Livable Income IN a Livable Economy (Part Two: the Impacts of AI)
The title of this posting reflects my interest in getting language “right.”
Living Wage and Livable Income are not synonymous. The latter includes the former and ensures we are considering those who do not earn wages and rely on pensions and/or government income security programs. A livable economy is one that benefits society as a whole, not just those at the top of the income scale.
One of the biggest threats to a livable economy and the chance for people to have a livable income is technology and in particular Artificial Intelligence.
Artificial Intelligence (AI) is reducing the need for human intelligence and interaction. Systems and processes are fast becoming less reliant on human presence and more dependent on technologies that eliminate human error and/or just make things cheaper to do.
There are those who suggest that the disruptions caused by technologies are dramatically improving:
- health for people; witness how much longer people are living (in the Western world in particular);
- learning and education;
- how we network and communicate;
- convenience as in “Siri, how do you spell, perpendicular?” while offering us more choice (e.g. Skip the Dishes or Uber instead of just taxis);
- the quality of products and services by eliminating human error; and
- the bottom line by reducing labour costs and increasing profits.
We could debate the points above, but let’s assume all of the above is markedly accurate. Perhaps these are primarily positive impact of AI and other technologies, but the question for me has to do with the yin and yang of technological advances and their disruptive nature.
Technology proponents will point to the job creation that techno-firms provide and suggest that those jobs will replace the jobs lost because of technology. Some will admit there will be a structural skills gap in the workforce for a generation or so, but that everything will even out in the long run.
Maybe this evening out will happen over time, but it is hard to imagine that technology firms will be leading the way to structural reform that benefits workers who are being replaced.
Overall, it appears that technology is about the overall reduction of human workers in the market place. Currently much of this displacement is focused on low-skilled jobs, but don’t fool yourself. How long will it take robots to take these jobs:
- Insurance underwriters and claims adjusters
- Bank tellers and representatives
- Financial and marketing analysts
- Inventory managers
- Taxi drivers and truck drivers
- Manufacturing workers
- and more
If you believe technology will benefit you economically, you might be right, but overall the evidence to date indicates things don’t look so rosy down the road. Consider the following US data, based on a report about the impact of digital technologies on productivity and job growth — in the MIT Technology Review.
The chart is a bit difficult to read but basically until 2000, the gap between productivity and employment in the United States has been fairly consistent and representative of a connection between jobs and productivity. Since 2000, productivity has increased while jobs have pretty much remained at 2000 levels. That might be great news for big business, but far less so for workers.
Not only has the job trend not kept up with productivity, we can see a longer trend of significant GDP growth in the United States while household income has remained relatively flat since 1990. This chart indicates more economic achievement for the economy that is not benefitting workers at a corresponding rate, which frankly is one key factor in the significant income inequality that exists in the United States.
Even technology pioneers are expressing concerns about technology’s impacts on jobs. Folks like Dr. Stephen Hawking, Elon Musk and Jaan Tallinn have warned us about the nefarious impacts on the human race. Below is what Bill Gates has to say.
Even so, there are others who can show us data that supports technology as a having positive impacts on jobs and keeping unemployment down. Jim Edwards, Founding editor and editor-in-chief of Business Insider UK, wrote in the Business Insider that the idea that technology is causing unemployment is “garbage.” Here is the chart he uses to prove that point.
The United Kingdom chart above indicates quite something else to me. In all cases cited by red arrows unemployment rose, the only exception being when Google was born. No doubt other factors were going on as well during the rises and the falls of the unemployment rate. That said, the unemployment rate in the UK is higher at the far end of the graph than at the beginning.
By the way, you may have noticed a lack of reference to Canadian sources. Most of what I could find in Canadian sources were more about how the business implications of AI not its impact on workers. If you know of some good Canadian resources that include date, leave me a comment.
Artificial Intelligence has been around since at least the 1950s. For example, we saw how robots disrupted automobile manufacturing long ago, eliminating high paying jobs, but displacement of workers has extended to manufacturing in general.
The impacts on displaced workers was the topic of an extensive survey done by the US Department of Labour in the 1980s. Based on the research , between 1981 and 1983, 5.1 million workers who had been employed in their current position for three years or more were displaced for a variety of reasons, including plant closures, an employer going out of business, or due to layoffs that never called workers back to work (i.e., permanent layoffs). Here is some data to consider:
- Of the 5.1 million workers studied, 3.5 million received unemployment benefits (68%). Nearly 50% of these workers exhausted their benefits, indicating that at the time they ran out of benefits they were still unemployed.
- About 3.1 million of the 5.1 million (61%) were re-employed by January 1984. Approximately 1.3 million were still looking for work (25%) and 700,000 were no longer considered to be in the work force.
- Of the 3.1 million who were re-employed, half of them were earning less than in the previous jobs (1.55 million) and many experienced significant decreases, often up to 20 percent.
While the data above is over 30 years old, it tells us that even before the technological advances we are experiencing today, displacement of workers has not been good for workers overall and for the economy.
Technological advances and their disruptive nature must be part of the livable income and livable economy conversation and include these critical questions:
- How will governments being impacted in terms of tax revenues as more and more workers either have no jobs or are left to assemble work via part-time jobs and other means of making money?
- How will society support displaced workers? By society, I mean all sectors.
- How long will it take for educational institutions to catch up, much less be at the forefront of preparing young people for a new economy where workers are far less important to businesses than technology?
- How will the aging of the population disrupt the economy?
- What are the implications on the job market when more and more workers are becoming, in effect, contractors sans benefits (e.g. Uber, Skip the Dishes, etc.)? Are such work opportunities wealth generators for workers or are they poverty inducing opportunities for workers that benefit the companies?
We are not going to stop technology, but I would like to think we have a chance of influencing its impacts on our economy, especially on workers and society as a whole.
Creating a livable economy is far more complex than focusing on transactions that save us money at the till. In the long run, perhaps buying cheap clothing at Wal-Mart and taking an Uber aren’t all that good for us. Perhaps living into our eighties doesn’t make much sense if our older years are spent in poverty.
This has to be about more than generating economic growth and more profits for business. Focusing only on the benefits of new technologies on health, learning, etc. while ignoring the downside of the technology uprising is contraindicated.
A livable economy has to be about all of living a decent life, doesn’t it?
REFERENCES AND FOR FURTHER READING