NewCo Shift Forum 2018

Fix Work Now, Or We All Die Tomorrow

A spirited conversation on the future of work debates the best policies for a world in significant transition.

NewCo
NewCo
Apr 17, 2018 · 18 min read
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Left to right: Tim O’Reilly, Laura Tyson, Nick Hanauer and Alexandra Suich Bass.

There are many “future of work” panels, but none that have featured wealthy capitalist turned activist Nick Hanauer, author, entrepreneur and tech leader Tim O’Reilly, and policy expert and economics professor Laura Tyson. Moderated by Alexandra Suich Bass, U.S. technology editor, The Economist, this panel debates everything from universal basic income to the role of unions in modern corporations. Not to be missed. Full video and edited transcript below.

Alexandra Suich Bass: I would like to start our panel on the Future of Work in an unconventional place. Talking about the future of work can sometimes feel like watching the most depressing movie imaginable in slow motion. I’d like to ask you guys to give me some positive news. What’s something that we can be excited about as it relates to work in the future? Nick, I’ll start with you.

Nick Hanauer: The prospects can be very, very bright. To contextualize the challenge, I don’t think we have to be afraid of automation. We’ve had automation in human societies since the first person tied a stick to a stone.

Automation has been improving lives since then, and I don’t think we have to worry about capitalism either. Capitalism is a social technology that enables people to come together and solve one another’s problems.

Our challenge is neo-liberalism, which is the ideology that concentrates the benefits of how people work and socializes the costs of those arrangements. That’s completely unnecessary. The combination of technological innovation and automation with capitalism has the power to make everybody’s lives better, to take out routinized tasks and dangerous tasks from work and make the entire world a better place.

ASB: Definitely my first panel where neo-liberalism has come up in the first 30 seconds. Laura?

Laura Tyson: I would say that, yes, technologies can make a job safer. They can make them cleaner. They can complement human skills in very interesting ways. If you think about the role of technology in education, the role of technology in training, the role of technology increasingly in healthcare, and even to the point of basically taking care of the elderly.

Those are all very positive things. I do have less of a sanguine view than Nick does about the influence of this round of technology. I don’t think it’s the same as the stick and the stone.

We’ve seen already in the past 30 years — we know that automation is labor-saving, and we know that it actually does create polarization. It does complement the skills and the jobs of people at the top. It does take out the jobs of people in the middle and increasingly people at the bottom.

That’s real. Societies have to think about what are the jobs of the future going to look like? What kind of wages will they pay? What kind of wage and income inequality may result from that?

Yes, the technology has the possibility of making us better off in many, many ways. But it does pose that risk. Most people in the world work for their income, and their income matters to their lives. If you think that the incomes of many workers are going to be disrupted and maybe reduced because of the technology, then that is a social challenge, a policy challenge.

ASB: Tim, what are the jobs of the future?

Tim O’Reilly: For me, the fundamental question is not jobs. It’s work. The question I ask anyone in this audience, is there work to be done that we’re not getting to? It’s pretty clear to me that there is.

We’ve got crumbling infrastructure. We have climate change coming at us as a real threat to our future. We have crumbling cities. We have poor people everywhere. There’s plenty to do.

The question that I ask is, why aren’t we doing it? We have built a system which rewards the wrong things. We look very much at systems like Facebook and we say, “Wow, this is a big algorithm system.” Well, our entire economy is an algorithm system.

Just like Facebook, it’s optimizing for the wrong things, saying, “Wow, if we just show people more of what they like, it’s going to get them to be more engaged.” Instead, it drove them apart.

We’re asking Facebook, “Hey, come to terms with that. Fix your algorithm.” We have an economy in which we said, “If you basically reward capital, it will make everyone richer, it’ll make our society richer.”

Instead, we have an opioid crisis. Our cities are starved of investment. There’s very little real investment going on. We have a financial casino where a small number of people are making enormous amounts of money without creating any productive work in society.

We go, “We’ve got the wrong algorithm.” When are we going to ask our financial system to fix itself? When are we going to start doing the work that’s so plainly all around us?

ASB: I’d like to transition. That was your positive, good news opening.

[laughter]

TO: We can fix it. We just have to make better choices.

ASB: I’d like to transition to the politically viable proposals to fix what’s wrong. There’s a lot of imaginative scenarios of what we might design if we were starting from scratch. What are some politically viable solutions?

