FacebookTwitterRedditEmail

Blame the Economic Policies, Not the Robots

The claim that automation is responsible for massive job losses has been made in almost every one of the Democratic debates. In the last debate, technology entrepreneur Andrew Yang told of automation closing stores on Main Street and of self-driving trucks that would shortly displace “3.5 million truckers or the 7 million Americans who work in truck stops, motels, and diners” that serve them. Rep. Tulsi Gabbard (Hawaii) suggested that the “automation revolution” was at “the heart of the fear that is well-founded.”

When Sen. Elizabeth Warren (Mass.) argued that trade was a bigger culprit than automation, the fact-checker at the Associated Press claimed she was “off” and that “economists mostly blame those job losses on automation and robots, not trade deals.”

In fact, such claims about the impact of automation are seriously at odds with the standard data that we economists rely on in our work. And because the data so clearly contradict the narrative, the automation view misrepresents our actual current challenges and distracts from effective solutions.

Output-per-hour, or productivity, is one of those key data points. If a firm applies a technology that increases its output without adding additional workers, its productivity goes up, making it a critical diagnostic in this space.

Contrary to the claim that automation has led to massive job displacement, data from the Bureau of Labor Statistics (BLS) show that productivity is growing at a historically slow pace. Since 2005, it has been increasing at just over a 1 percent annual rate. That compares with a rate of almost 3 percent annually in the decade from 1995 to 2005.

This productivity slowdown has occurred across advanced economies. If the robots are hiding from the people compiling the productivity data at BLS, they are also managing to hide from the statistical agencies in other countries.

Furthermore, the idea that jobs are disappearing is directly contradicted by the fact that we have the lowest unemployment rate in 50 years. The recovery that began in June 2009 is the longest on record. To be clear, many of those jobs are of poor quality, and there are people and places that have been left behind, often where factories have closed. But this, as Warren correctly claimed, was more about trade than technology.

Consider, for example, the “China shock” of the 2000s, when sharply rising imports from countries with much lower-paid labor than ours drove up the U.S. trade deficit by 2.4 percentage points of GDP (almost $520 billion in today’s economy). From 2000 to 2007 (before the Great Recession), the country lost 3.4 million manufacturing jobs, or 20 percent of the total.

Addressing that loss, Susan Houseman, an economist who has done exhaustive, evidence-based analysisdebunking the automation explanation, argues that “intuitively and quite simply, there doesn’t seem to have been a technology shock that could have caused a 20 to 30 percent decline in manufacturing employment in the space of a decade.” What really happened in those years was that policymakers sat by while millions of U.S. factory workers and their communities were exposed to global competition with no plan for transition or adjustment to the shock, decimating parts of Ohio, Michigan and Pennsylvania. That was the fault of the policymakers, not the robots.

Before the China shock, from 1970 to 2000, the number (not the share) of manufacturing jobs held remarkably steady at around 17 million. Conversely, since 2010 and post-China shock, the trade deficit has stabilized and manufacturing has been adding jobs at a modest pace. (Most recently, the trade war has significantly dented the sector and worsened the trade deficit.) Over these periods, productivity, automation and robotics all grew apace.

In other words, automation isn’t the problem. We need to look elsewhere to craft a progressive jobs agenda that focuses on the real needs of working people.

First and foremost, the low unemployment rate — which wouldn’t prevail if the automation story were true — is giving workers at the middle and the bottom a bit more of the bargaining power they require to achieve real wage gains. The median weekly wage has risen at an annual average rate, after adjusting for inflation, of 1.5 percent over the past four years. For workers at the bottom end of the wage ladder (the 10th percentile), it has risen 2.8 percent annually, boosted also by minimum wage increases in many states and cities.

To be clear, these are not outsize wage gains, and they certainly are not sufficient to reverse four decades of wage stagnation and rising inequality. But they are evidence that current technologies are not preventing us from running hotter-for-longer labor markets with the capacity to generate more broadly shared prosperity.

National minimum wage hikes will further boost incomes at the bottom. Stronger labor unions will help ensure that workers get a fairer share of productivity gains. Still, many toiling in low-wage jobs, even with recent gains, will still be hard-pressed to afford child care, health care, college tuition and adequate housing without significant government subsidies.

