The future of jobs is that there won’t be any

This year, a report on the Future of Jobs was delivered to Congress showing that if you make less than $20 an hour, the odds that you will lose your job to a machine are 83%. If you’re making $40 an hour, your odds are 31%. There is already a consensus that computers will create a massive “labor displacement” that will put millions of Americans out of work. This is nothing new —technology has been taking jobs for decades.

  1. Auto manufacturers use machines (and not human beings) to build cars and trucks
  2. Warehouses are staffed by robots that move goods around
  3. ATMs replaced thousands of bank teller jobs
  4. Personal computers replaced secretaries
  5. Self-checkout kiosks replaced grocery store clerks
  6. Machines replaced women in the garment industry who previously made each shirt/dress/pair of pants/blanket/curtains by hand
  7. Telemedicine is replacing doctors, nurses, and physician assistants
  8. TurboTax replaced thousands of accountants with small businesses

I could go on, there are many examples to choose from. There is a ‘smart machine’ for call centers that speaks more than 20 languages and constantly improves — it’s estimated that it will lead to the loss 250 million jobs worldwide by 2030. Jobs that are all currently held by human beings with bills to pay.

And no profession is immune. In fact, check out these the front page of a Palo Alto newspaper from the last month -

Robots making pizza? Anyone working at a pizza chain should be worried. Robots fighting parking tickets? Small time lawyers in big cities should be worried about this valuable source of income coming to an end.

But again, this is nothing new. American jobs have been taken by computers for the last 20 years and this shedding of jobs is a well known phenomenon. The report linked above is one of a long, long list of white papers and discussions over the last decade with US business leaders, politicians, academics and engineers.

Other countries around the world are also aware of this trend. Discussions on job creation, skill, education, and income are of the highest priority. There are so many questions that need to be answered, the most important one being -

How can people make money when almost all the jobs are eliminated?

Let me assure you, it would be naive to think that all the jobs replaced by computers will be somehow mitigated by adding new jobs, or that these hypothetical new jobs will be held exclusively by human beings.

In the 2016 US elections, there has been much discussion on immigration and the role that illegal immigrants play in job loss. There are an estimated 11 million illegal immigrants in America today — a large number (although it has declined steadily since 2006). Illegal immigrants that, like citizens, require jobs. Illegal immigrants make up about 5.1% of the US labor force (phrased another way, illegal immigrants occupy about 6.3 million jobs that could have gone to US citizens).

The second scourge of immigration, outsourcing of jobs to other countries, has also impacted American citizens. 3.2 million jobs were outsourced to China alone since 2001 and there were more than $25 billion dollars in lost wages in 2015 due to outsourcing.

$25 billion dollars is a lot of money to lose, for a country that has struggled with a recession and whose forward looking prospects for job creation look a uncertain. But if it’s such a problem, why does the number of jobs outsourced keep going up?

To quote Tom Cruise,

“What is the answer to 99 out of 100 questions? Money.”

American businesses know that cutting labor costs is the best way to get toward profit. To this end, having a staff that work for less is the best outcome a business can hope for. Immigrants in the US are a huge workforce that typically will endure long hours and grueling tasks for a smaller wage. Shipping jobs abroad (outsourcing) allows corporations to pay even lower wages and provide less benefits. A non-American worker often is a way for the business to save on costs, and make itself more profitable.

But imagine a situation where the same business could hire an employee who does the work of 100 people, never sleeps, doesn’t need benefits, doesn’t commit HR infractions, doesn’t get sick or have children, doesn’t need to be paid, and can speak any language?

It’s nearly irresistible. Replacing a human being with a computer is an easy decision, at least, financially.

After losing their job, most people will find another. But when entire industries have no jobs, or very few jobs, then getting another one becomes impossible for millions of Americans. Today, the underemployed turn to either selling themselves or their possessions (handyman activities, hourly wage labor, or in the less ideal case, pimping, drug dealing, or petty criminal acts that provide an income like breaking into cars and stealing stereos). Or the jobless will scrape by via welfare subsidies, when those are available.

As automation and technological advances lead to huge job losses around the world, there will be more family instability and more poverty. When there is more instability and more poverty, there will also be more crime. Tax rates won’t make a difference. Elected officials won’t make a difference. Education won’t make a difference. It is, according to academics, engineers, politicians, inevitable. And the magnitude of who will be affected cannot be understated:

This year, a report was delivered to Congress showing that if you make less than $20 an hour, the odds you will lose your job to a machine are 83%.

An estimated 51% of Americans make less than $20 an hour in our current workforce of 123.55 million people. If we calculate job losses only using the number of people who currently have a job, which is fairly conservative, we’d have potential job losses for more than 50 million people.

If you’re making $40 an hour or more, your odds are 31%…

Roughly 88% of Americans make less than $85,000 a year, or $40.87 an hour. That means 88% of Americans have a risk of losing their jobs that falls somewhere between 31–83%, on a graduated scale. Predicting the likelihood of job loss for every wage bracket with accuracy is impossible, of course, because we don’t know which industries will shed jobs first, or what industries will have job growth as a result of automation.

Statistically, there’s always a segment of long term unemployed and periodically unemployed people. Over the decades, it has ranged from a low 2.9% in 1953 to 10.4% in 1983. If we assume that unemployment returns to its lowest rate, and I would argue there’s no reason whatsoever for us to do that but we will anyway for the purposes of being conservative with our estimates, then the number of unemployed could be another 5.9 million people.

So, out of a a total potential workforce of 203 million, a conservative estimate of the unemployed would be 58.2 million. 29% of the workforce. Of course, that doesn’t include the number of people who:

  • Have left the workforce, the “longterm unemployed” who have given up on finding a job (estimated to be about 1.9 million right now)
  • Disabled folks who are “working age” but are on social security (an estimated 9 million people)
  • Retirees, which are in the millions (approximately 39.5 million as of March 2015)

If we use these numbers to calculate who would need to be on some form of public support (social security, unemployment, or some other wage replacement) we’d have over 100 million people. This is based on 2015 numbers, which aren’t accurate because it’s already accepted fact that the number of people on Social Security will one day surpass the number of able-bodied workers — as early as 2030.

What that estimate also doesn’t take into account is if the number of jobs and therefore workers is dramatically reduced and the number of retirees goes up concurrently.

120 million people not working out of a total population of 320 million is pretty significant.

If you’ve read this far I believe you’ll agree that the situation is worrisome. So why are all the political candidates rambling on about bringing back jobs, or blaming immigrants for the lack of jobs? If an immigrant takes 1 out of 20 jobs, but computers will take 10 out of 20, or even 17 out of 20, isn’t that a bigger problem? If it’s inevitable that this change will happen, shouldn’t we prepare? And if the estimates (conservative estimates!) anticipate this change occurring within the next 5–10 years, shouldn’t that conversation be a priority for the American people and its leadership?