Tim, I know you want to talk about the capitalist system but specifically also with the future of work and to design new policies that will help us going forward. Laura, can I start with you?

LT: To answer that question, you also have to ask, where do you want to make the politically viable assessment?

We can say even from the tax legislation that we just passed in the United States. I would say we’re walking away from political sensible solutions for the problems we face, but I will say that there are other societies that are not walking away.

If you look at the changes in the apprenticeship systems in Germany, or Sweden, or Denmark. If you look at Singapore, which is providing for every adult, essentially, the right to draw on a grant to reeducate and reskill as the jobs change, there are things that are working in other settings. They are not currently politically viable at the federal level in the United States.

There are, however, some states that are beginning to do some very interesting things. I am part of something called the Skillful Taskforce. It’s also called Rework America. 20 governors, both Republicans and Democrats, led by the first state to move in this direction — Colorado Governor Hickenlooper (also a speaker at Shift Forum).

We now have 20 states. They’re actually doing a lot of work, for example, in the skill development area starting with high school students, assuming that lots of people are going to have to get credentials and nanodegrees and pathways with career coaches to the kinds of skills that are needed in new jobs.

Use the digital technology to link those people to the jobs and the training. Those are politically viable. Some states have significantly increased the minimum wage with the help of people like Nick to do that. We’ve had over the course of the last several years, an increase in the minimum wage along with a more generous earned income tax credit as something that can help income at the lower level income families.

Those are all politically viable in various states right now. A grassroots pressure to increase the minimum wage, grassroots pressure to spread the earned income tax credit, which California did last year in its own tax law, those are things that we can do.

They’re politically viable where there is a progressive agenda and actually in the reskill that I talked about, that actually is (supported by both) Democrats and Republicans. That actually has to do with training the workforce and trying to match skill development with skill needs of employers.

ASB: Nick?

NH: I’m not sure if we’re disagreeing, but I would to zero in on a very pernicious idea that permeates our society, which is that we have a jobs problem. We do not have a jobs problem. We have a wages problem.

LT: I agree with that.

NH: We have a wages problem. One of the most pernicious lies told is that the reason that people are struggling is because they’re not well enough educated or something like that. They’re not well enough trained. That’s a lie.

The middle class jobs that we used to have in this country in auto factories and so on and so forth, these folks weren’t better trained than a Starbucks barista.

They didn’t work for a bigger company than Starbucks. The company was not more profitable than Starbucks. The only difference is that those folks had a union which negotiated a fair split of the value that enterprise created. (Starbucks CEO Kevin Johnson also spoke at Shift Forum).

[applause]

NH: That’s it. This fantasy that we have to educate our way out of this. Don’t get me wrong. More education is good, and more people we send to college is good. The better our schools work, that’s all good, but the challenge facing our country is a power challenge, not an education challenge or a job challenge.

We have a relatively low unemployment rate. The problem is that 4 in 10 businesses pay exploitive wages.

ASB: Is your view that it will stay a wage problem? I would imagine that in the next decade we’re going to have both.

LT: I want to ask Nick a question because I do agree we have a wage problem. I completely agree, and I completely agree that in firms we used to have an organization. We used to have large firms that had substantial market power that had unions and that shared the market power and the profits with their workers. We used to have that.

Now, we have very substantial firms that are not so much sharing the market power. If a lot of their unskilled workers they outsource and they pay them the market wage or just exploit.

NH: Or just exploit straight up.

LT: My question is the following because I still think a lot of those jobs you talked about, for example, in the auto industry, in particular. Those have been decimated by technology and trade. They’re gone, they’re gone.

The place where the mechanization and automation has gone the furthest is in predictable manufacturing jobs. Those are the middle income jobs that have disappeared.

NH: They didn’t disappear in Germany though or, at least, not so much.

LT: They have disappeared in Germany at a much slower rate, at a much slower rate. Of course, Germany has lots of other things to help the workers who are transitioning out more slowly to do other things. We just leave people disrupted. “Transition on your own, please. It’s not our problem.”

NH: Laura, we replaced manufacturing jobs with service jobs. The only difference between those jobs is that the manufacturing companies used to pay middle class wages and the service companies choose not to. The jobs are the same.

