Job Quality is about Policies, not Technology


Nouriel Roubini posted an article titled "Where Will All the Workers Go?". A few pulls:

"The risk is that robotics and automation will displace workers in blue-collar manufacturing jobs before the dust of the Third Industrial Revolution settles."

"But, unless the proper policies to nurture job growth are put in place, it remains uncertain whether demand for labor will continue to grow as technology marches forward."

"Even that may not be sufficient, in which case it will become necessary to provide permanent income support to those whose jobs are displaced by software and machines."

The worry here is that technology will replace certain jobs (particularly goods-producing jobs) and that there will literally be nothing for those people to do. They will presumably exit the labor market completely and possibly need permanent income support.

Let's quickly deal with the "lump of labor" fallacy sitting behind this. Technology reduces the demand for labor in some industries, so fewer workers are employed there. Which raises the supply of labor in all the other industries. For that supply shock to generate no other employment you have to assume that the $15 trillion dollar a year U.S. economy is so rigidly inflexible that it has a definitely fixed set of jobs that can be filled. That's ridiculous.

To a rough approximation, just about the exact same number of people work in goods-producing industries in 2013 (19 million) as did in 1950 (17 million). And yet somehow the rest of us have figured out what to do with ourselves in the interim. Between 1950 and 2013 the U.S. economy expanded from 28 million service jobs to 117 million service jobs (All stats from the BLS). You think that somehow it won't be able to figure out what to do with more workers that are displaced by technology? We've been creating new kinds of jobs for two hundred years.

So let's ignore the phantom worry that tens of millions workers suddenly find themselves completely at a loss to find work. The economy is going to find something for these people to do. The question is what kind of jobs these will be.

Will they be "bad jobs"? McJobs at retail outlets, wearing a nametag? These aren't "good jobs", real jobs. Making "stuff" is a real job, not some made-up bullshit service job.

We can worry about the quality of jobs, but the mistake here is to confound "good jobs" with manufacturing or goods-producing jobs. Manufacturing jobs are not inherently "good jobs". There is nothing magic about repetitively assembling parts together. You think the people at Foxconn have good jobs? There is no greater dignity to manufacturing than to providing a service. Cops produce no goods. Nurses produce no goods. Teachers produce no goods.

Manufacturing jobs were historically "good jobs" because they came with benefits that were not found in other industries. Those benefits - job security, health care, regular raises - have nothing to do with the dignity of "real work" and lots to do with manufacturing being an industry that is conducive to unionization. The same scale economies that make gigantic factories productive also make them relatively easy places to organize. They have lots of workers collected in a single place, with definitive safety issues to address, and an ownership that can be hurt deeply by shutting down the cash flow they need to pay off debt. To beat home the point, consider that what we consider "good" service jobs - teacher, cop - are also heavily unionized. Public employees, no less.

If you want people to get "good jobs" - particularly those displaced by technology - then work to reverse the loss of labor's negotiating power relative to ownership. Raise minimum wages. Alleviate the difficulty in unionizing service workers.

You want to smooth the transition for people who are displaced, and help them move into new industries? Great. Let's have a discussion about our optimal level of social insurance and support for training and education. But the sectors people leave or eventually enter are irrelevant to that.

You want to worry about downward wage pressure as the demand for labor falls? Great. Worry about that. See the above point about raising labor's negotiating power relative to ownership.

Hoping or trying to recreate the employment structure of 1950 is stupid. We don't need that many people to assemble stuff together any more because we are so freaking good at it now. The expansion of service employment isn't some kind of historical mistake we need to reverse.

Any job can be a "good job" if the worker and employer can coordinate on a good equilibrium. Costco coordinates on a high-wage, high-benefit, high-effort, low-turnover equilibrium. Sam's Club coordinates on a low-wage, low-benefit, low-effort, high-turnover equilibrium. Both companies make money, but one provides better jobs than the other. So as technology continues to displace workers, think about how to get *all* companies to coordinate on the "good" equilibrium rather than pining for lost days of manly steelworkers or making the silly presumption that we will literally run out of things to do.

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