confused with the false corollary that is “protecting local businesses.”
With rapid technological progress comes the prospect of economic changes that eliminate whole ways of life. The agricultural work that once defined American culture is now, because of technological change, a specialized calling for a small fraction of the population. Manufacturing industries have seen similar disruption, as automation replaces careers with computers. We should not minimize the tragedy that is Youngstown, Ohio, or Flint, Michigan. The loss of stable employment because of economic changes has real casualties, and can be measured in lives, vocations, and communities.
This concern should not be a reason to fear a wholesale replacement of people with machines, however. The best evidence about technological progress points not to mass unemployment but to more frequent skill depreciation and career disruption. Instead of trying to protect a way of life that assumed a particular kind of career—a forty-year tenure with a large, stable firm—we should renew our commitment to good and productive work in the new environment. We can focus on making work transitions easier, so that technological disruptions are less likely to cause permanent inequality, and craft institutions and policies that absorb some of the risk people will face without halting competition and innovation.