Technological Unemployment: The Past, Future and Possible Solutions

Technological unemployment is the notion that even as innovation creates new opportunities, it destroys old jobs. Automobiles, for example, created entirely new industries (and convenience), but eliminated jobs like train engineers and buggy builders. As the pace of technology change grows faster, the impact of large scale job elimination increases, and some fear we've passed the point of peak jobs. This post explores the past and future of technological unemployment.

Growing up in Brooklyn, my friend Vito's father spent as much time tinkering around his home as he did working. He was just around more than other dads. I found it quite puzzling until Vito explained that his father was a stevedore, or longshoreman, a worker who loaded and unloaded shipping vessels.
New York Shipyard

Shipping containers (specifically intermodal containers) started to be widely used in the late 1960s and early 1970s. They took far less time to load and unload than un-contained cargo. Longshoreman, represented by a strong union, opposed the intermodal containers, until the union came to an agreement that the longshoreman would be compensated for the loss of employment due to the container innovation. So longshoreman worked when ships came in, and received payment (partial or whole I'm not sure) for the time they didn't work because of how quickly the containers could be unloaded.

As a result Vito's father was paid a full salary, even though his job didn't require him full time. The extra time he was able to be with his kids and work around the home.

Other industries have had innovations that led to unemployment, and in most cases, those professions were not so protected. Blacksmiths are few and far between, and they didn't get a stipend. Nor did wagon wheel makers, or train conductors, or cowboys. In fact, if we look at professions of the 1800s, we can see many that are gone today. And through there may have been public outcry at the time, we recognize that times change, and clearly we couldn't protect their jobs forever, even if we wanted to.
Victorian Blacksmiths

However, technology changed slower in the 1800s. It's likely that wagon wheel makers and blacksmiths died out through attribution (less people entering the profession because they saw fewer opportunities while existing, older practitioners retiring or dying) than through mass unemployment.

By comparison, in the 1900s, technology changed fast enough, and with enough disruption, that it routinely put people out of work. Washing machines put laundries out of business. Desktop publishing put typesetters out of work. (Desktop publishing created new jobs, new business, and new opportunities, but for people whose livelihood was typesetting: they were out of luck.) Travel websites put travel agents out of business. Telephone automation put operators out of work. Automated teller machines put many bank tellers out of work (and many more soon), and so on.

This notion that particular kinds of jobs cease to exist is known as technological unemployment. It's been the subject of numerous articles lately. John Maynard Keynes used the term in 1930:
We are being afflicted with a new disease of which some readers may not yet have heard the name, but of which they will hear a great deal in the years to come-namely, technological unemployment. This means unemployment due to our discovery of means of economizing the use of labor outrunning the pace at which we can find new uses for labor.”
In December, Wired ran a feature length article on how robots would take over our jobs. TechCrunch wrote that we've hit peak jobs. Andrew McAfee (of Enterprise 2.0 fame) and Erik Brynjolfsson wrote Race Against The Machine. There is a Google+ community dedicated to discussing the concept and its implications.

There are different ways to respond to technological unemployment.

One approach is to do nothing: let people who lose their jobs retrain on their own to find new jobs. Of course, this causes pain and suffering. It can be hard enough to find a job when you're trained for one, let alone when your skills are obsolete. Meanwhile, poverty destroys individuals, children, and families through long-term financial problems, lack of healthcare, food, shelter, and sufficient material goods. I find this approach objectionable on this reason alone.

A little personal side story: Several years ago a good friend broke his ankle and didn't have health insurance. The resulting medical bills would be difficult to handle under any circumstances, but especially so in the midst of the great recession when their income was low. We helped raised money through donations to the family to help pay for the medical expenses. Friends and strangers chipped in. But what was remarkable is that nearly all the strangers that chipped in were other folks that either didn't have health insurance or had extremely modest incomes. That is, although we made the same plea for help to everyone, except for friends, it was only those people who had been in the same or similar situations who actually donated money -- despite them being the ones who could least afford to do it. I bring this up because I don't think people who have a job and health insurance can really appreciate what it means to not have those things. 

