Our Choice: Robots, Jobs and Income Inequality

Lots has been published recently about the future of jobs, the rise of AI (artificial intelligence) and whether robots are coming to replace humans over the next few decades. “Experts” (more on this later) generally fall into two camps on the topic:

  1. The labour market has been through technology shifts before, and this time is no different.
  2. This time is very different — information technology is exponential in nature and soon robots will be able to perform the majority of jobs humans currently have.

Fortunately (or unfortunately) nobody really knows what they are talking about. We are notoriously bad at predicting the future, and even worse at preparing for things we can’t predict. If you need evidence of this, block off some time to go back and read all of the “experts” opinions right before the 2008 financial crash. Here’s a good place to start: http://www.bloombergview.com/articles/2015-03-05/economics-can-t-predict-the-big-things-like-recessions

The world also isn’t binary, neither camp one nor two are going to be 100% right. The real answer falls somewhere in the middle of the spectrum. This post is to explore the various elements of a healthy labour market and offer some humanistic solutions to the problems we currently face.

The Current Labour Market

The US labour market is a tale of two systems. System #1 is the employment/unemployment/underemployment stats machine, which the media covers to give the public an idea of how “healthy” the overall economy is. Unemployment currently sits around 5%, which is impressive considering the size of recession the US went through in 2008/2009. Of course a single number doesn’t tell the entire story. When we start to dig into workers who have chosen to “opt-out” of the labour market, the unemployment rate starts to look much more menacing.

Another way of measuring health of a labour market is by looking at underemployment, or the share of workers who are doing jobs they are overqualified for. Put another way, the utilization of those workers is below an acceptable threshold based on the training/education they have. Underemployment is currently at 14.6%.

System #2 is that millions of jobs can’t be filled by the current supply in the labour market. Even though system #1 shows us that there are plenty of people who either aren’t in the labour force or are underutilized, we can’t seem to connect them with the jobs most in-demand. There are lots of reasons for this, and our company, Sokanu, focuses 100% of its efforts on trying to solve this problem.

So yes, while technology will begin to erode a set of jobs in the future, it’s not as if we’ve reached peak utility in the current labour market. 5M vacant jobs in the US points to an asymmetric, inefficient labour market — one with lots of potential. I believe this gap will exist for the foreseeable future, and with a new education/placement model (more for a later post) we can place millions of people into well-paying, interesting, fulfilling careers.

The Rise Of The Robots

There is no doubt in my mind AI & robots are coming to replace lots of jobs. It doesn’t take much foresight to understand some basic examples. Think of the current vehicular transportation system. It makes no sense why a human being — a person prone to error, tiredness, intoxication, etc… is driving around a metal combustible box at 100mph. If you were an alien from the future you’d be super confused why we hadn’t figured out a way to avoid the 1.3 million road deaths per year.

Luckily robots are on their way to solve this problem (and save lives). In the not-too-distant future, your electric car is going to drive you to work automatically, dropping you off at the front door and finding someplace to park itself. If you choose to activate Uber, it’s going to be useful during the day and act as a self-driving taxi, earning you additional income while you work. Once you’re ready to come home, the car will meet you at the front door, driving you home in a safe manner — no matter your cognitive state. Of course, the car will charge itself at night through your home’s stored solar energy, captured while you were gone at work.

Yes, millions of taxi drivers (and bus drivers) are slowly going to have their jobs replaced. But there is no argument whether this is a net positive or net negative impact — I’ll take saving 1.3 million lives annually, reduced traffic and a lesser need for car ownership any day.

Examples like the above are relatively simple for us to understand, but when AI researchers start projecting that doctors are going to be replaced by robots, people start to get scared. Robots of various sorts are going to have different effects on different industries, most of which we just don’t understand yet. Progress always appears to be slower than expected in the short-term, but much faster than expected over the long-term. Expect the same thing to happen here.

