We Will NOT Run Out of Jobs

This seems like a strange headline given that the economy has recently shed almost 40 million jobs. But at some point with the development of a vaccine or an effective treatment, the economy will come back to normal.

And when it does, so too will opposition to automation, at a time when we will need productivity more than ever to shrink the now massive debt-to-GDP ratio. We can be sure the conversation will be reminiscent of an early 1960s Twilight Zone episode in which a manager replaces all his firm’s workers with robots, only to find himself replaced by a robot.

Oxford University economist Daniel Susskind writes that we will soon be in “A World Without Work.” Tech pundit Vivek Whadwa warns that we need a “never version of capitalism to cope with a jobless future.” No surprise, that version comes with the latest version of universal basic income (UBI); the new opiate of the unemployed masses. And Bill de Blasio, the mayor of New York City and a candidate for the 2020 Democratic Presidential nomination, would go even further, calling with UBI, but raising with both a robot tax and a Federal Automation and Worker Protection Agency that give companies permissions to use any technology that would displace workers. His plan would “wouldn’t accept a post-work future.” In their view, we will run out of work because consumption will not be able to keep up with production.

While the technophobes and neo-luddites warn of a jobless world where the only way the precariat can survive is on the dole – oh, sorry, on UBI – another branch of progressives oppose automation for a different reason: we should be poor to protect the planet. Environmentalist Duane Elgin sums up the view when he writes “Even with major technological innovations in energy and transportation, it will be crucial that people embrace simplicity as a foundation for sustainability and change our overall levels and patterns of living and consuming.”

All this matters, because without policies and public attitudes that are at least neutral towards automation, if not supportive, the U.S. economy will grow more slowly, with the consequent impacts on living standards and competitiveness.

We should reject these claims, because we will never run out of jobs and that rapid automation is likely the best thing for the planet.

We won’t run out of jobs because we won’t run out of human needs. The neo-Luddites who oppose automation succumb to what economists call the “lump of labor” fallacy; the idea that once a job is gone it is gone for good. But automation lowers costs and those savings generate higher incomes through lower prices or higher wages.

And even if Americans earned significantly more than the current $60,000 median annual household income, they wouldn’t run out of things to spend money on. Let’s fantasize that by some miracle automation increases labor productivity growth by 5.5 percent a year for the next 20 years (its current rate is around 1.2 percent). That would mean that in two decades median household income would triple to around $180,000 per year.

People, as individuals and through their governments, would find it a piece of cake to spend that money. Most Americans think twice about spending money on things other than necessities. But if incomes tripled, people would buy things that are now for many a financial stretch: a newer and safer car; more healthy food; a gym membership, possibly with personal trainer sessions; a new fishing boat, a 4K TV, a remodeled basement, a hot tub, etc. More people would be able to afford higher quality items, from clothing to appliances to electronics. And more people could afford good health care, better housing, increased retirement savings, generous paid leave for new parents, more and better education for their children and a host of other key needs. And there is no shortage of collective needs: lowering class size and paying teachers more, expanding social work resources for struggling families, fixing crumbling infrastructure and closing the digital divide, increasing foreign aid, boosting funding for scientific research, and as we now know all too well boosting spending on public health.

But what about the planet; can we afford all this consumption? As ITIF has long argued, the only way to halt and reverse climate change is with zero-emission technologies. Full stop. And the wealthier we are, the more likely the government will invest in the research, development and demonstration needed to get these technologies cheaper and better than dirty technologies.

None of this is to say that government should not do more to help workers make labor market transitions: we should. The U.S. system is frankly, bad. But opposing automation is the path to stagnation.