LT: They’re not the same. They’re not the same in terms of productivity. They’re not the same in terms of profitability. No, they’re not. There’s a question of what we should do about that.

NH: GM was not more profitable than Starbucks is.

ASB: We’ll take this backstage.

NH: OK. [laughs]

ASB: I would like to move forward to what the future wage problems would be.

LT: Look, we both agree on future goals.

ASB: I just finished reporting a story about artificial intelligence and traditional business that will run at the end of March.

One of the things that was told to me is that a European bank in the compliance department has tasked a consultant with getting down their staff from 15,000 to 500 in compliance. We’re talking about manufacturing jobs? It’s going to happen to white collar jobs for sure.

LT: Oh, it will.

NH: Yes and no.

LT: That’s what the technology tells you is that it’s now happening to cognitive routine jobs. It’s absolutely happening, absolutely.

NH: The question is, you’re getting rid of some jobs but you are creating others. The question is, “Can we create more in other areas faster than we take them away?”

LT: The answer is probably yes, but I will say that if you look at that, and McKinsey has done some good work on this. If you look at where the jobs are likely to come, education, health, care of the elderly, care of children, alternative energy, and infrastructure.

To which I say, what’s common about those kinds of jobs? A huge amount of public support. Those are supported by public monies. Those are not, in general, private monies. If we’re going to have a lot of jobs in health…

NH: But that’s not inevitable. That’s just a choice. That’s a policy choice.

LT: Wait, we have a healthcare system that already is largely private. I guess I want to ask the question of how are we going to fund these jobs? Who’s going to fund them?

NH: Right now, we have this enormous diversion of corporate profits in the stock buybacks and financial gains that are basically going to a very small number of people. We’re saying, “There’s no money to spend on our employees. We have to reduce our costs.”

Why? Because we have to make the stock price go up. Why do we have to make the stock price go up? Because our CEOs are paid in stock. We basically have built a system, that is, we tell companies, “Optimize for return on capital.” We could make a different choice.

ASB: How do you change that system?

NH: Change the law.

LT: Which law?

ASB: Which law, yeah.

NH: In 1982, Ronald Reagan appointed somebody, the SEC, to change the Safe Harbor Law that made stock buybacks go from, essentially, illegal to legal. Today, our country devotes four percent of GDP, four percent of GDP, $700 billion a year, to stock buybacks.

TO: Which do nothing except increase the value of stock artificially.

NH: Which is insane. It’s insane. You could pay for college for every kid for $100 billion a year. The entire infrastructure deficit of the country is $3.6 trillion a year. It’s nuts.

This is simply an arrangement based on an idea about how you create prosperity in human societies that is false. Largely, that if you make the rich richer, it will be better for everybody. Totally arbitrary. We could end it tomorrow.

TO: OK, we want to get a word in edge-wise.

LT: No, no, no. I just want to say that I want to put technology back in this discussion.

I do think that there has been some very serious work that suggests that the technological disruption of labor markets of jobs, of skills, is very significant and going to become more significant.

For example, it’s something like half of the wages paid in the United States, low for all the reasons that we’ve heard here. Half of the wages are in activities that are subject to serious risk of being substituted for by technology.

Retail, some transportation, as we very well know about, some hotel, and food, and continuing erosion of manufacturing. That’s half of the wages currently paid.

In terms of the percentage of workers who might be disrupted. Disrupted, meaning they might lose a job because they’re substituted for by the technology and they have to find a new job. That can be up to a third of the U.S labor force between now and 2030. We’re talking about 15 years. That’s it.

ASB: Where are you all on universal basic income? Let’s just not even say a politically viable solution but a solution. What do you believe?

TO: It’s a cop-out, quite honestly.

ASB: In what way?

TO: It would be a good idea if it weren’t a way of basically saying, “Well, there’s nothing we can do about this situation. There’s no better choices we can make. We have no obligation to put people to work.”

This idea of industrial policy, what needs doing in this country? How are we going to fund it? How are we going to get it to happen? There’s this absolute veneration of this crazy idea that somehow the market will naturally find the way.

You look at the development of an economy like China. They have basically said, “Oh, wow. We’re going to get really good at this one thing. Then, we’re going to get good at this thing, and we’re going to get good at this thing.”

