The Glass Cage: Automation and Us (5 page)

By 1962, President John F. Kennedy could proclaim, during a speech in West Virginia, “We believe that if men have the talent to invent new machines that put men out of work, they have the talent to put those men back to work.”
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From the opening “we believe,” the sentence is ringingly Kennedyesque. The simple words become resonant as they’re repeated:
men
,
talent
,
men
,
work
,
talent
,
men
,
work
. The drum-like rhythm marches forward, giving the stirring conclusion—“back to work”—an air of inevitability. To those listening, Kennedy’s words must have sounded like the end of the story. But they weren’t. They were the end of one chapter, and a new chapter had already begun.

W
ORRIES ABOUT
technological unemployment have been on the rise again, particularly in the United States. The recession of the early 1990s, which saw exalted U.S. companies such as General Motors, IBM, and Boeing fire tens of thousands of workers in massive “restructurings,” prompted fears that new technologies, particularly cheap computers and clever software, were about to wipe out middle-class jobs. In 1994, the sociologists Stanley Aronowitz and William DiFazio published
The Jobless Future
, a book that implicated “labor-displacing technological change” in “the trend toward more low-paid, temporary, benefit-free blue- and white-collar jobs and fewer decent
permanent
factory and office jobs.”
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The following year, Jeremy Rifkin’s unsettling
The End of Work
appeared. The rise of computer automation had inaugurated a “Third Industrial Revolution,” declared Rifkin. “In the years ahead, new, more sophisticated software technologies are going to bring civilization ever closer to a near workerless world.” Society had reached a turning point, he wrote. Computers could “result in massive unemployment and a potential global depression,” but they could also “free us for a life of increasing leisure” if we were willing to rewrite the tenets of contemporary capitalism.
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The two books, and others like them, caused a stir, but once again fears about technology-induced joblessness passed quickly. The resurgence of economic growth through the middle and late 1990s, culminating in the giddy dot-com boom, turned people’s attention away from apocalyptic predictions of mass unemployment.

A decade later, in the wake of the Great Recession of 2008, the anxieties returned, stronger than ever. In mid-2009, the American economy, recovering fitfully from the economic collapse, began to expand again. Corporate profits rebounded. Businesses ratcheted their capital investments up to pre-recession levels. The stock market soared. But hiring refused to bounce back. While it’s not unusual for companies to wait until a recovery is well established before recruiting new workers, this time the hiring lag seemed interminable. Job growth remained unusually tepid, the unemployment rate stubbornly high. Seeking an explanation, and a culprit, people looked to the usual suspect: labor-saving technology.

Late in 2011, two respected MIT researchers, Erik Brynjolfsson and Andrew McAfee, published a short electronic book,
Race against the Machine
, in which they gently chided economists and policy makers for dismissing the possibility that workplace technology was substantially reducing companies’ need for new employees. The “empirical fact” that machines had bolstered employment for centuries “conceals a dirty secret,” they wrote. “There is no economic law that says that everyone, or even most people, automatically benefit from technological progress.” Although Brynjolfsson and McAfee were anything but technophobes—they remained “hugely optimistic” about the ability of computers and robots to boost productivity and improve people’s lives over the long run—they made a strong case that technological unemployment was real, that it had become pervasive, and that it would likely get much worse. Human beings, they warned, were losing the race against the machine.
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Their ebook was like a match thrown onto a dry field. It sparked a vigorous and sometimes caustic debate among economists, a debate that soon drew the attention of journalists. The phrase “technological unemployment,” which had faded from use after the Great Depression, took a new grip on the public mind. At the start of 2013, the TV news program
60 Minutes
ran a segment, called “March of the Machines,” that examined how businesses were using new technologies in place of workers at warehouses, hospitals, law firms, and manufacturing plants. Correspondent Steve Kroft lamented “a massive high-tech industry that’s contributed enormous productivity and wealth to the American economy but surprisingly little in the way of employment.”
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Shortly after the program aired, a team of Associated Press writers published a three-part investigative report on the persistence of high unemployment. Their grim conclusion: jobs are “being obliterated by technology.” Noting that science-fiction writers have long “warned of a future when we would be architects of our own obsolescence, replaced by our machines,” the AP reporters declared that “the future has arrived.”
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They quoted one analyst who predicted that the unemployment rate would reach 75 percent by the century’s end.
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Such forecasts are easy to dismiss. Their alarmist tone echoes the refrain heard time and again since the eighteenth century. Out of every economic downturn rises the specter of a job-munching Frankenstein monster. And then, when the economic cycle emerges from its trough and jobs return, the monster goes back in its cage and the worries subside. This time, though, the economy isn’t behaving as it normally does. Mounting evidence suggests that a troubling new dynamic may be at work. Joining Brynjolfsson and McAfee, several prominent economists have begun questioning their profession’s cherished assumption that technology-fueled productivity gains will bring job and wage growth. They point out that over the last decade U.S. productivity rose at a faster pace than we saw in the preceding thirty years, that corporate profits have hit levels we haven’t seen in half a century, and that business investments in new equipment have been rising sharply. That combination should bring robust employment growth. And yet the total number of jobs in the country has barely budged. Growth and employment are “diverging in advanced countries,” says economist Michael Spence, a Nobel laureate, and technology is the main reason why: “The replacement of routine manual jobs by machines and robots is a powerful, continuing, and perhaps accelerating trend in manufacturing and logistics, while networks of computers are replacing routine white-collar jobs in information processing.”
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Some of the heavy spending on robots and other automation technologies in recent years may reflect temporary economic conditions, particularly the ongoing efforts by politicians and central banks to stimulate growth. Low interest rates and aggressive government tax incentives for capital investment have likely encouraged companies to buy labor-saving equipment and software that they might not otherwise have purchased.
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But deeper and more prolonged trends also seem to be at work. Alan Krueger, the Princeton economist who chaired Barack Obama’s Council of Economic Advisers from 2011 to 2013, points out that even before the recession “the U.S. economy was not creating enough jobs, particularly not enough middle-class jobs, and we were losing manufacturing jobs at an alarming rate.”
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Since then, the picture has only darkened. It might be assumed that, at least when it comes to manufacturing, jobs aren’t disappearing but simply migrating to countries with low wages. That’s not so. The total number of worldwide manufacturing jobs has been falling for years, even in industrial powerhouses like China, while overall manufacturing output has grown sharply.
³¹
Machines are replacing factory workers faster than economic expansion creates new manufacturing positions. As industrial robots become cheaper and more adept, the gap between lost and added jobs will almost certainly widen. Even the news that companies like GE and Apple are bringing some manufacturing work back to the United States is bittersweet. One of the reasons the work is returning is that most of it can be done without human beings. “Factory floors these days are nearly empty of people because software-driven machines are doing most of the work,” reports economics professor Tyler Cowen.
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A company doesn’t have to worry about labor costs if it’s not employing laborers.