I do believe, however, that there is going to be a net job loss due to the proliferation of robotics & AI throughout the labour market. The size and impact of this loss I believe is mostly controllable, which I’ll speak about below.

Income Inequality

Anyone who’s following US politics has probably heard Bernie Sanders passionately speak about the current status of income inequality in America. The short version is the problem is getting worse, not better. The richest people are getting (much) richer, while the other 99% of people aren’t seeing appreciating capital come their way. There are a number of reasons this is the case. I’m not an economist (and don’t pretend to be) so I’ll just give some high level thoughts around how income inequality may change the dynamics of labour in the future.

Simply put, in the early 1970’s workers stopped earning more money per hour, but companies kept increasing their profits/efficiency of capital. So instead of having a system where compensation mirrors productivity, you have one where companies try and do more with less, maximize efficiency at every turn and outsource as much as they can. What an increased minimum wage does is essentially force the curve of compensation to follow productivity (minimum wage should be around $18 today if we were to follow productivity gains over the last 40 years). It’s not that simple, however, as companies in a free market will tend to go wherever labour is cheapest.

The government is in a bind between regulating minimum wage and allowing companies to allocate capital however they want. It’s clear, however, that the current system is not working for the vast majority (99%) of people and capital is accruing specifically to those already with capital. It’s a vicious cycle that causes deeper issues than what the media tends to talk about.

Morally, income inequality is actually another form of discrimination. It’s a form of discrimination that affects a massive number of people and gets worse over time. Social mobility used to be a unique defining characteristic of America, but increasingly the “American Dream” has become less and less real.

Education is supposed to be the real equalizer when it comes to mobility. But data shows us that parental income is a major factor when it comes to limiting educational achievement with children. With the exception of Khan Academy, education progresses in a linear, one-size-fits-all model. This exacerbates the issues that lack of family income has throughout a child’s student life.

What this leads to is one of the most brutal truths about the American education system — that success is mostly dictated by a factor that is out of a child’s control. Yes, there are examples of exceptional individuals who can break out of the lower quartile of socioeconomic status, but most can’t. How can we not understand the irony that exists when the system that is designed to allow for social mobility is the very thing that is constrained most by income inequality?

Our Choice

I think people sometimes forget that we are the ones in charge. Humans are the ones who create new innovations and make policies that govern new technology. It’s our choice as to how the future is created, and it’s our choice as to how we want that future to affect the seven billion people on this planet.

To that point, I believe we are quickly going to need to make a choice as to what kind of world we want to live in. We need to decide whether we want the future to benefit as many people as possible, or accrue to a few with core psychological needs being taken away from most people.

Our current technological path paints a picture where one day there will be no need for a middle class to work. Any non-creative task will be automated and will not be done by a human. Millions upon millions of middle-class jobs will be wiped out and only two core things will matter to making money — ownership and manipulation of the robots doing the work. How will the majority of people have the income to live? We’ll have to implement some form of guaranteed income model where everyone will receieve a monthly stipend to live on.

That system would allow most people to benefit from better technology and spend their days “leisuring”. People like to say that unlimited leisure for everyone would be a great thing. We could spend our days creating art, gardening and socializing. My (current) opinion on this is while it’s easy to imagine this being true, its effect is actually the opposite. People gain an important thing through work and contribution to society — dignity. Going to work, no matter the role, gives a sense that you are a part of something larger than yourself. Cooking food that people enjoy, maintaining sewage systems that allow us to live cleanly and creating software that allows farmers to yield more from their crops are all examples of how each of us contributes to the larger ecosystem. Our labour market is as much a way to make money as it is for us to collectively build and sustain humanity through subdivision of unique work.

We can choose to utilize, but not maximize, our work with robots. I have no problem with using AI & robotization to eliminate jobs that are dangerous, meaningless or largely redundant. I have no problem creating better, more interesting jobs that can afford people a lifestyle. But I believe we need to do a job balancing our need for automation with the needs of our people. As long as we do a good job of this (how is for another post) we can continue to harness technology to drive the world forward.