Contrary to those hawking the automation story, faster productivity growth — by boosting growth and pretax national income — would make it easier to meet these challenges. The problem isn’t and never was automation. Working with better technology to produce more efficiently, not to mention more sustainably, is something we should obviously welcome.

The thing to fear isn’t productivity growth. It’s false narratives and bad economic policy.

This column first appeared in the Washington Post.

bernie-the-sandernistas-cover-344x550
November 18, 2019
Olivia Arigho-Stiles
Protestors Massacred in Post-Coup Bolivia
Ashley Smith
The Eighteenth Brumaire of Macho Camacho: Jeffery R. Webber and Forrest Hylton on the Coup in Bolivia
Robert Fisk
Michael Lynk’s UN Report on Israeli Settlements Speaks the Truth, But the World Refuses to Listen
Ron Jacobs
Stefanik Stands By Her Man and Roger Stone Gets Convicted on All Counts: Impeachment Day Two
John Feffer
The Fall of the Berlin Wall, Shock Therapy and the Rise of Trump
Stephen Cooper
Another Death Penalty Horror: Stark Disparities in Media and Activist Attention
Bill Hatch
A New Silence
Gary Macfarlane
The Future of Wilderness Under Trump: Recreation or Wreckreation?
Laura Flanders
#SayHerName, Impeachment, and a Hawk
Ralph Nader
The Most Impeachable President vs. The Most Hesitant Congress. What Are The Democrats Waiting For?
Robert Koehler
Celebrating Peace: A Work in Progress
Walter Clemens
American Oblivion
Weekend Edition
November 15, 2019
Friday - Sunday
Melvin Goodman
Meet Ukraine: America’s Newest “Strategic Ally”
Rob Urie
Wall Street and the Frankenstein Economy
Jeffrey St. Clair
Roaming Charges: Ukraine in the Membrane
Jonathan Steele
The OPCW and Douma: Chemical Weapons Watchdog Accused of Evidence-Tampering by Its Own Inspectors
Kathleen Wallace
A Gangster for Capitalism: Next Up, Bolivia
Andrew Levine
Get Trump First, But Then…
Thomas Knapp
Trump’s Democratic Critics Want it Both Ways on Biden, Clinton
Ipek S. Burnett
The United States Needs Citizens Like You, Dreamer
Michael Welton
Fundamentalism as Speechlessness
David Rosen
A Century of Prohibition
Nino Pagliccia
Morales: Bolivia Suffers an Assault on the Power of the People
Dave Lindorff
When an Elected Government Falls in South America, as in Bolivia, Look For a US Role
John Grant
Drones, Guns and Abject Heroes in America
Clark T. Scott
Bolivia and the Loud Silence
Manuel García, Jr.
The Truthiest Reality of Global Warming
Ramzy Baroud
A Lesson for the Palestinian Leadership: Real Reasons behind Israel’s Arrest and Release of Labadi, Mi’ri
Charles McKelvey
The USA “Defends” Its Blockade, and Cuba Responds
Louis Proyect
Noel Ignatiev: Remembering a Comrade and a Friend
John W. Whitehead
Casualties of War: Military Veterans Have Become America’s Walking Wounded
Patrick Bond
As Brazil’s ex-President Lula is Set Free and BRICS Leaders Summit, What Lessons From the Workers Party for Fighting Global Neoliberalism?
Alexandra Early
Labor Opponents of Single Payer Don’t  Speak For Low Wage Union Members
Pete Dolack
Resisting Misleading Narratives About Pacifica Radio
Edward Hunt
It’s Still Not Too Late for Rojava
Medea Benjamin - Nicolas J. S. Davies
Why Aren’t Americans Rising up Like the People of Chile and Lebanon?
Nicolas Lalaguna
Voting on the Future of Life on Earth
Jill Richardson
The EPA’s War on Science Continues
Lawrence Davidson
The Problem of Localized Ethics
Richard Hardigan
Europe’s Shameful Treatment of Refugees: Fire in Greek Camp Highlights Appalling Conditions
Judith Deutsch
Permanent War: the Drive to Emasculate
David Swanson
Why War Deaths Increase After Wars
Raouf Halaby
94 Well-Lived Years and the $27 Traffic Fine
Kollibri terre Sonnenblume
Coups-for-Green-Energy Added to Wars-For-Oil
Andrea Flynn
What Breast Cancer Taught Me About Health Care
FacebookTwitterRedditEmail