This very incisive bit of work from the NYT editorial page makes two critical points:
- The data do not support the claim that there’s been an acceleration in labor-replacing technology displacing US workers. To the contrary, measures of capital investment and especially and most persuasively, productivity growth, have slowed, trends that point in the opposite direction.
- The adjustment to technological change (and trade, and every other structural shift) takes place in a policy context that can either help those hurt by the change, or ignore them. US labor policy used to be a lot more helpful.
Re point #1, here’s the relevant figure. If automation were increasingly displacing workers, we’d be seeing more output produced in fewer labor hours, aka, faster productivity growth. But we see the opposite. I know that measurement issues have been raised–the idea that we’re under-counting output related to IT–but if anything, the evidence pushes the other way: we’re now doing a better job of accounting for the productive aspects of new technologies.
Re point #2, the editorial provides a useful, quick sweep through the kinds of labor standards and “guardrails” that have historically been in place to facilitate the adjustment to tech changes:
When automation on the farm resulted in the mass migration of Americans from rural to urban areas in the early decades of the 20th century, agricultural states led the way in instituting universal public high school education to prepare for the future. At the dawn of the modern technological age at the end of World War II, the G.I. Bill turned a generation of veterans into college graduates.
When productivity led to vast profits in America’s auto industry, unions ensured that pay rose accordingly.
Corporate efforts to keep profits high by keeping pay low were countered by a robust federal minimum wage and time-and-a-half for overtime.
Fair taxation of corporations and the wealthy ensured the public a fair share of profits from companies enriched by government investments in science and technology.
Productivity and pay rose in tandem for decades after World War II, until labor and wage protections began to be eroded. Public education has been given short shrift, unions have been weakened, tax overhauls have benefited the rich and basic labor standards have not been updated.
To be clear, none of this denies the ongoing infusion and defusion of digital technologies into our work and our lives. Obviously, you see robots in today’s factories that weren’t there years ago, and productivity is growing, albeit too slowly.
But I think a lot of people miss a really simple, fundamental point about all this: productivity is pretty much always growing. We’re almost always creating and adding new machines that complement the production processes, and no question, there are workers who get displaced in the process. But throughout it all, we’ve had periods of full employment and equitably distributed growth, and periods of slack and inequality.
The questions are thus: is there enough labor demand in the economy to provide those displaced workers with other opportunities, and are the policy measures in place to help them handily find their footing again? In recent decades, the answers to those questions has been a resounding “no.”
FTR, I made all these same points years ago, but if anything, the automation story is getting louder.
People, if you’d just let me rule the world, we wouldn’t have to go through all of this!