The industrial economy—the economy of machines—is a recent phenomenon. It has been around for just two and a half centuries, a tick of history’s second hand. Drawing definitive conclusions about the link between technology and employment from such limited experience was probably rash. The logic of capitalism, when combined with the history of scientific and technological progress, would seem to be a recipe for the eventual removal of labor from the processes of production. Machines, unlike workers, don’t demand a share of the returns on capitalists’ investments. They don’t get sick or expect paid vacations or demand yearly raises. For the capitalist, labor is a problem that progress solves. Far from being irrational, the fear that technology will erode employment is fated to come true “in the very long run,” argues the eminent economic historian Robert Skidelsky: “Sooner or later, we will run out of jobs.”
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How long is the very long run? We don’t know, though Skidelsky warns that it may be “uncomfortably close” for some countries.
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In the near term, the impact of modern technology may be felt more in the distribution of jobs than in the overall employment figures. The mechanization of manual labor during the Industrial Revolution destroyed some good jobs, but it led to the creation of vast new categories of middle-class occupations. As companies expanded to serve bigger and more far-flung markets, they hired squads of supervisors and accountants, designers and marketers. Demand grew for teachers, doctors, lawyers, librarians, pilots, and all sorts of other professionals. The makeup of the job market is never static; it changes in response to technological and social trends. But there’s no guarantee that the changes will always benefit workers or expand the middle class. With computers being programmed to take over white-collar work, many professionals are being forced into lower-paying jobs or made to trade full-time posts for part-time ones.

While most of the jobs lost during the recent recession were in well-paying industries, nearly three-fourths of the jobs created since the recession are in low-paying sectors. Having studied the causes of the “incredibly anemic employment growth” in the United States since 2000, MIT economist David Autor concludes that information technology “has really changed the distribution of occupation,” creating a widening disparity in incomes and wealth. “There is an abundance of work to do in food service and there is an abundance of work in finance, but there are fewer middle-wage, middle-income jobs.”
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As new computer technologies extend automation into even more branches of the economy, we’re likely to see an acceleration of this trend, with a further hollowing of the middle class and a growing loss of jobs among even the highest-paid professionals. “Smart machines may make higher GDP possible,” notes Paul Krugman, another Nobel Prize–winning economist, “but also reduce the demand for people—including smart people. So we could be looking at a society that grows ever richer, but in which all the gains in wealth accrue to whoever owns the robots.”
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The news is not all dire. As the U.S. economy gained steam during the second half of 2013, hiring strengthened in several sectors, including construction and health care, and there were encouraging gains in some higher-paying professions. The demand for workers remains tied to the economic cycle, if not quite so tightly as in the past. The increasing use of computers and software has itself created some very attractive new jobs as well as plenty of entrepreneurial opportunities. By historical standards, though, the number of people employed in computing and related fields remains modest. We can’t all become software programmers or robotics engineers. We can’t all decamp to Silicon Valley and make a killing writing nifty smartphone apps.
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With average wages stagnant and corporate profits continuing to surge, the economy’s bounties seem likely to go on flowing to the lucky few. And JFK’s reassuring words will sound more and more suspect.

Why might this time be different? What exactly has changed that may be severing the old link between new technologies and new jobs? To answer that question we have to look back to that giant robot standing at the gate in Leslie Illingworth’s cartoon—the robot named Automation.