The other reason it doesn't make sense to do nothing is because it can often become a roadblock to meaningful change. One example of this is the logging industry. Despite fairly broad public support to changes in clear-cutting policies, loggers and logging companies often fight back with claims of the number of jobs that will be lost. Whether this is true or not, the job loss argument has stymied attempts to change logging policy to more sustainable practices. So even though we could get to a better long-term place through changes, the short-term fear of job loss can hold us back.

Similar arguments have often been made about military investments. Although this is a more complicated issue (it's not just about jobs, but about overall global policy and positioning), I know particular military families that will consistently vote for the political candidate that supports the biggest military investment because that will preserve their jobs. Again, fear of job loss drives decision making, as opposed to bigger picture concerns.

Longshoremen circa 1912
by Lewis Hine
The longshoreman union agreement is what I'd call a semi-functional response to technological unemployment. Rather than stopping innovation, the compromise allowed innovation to happen while preserving the income of the affected workers. It certainly wasn't a bad thing that Vito's father was around more to help his family.

There are two small problems with this approach: it doesn't scale, and it doesn't enable change. Stevedores were a small number of workers in a big industry, one that was profitable enough to afford to continue to equal pay for reduced work.

I started to think about technological unemployment a few years ago when I published my first book. I was shocked at the amount of manual work it took to transform a manuscript into a finished book: anywhere from 20 to 60 hours for a print book.

As a software developer who is used to repeatable processes, I found the manual work highly objectionable. One of the recent principles of software development is the agile methodology, where change is embraced and expected. If I discover a problem in a web site, I can fix that problem, test the software, and deploy it, in a fully automated way, within minutes. Yet if I found a problem in my manuscript, it was tedious to fix: it required changes in multiple places, handoffs between multiple people and computers and software programs. It would take days of work to fix a single typo, and weeks to do a few hundred changes. What I expected, based on my years of experience in the software industry, was a tool that would automatically transform my manuscript into an ebook, printed book, manuscript format, etcetera.

I envisioned creating a tool to automate this workflow, something that would turn novel manuscripts into print-ready books with a single click. I also realized that such a tool would eliminate hundreds or thousands of jobs: designers who currently do this would be put out of work. Of course it wouldn't be all designers, and it wouldn't be able books. But for many books, the $250 to $1,000 that might currently be paid to a designer would be replaced by $20 for the software or web service to do that same job.

It is progress, and I would love such a tool, and it would undoubtably enable new publishing opportunities. But it has a cost, too.

Designers are intelligent people, and most would find other jobs. A few might eek out an existence creating book themes for the book formatting services,  but that would be a tiny opportunity compared to the earnings before, much the same way iStockPhoto changed the dynamics of photography. In essence, a little piece of the economic pie would be forever destroyed by that particular innovation.

When I thought about this, I realized that this was the story of the technology industry writ large: the innovations that have enabled new businesses, new economic opportunities, more convenience -- they all come of the expense of existing businesses and existing opportunities.

I like looking up and reserving my own flights and I don't want to go backwards and have travel agents again. But neither do I want to live in a society where people can't find meaningful work.

Meet your future boss.
Innovation won't stop, and many of us don't want it to. I think there is a revolution coming in artificial intelligence, and subsequently in robotics, and these will speed up the pace of change, rendering even more jobs obsolete. The technological singularity may bring many wondrous things, but change and job loss is an inevitable part of it.

If we don't want to lose civilization to poverty, and the longshoreman approach isn't scalable, then what do we do?

One thing that's clear is that we can't do it piecemeal: If we must negotiate over every class of work, we'll quickly become overwhelmed. We can't reach one agreement with loggers, another with manufacturing workers, another with construction workers, another with street cleaners, a different one for computer programmers. That sort of approach doesn't work either, and it's not timely enough.

I think one answer is that we provide education and transitional income so that workers can learn new skills. If a logger's job is eliminated, then we should be able to provide a year of income at their current income rate while they are trained in a new career. Either benefit alone doesn't make sense: simply giving someone unemployment benefits to look for a job in a dying career doesn't make a long term change. And we can't send someone to school and expect them to learn something new if we don't take care of their basic needs.

