Robots Are Taking Americans’ Jobs. What Can Be Done?
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Policy Oct 2, 2017

Robots Are Tak­ing Amer­i­cans’ Jobs. What Can Be Done?

Four con­crete pol­i­cy pro­pos­als to get peo­ple back to work.

Worker and automation with American flag.

Morgan Ramberg

Based on insights from

David A. Besanko

From ware­house robots to dri­ver­less cars, automa­tion con­tin­ues to trans­form mil­lions of Amer­i­can jobs — as well as to fuel the anx­i­ety of an increas­ing­ly pre­car­i­ous work­ing class. A num­ber of politi­cians, includ­ing the Pres­i­dent, have promised to restore jobs by curb­ing invest­ment in new tech­nolo­gies. This atti­tude cer­tain­ly strikes a chord with Rust Belt com­mu­ni­ties that have seen declin­ing indus­try coin­cide with Sil­i­con Val­ley wealth. 

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But David Besanko, the IBM pro­fes­sor of reg­u­la­tion and com­pet­i­tive prac­tice at the Kel­logg School, says halt­ing automa­tion would only harm the nation’s glob­al com­pet­i­tive­ness. Instead of ban­ning dri­ver­less trucks or hit­ting com­pa­nies with a robot” tax, Besanko argues in a new white paper cowrit­ten with Max Mey­ers that the most strate­gic way to pro­tect work­ers is through poli­cies that help them adjust to the new econ­o­my. Such poli­cies should be aimed at offer­ing work­ers bet­ter access to train­ing and equip­ping them to build their own businesses. 

This isn’t a prob­lem that we should leave entire­ly to the pri­vate sec­tor,” Besanko says. The scale is sim­ply too enor­mous — machines might be able to per­form half of all U.S. jobs in the next two decades. 

More­over, the social costs of labor dis­place­ment are sig­nif­i­cant. Long peri­ods of unem­ploy­ment can dev­as­tate com­mu­ni­ties. We’re see­ing that now with the opi­oid cri­sis,” he says. But no sin­gle busi­ness has an incen­tive to take these costs into account when invest­ing in labor-sav­ing tech­nolo­gies. This is why there is a role for gov­ern­ment in help­ing deal with the costs of labor displacement.” 

So what should the gov­ern­ment do to sup­port the adjust­ment to automa­tion? It’s clear that cur­rent gov­ern­ment pro­grams will not be enough to address the chal­lenge. Trade Adjust­ment Assis­tance is fund­ed at 0.1 per­cent of GDP, and even that pal­try invest­ment rarely sup­ports the entre­pre­neurs who are like­ly to dri­ve local economies. 

An effec­tive pol­i­cy needs to take the long view,” Besanko says. We need to pro­vide more rel­e­vant train­ing, but we also need to respect the ties that work­ers have to their fam­i­lies and com­mu­ni­ties. The key is for peo­ple to have access to oppor­tu­ni­ties that don’t require uproot­ing them­selves or tak­ing a huge pay cut as they transition.” 

To make that hap­pen, Besanko and Mey­ers offer four pol­i­cy proposals. 

Bridge the Dig­i­tal Divide

One obvi­ous first step the gov­ern­ment could take: invest in dig­i­tal infrastructure. 

There’s a stark dig­i­tal divide in this coun­try, and there doesn’t need to be,” Besanko says. 

One in five Amer­i­cans lacks Inter­net access. By expand­ing broad­band instal­la­tion and sub­si­diz­ing the ser­vice (per­haps through com­mu­ni­ty block grants), the gov­ern­ment could put more Amer­i­cans on the dig­i­tal grid, giv­ing them access to edu­ca­tion, train­ing, and oth­er resources that would help them fur­ther their careers. 

This is in con­trast to tra­di­tion­al ini­tia­tives, which have focused on com­mu­ni­ty col­leges’ abil­i­ty to give dis­ad­van­taged stu­dents a leg up in the econ­o­my, which is why some politi­cians have favored bol­ster­ing sup­port for such schools. Yet a com­bi­na­tion of broad­band access and dig­i­tal-train­ing pro­grams could yield sim­i­lar results for a frac­tion of the cost. 

There are enor­mous economies of scale in being able to reach mil­lions of work­ers and help them retrain through online cours­es,” Besanko says. But you can’t do that if you don’t have the capac­i­ty. This only works if every­one in the coun­try can get online,” says Besanko. 

Besanko points to Esto­nia as an exam­ple of how trans­for­ma­tive online access can be for a work­force. In 2000, the coun­try declared Inter­net access a basic right and began tak­ing gov­ern­ment edu­ca­tion pro­grams dig­i­tal. The econ­o­my has since trans­formed into a high-tech hub, becom­ing the birth­place of Skype and home to scores of Euro­pean tech companies. 

In addi­tion to lev­el­ing the play­ing field, invest­ing in dig­i­tal infra­struc­ture would also expand the gig econ­o­my” for cer­tain ser­vices such as TaskRab­bit to labor pools beyond major cities, thus reduc­ing the country’s deep­en­ing rur­al-urban divide. 

It’s not hard to see the upside of an invest­ment like this,” Besanko says. Just as it’s a good idea to have uni­ver­sal access to elec­tric­i­ty, it’s a good idea to have uni­ver­sal access to the Internet.” 