The shortcoming of the longshoreman solution is that the longshoremen were never trained in a new field. The expense of paying them for reduced work was never going to go away, because they were never going to make the move to a new career, so there would always be more of them than needed.

And rather than legislate which jobs receive these kinds of benefits, I think it's easy to determine statistically. The U.S. government has thousands of job classifications: it can track which classifications are losing workers at a statistically significant rate, and automatically grant a "career transition" benefit if a worker loses a job in an affected field.

In effect, we're adjusting the supply and demand of workers to match available opportunities. If logging jobs are decreasing, not only do you have loggers out of work, but you also have loggers competing for a limited number of jobs, in which case wages decrease, and even those workers with jobs are making so little money they soon can't survive.

Even as many workers are struggling to find jobs, I see companies struggling to find workers. Skills don't match needs, so we need to add to people's skills.
Programmers need to eat too,

I use the term education, but I suspect there are a range of ways that retraining can happen besides the traditional education experience: unpaid work internships, virtual learning, and business incubators.

There is currently a big focus on high tech incubators like TechStars because of the significant return on investment in technology companies, but many firms from restaurants to farming to brick and mortar stores would be amenable to incubators. Incubator graduates are nearly twice as likely to stay in business as compared to the average company, so the process clearly works. It just needs to be expanded to new businesses and more geographic areas.

The essential attributes of entrepreneurs are an ability to learn quickly, respond to changing conditions, and big picture thinking. These will be vital skills in the fast-evolving future. It's why, when my school age kids talk about getting 'jobs' when they grow up, I push them towards thinking about starting their own businesses.

Still, I think a broad spectrum retraining program, including a greater move toward entrepreneurship, is just one part of the solution.

I think the other part of the solution is to recognize that even with retraining, there will come a time,
whether in twenty-five or fifty years, when the majority of jobs are performed by machines and computers. (There may be a small subset of jobs humans do because they want to, but eventually all work will become a hobby: something we do because we want to, not because we need to.)

This job will be available
in the future.
The pessimistic view would be bad indeed: 99% of humanity scrambling for any kind of existence at all. I don't believe it will end up like this, but clearly we need a different kind of economic infrastructure for the period when there are no jobs. Rather than wait until the situation is dire, we should start putting that infrastructure in place now.

We need a post-scarcity economic infrastructure. Here's one example:

We have about 650,000 homeless in the United States and foreclosures on millions of homes but about 11% of U.S. houses are empty. Empty! They are creating no value for anyone. Houses are not scarce, and we could reduce both suffering (homeless) and economic strain (foreclosures) by realizing this. We can give these non-scarce resources to people, and free up their money for actually scarce resources, like food and material goods.
Who wins when a home is foreclosed?

To weather the coming wave of joblessness, we need a combination of better redistribution of non-scarce resources as well as a basic living stipend. There are various models of this from Alaska's Permanent Fund to guaranteed basic income. Unlike full fledged socialism, where everyone receives the same income regardless of their work (and can earn neither more or less than this, and by traditional thinking, therefore may have little motivation to work), a stipend or basic income model provides a minimal level of income so that people can live humanely. It does not provide for luxuries: if you want to own a car, or a big screen TV, or eat steak every night, you're still going to have to work.

European Initiative for
Unconditional Basic Income
This can be dramatically less expensive than it might seem. When you realize that housing is often a family's largest expense (consuming more than half of the income of a family at poverty level), and the marginal cost of housing is $0 (see above), and if universal healthcare exists (we can hope the U.S. will eventually reach the 21st century), then providing a basic living stipend is not a lot of additional money.

I think this is the inevitable future we're marching towards. To reiterate:
  1. full income and retraining for jobs eliminated due to technological change
  2. redistribution of unused, non-scarce resources 
  3. eventual move toward a basic living stipend
I think we can fight the future, perhaps delay it by a few years. If we do, we'll cause untold suffering along the way as yet more people edge toward poverty, joblessness, or homelessness.

Or we can embrace the future quickly, and put in place the right structural supports that allow us to move to a post-scarcity economy with less pain.

What do you think?



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