Sup­port Appren­tice­ship Pro­grams

The soar­ing cost of edu­ca­tion has long been an obsta­cle for young peo­ple, as well as for any­one want­i­ng to switch careers. What if there was an option beyond a pricey col­lege degree? 

Besanko thinks the gov­ern­ment could do more to sup­port train­ing pro­grams that pre­pare stu­dents for jobs that real­ly exist — or that might soon exist. 

Ger­many has led the way in appren­tice­ship-style pro­grams for decades. By inte­grat­ing train­ing into the edu­ca­tion sys­tem, the coun­try ensures that its young peo­ple are pre­pared for the lat­est trends in the labor market. 

The U.S. has a very dif­fer­ent high­er edu­ca­tion sys­tem, but it could take a sim­i­lar approach, offer­ing under­em­ployed work­ers a less cost­ly option than pur­su­ing advanced degrees — par­tic­u­lar­ly in areas like machine learn­ing, where expo­sure to indus­try appli­ca­tions becomes espe­cial­ly valuable. 

There are already a few exist­ing mod­els. In New Hamp­shire, the Dart­mouth-Hitch­cock hos­pi­tal sys­tem teamed up with the Depart­ment of Labor to offer a free 15-month appren­tice­ship pro­gram that helps train med­ical assis­tants and phar­ma­cy tech­ni­cians, address­ing a short­age of hos­pi­tal staff in an area with an aging pop­u­la­tion. For those par­tic­i­pants, the oth­er option would be to pur­sue a med­ical assis­tant degree that would take two years and cost up to $20,000.

The key is for peo­ple to have access to oppor­tu­ni­ties that don’t require uproot­ing them­selves or tak­ing a huge pay cut as they transition.”

Of course, many com­pa­nies have their own train­ing pro­grams, but most are short-term in nature and require high start­up costs. 

Appren­tice­ships require long-hori­zon think­ing,” Besanko says. Exec­u­tives are often more focused on quar­ter­ly returns, so it’s not clear that firms will offer the right num­ber of pro­grams, or even the right kinds. Yet these pro­grams poten­tial­ly offer huge social benefits.” 

Finance Local Entrepreneurs

Anoth­er solu­tion is for the gov­ern­ment to offer young peo­ple the tools and cap­i­tal they need to start their own businesses. 

Financ­ing local entre­pre­neurs would help peo­ple build busi­ness­es in their own com­mu­ni­ties with­out hav­ing to relo­cate and sev­er impor­tant social ties. North Carolina’s Insti­tute for Rur­al Entre­pre­neur­ship offers one mod­el for how such financ­ing might work. In addi­tion to offer­ing small loans, its pro­grams pro­vide one-on-one coach­ing, help in devel­op­ing busi­ness plans, and schol­ar­ships for busi­ness or voca­tion­al training. 

You need more than grant fund­ing in order to make this work,” Besanko says. You need upscal­ing as well. That’s what can real­ly open the door for peo­ple to fol­low their dreams, to cre­ate sus­tain­able busi­ness­es, and to do it in their own com­mu­ni­ties. Peo­ple are often more sat­is­fied when they can find a way to work for them­selves and don’t have to leave their com­mu­ni­ties to do it.” 

Offer Wage Insurance

One of the most dif­fi­cult chal­lenges for these poli­cies, how­ev­er, is ensur­ing that peo­ple will want to take advan­tage of them. 

We think the most effec­tive pol­i­cy is to offer wage insur­ance to encour­age train­ing and job seek­ing,” says Besanko. 

This would mean that the gov­ern­ment put pro­grams in place to encour­age those work­ers to retrain for busi­ness­es that are ready to hire. If the job ini­tial­ly pays less, gov­ern­ment-spon­sored wage insur­ance can help those work­ers man­age the tran­si­tion. This way, more work­ers will be will­ing to take a short-term pay cut while receiv­ing on-the-job training. 

By incen­tiviz­ing work, wage insur­ance also guar­an­tees that peo­ple main­tain the sense of pur­pose derived from their job. A sim­i­lar pol­i­cy could even be extend­ed to vol­un­teerism — some­one in their late 50s, for exam­ple, might be encour­aged to serve as a men­tor to high school students. 

It’s no secret that peo­ple derive a sense of dig­ni­ty from their work,” Besanko says. What we need are poli­cies that pro­tect and restore that dignity.” 

An Afford­able Solution

Besanko and Mey­ers esti­mate that the total cost of these pro­grams would be $25 bil­lion — not an insignif­i­cant num­ber, but one that would still rep­re­sent less than one per­cent of U.S. fed­er­al gov­ern­ment out­lays in 2017. Besanko sug­gests there are plen­ty of ways the gov­ern­ment could raise this mon­ey — for exam­ple, by intro­duc­ing a finan­cial trans­ac­tion tax or a tax on wealth of high-net-worth households. 

When you con­sid­er the scale of the prob­lem and the social cost of unem­ploy­ment, these are very afford­able pro­grams,” Besanko says. 

Tech­nol­o­gy will con­tin­ue to advance, and the gov­ern­ment needs to come up with solu­tions that are con­sis­tent both with the prin­ci­ples of good strat­e­gy and America’s cul­tur­al DNA. This is a coun­try that val­ues strong ties to local com­mu­ni­ties and empha­sizes the impor­tance of build­ing small busi­ness­es. Our poli­cies should hon­or that.” 

About the Writer

Drew Calvert is a freelance writer based in Houston, Texas.

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