Over here, we don’t do any kind of planning or thinking about where we’re going to invest. At least, when we do we denigrate it. We invest in clean energy and then they go, “Oh, government should get out of that. We invest in space, “Government should get out of that.” No, government should be doing those things.

That’s why we have Tesla. That’s why we have SpaceX because we had somebody who actually had some courage to dream of a better future and say there’s some work that we’re not getting to. There’s a failure in the market. Let’s make it happen.

ASB: I’d like to open it up to questions from you. I’m going to ask one more and then feel free to step up to the microphones, if you could.

Going back to the politically viable wishes, I’ve heard about the capping or making illegal stock buybacks, but as it relates to technology and work. If you could have one wish, of something you could see in the next five years in America that would become law or policy, what would it be? Nick.

NH: I’m the biggest believer in capitalism in the world, but it cannot be true that capitalism is a great system and also true that the system will come tumbling down if business people are required to pay their workers enough to lead dignified lives.

[applause]

NH: These two things cannot both be true. I would require businesses to pay their workers enough to lead dignified lives full-stop, full-stop.

ASB: A federal minimum wage.

NH: If you can’t figure out how to do that, you should find another line of work. Go teach elementary school. Don’t run a business.

ASB: Laura?

LT: Politically viable. One of the things that has been a tremendous help to the development of flexibility for an individual worker has been the ACA, the Affordable Care Act.

I hope that we continue to move in the direction of healthcare for all. To have flexible societies where I do believe that people are going to have to move more from job to job. I do believe there’s going to be a need for more reskilling.

I do think the issue of technology is important for all the reasons I said. You’ve got to equip the individual worker with the ability to get skills, the ability to get healthcare that’s not tied to their place of employment. Many employers aren’t doing this anymore, anyway.

That basically gives to the individual access to childcare, access to healthcare, access to education, access to what I would call transition insurance so that if you’re, all of a sudden, out of a job, you actually have some serious unemployment compensation along with training support to get into the next job.

Those are the kinds of things we can do. We’ve taken a step in healthcare, and we should continue in that direction.

ASB: An expanded role for…

LT: Finally, the idea of universal portable benefits. I know Nick has worked on that. If you’re going to be working for a while for one employer or several employers, you should be collecting, on a prorated basis, benefits which carry with you as you move through your working life.

ASB: Tim.

TO: First of all I will say that I’m not a big believer that we should accept the current notion of political viability. We’re in a world where that has completely changed for the worse, and it can change in the other direction.

To put things in the realm of just the positive rather than just than the revolutionary, there’s a fundamental recognition in the tax code of what it actually means to invest.

We need to make a distinction in our tax code between gambling on the direction of a stock and actual investment in people, in things, the real economy, where you’re actually building a factory. You’re putting people to work.

The company actually takes in capital and uses it to do something that was not being done before. That’s capital investment. That should be rewarded in our tax code.

Carl Icahn, buying $6 billion of Apple stock in hopes that he can manipulate it to go up. Apple didn’t get any money. They didn’t do anything differently except give money to Carl Icahn. Didn’t make the world any better.

Yet, we treat it as if it’s an investment. We need to call that gambling. I’d like to see politicians recognize that we have an overly financialized economy and start to roll back all of the incentives that we have put in there to do that.

Actually, a very practical thing that we might want to consider at some point is that we get rid of all income taxes on labor. We get rid of payroll taxes, and we start thinking about replacing that with various kinds of taxes on capital.

ASB: We have time for two questions. If I could take one from each side and if you could do them back-to-back, we’ll take them. Yes, go ahead.

Delegate: Hi. Thank you for this discussion. I have to ask the question in hearing all of this. What is your position and how do you feel about just the anthropological, the pure anthropological, position here of the human animal and how we adapt?

Do you feel that adapting from that model of a manufacturing industry to a service industry is a natural adaptation of the human creature? Can we all just move in that direction because big business is saying that that’s the way we need to move?

ASB: Thank you for that question. It’s a great one. Ask yours and we’ll respond to them together.

Delegate: Sure thing. My name is Kenny Chen. I have the privilege of working with some of the organizations, like XPRIZE at the UN who are looking at these topics.

Across the board, it’s clear that people are still looking for that kind of data, expertise, and leadership. To the theme of the forum, I believe that business is well, if not best poised to lead. However, I think the incentive structures, as Tim mentioned, those external incentives for business to step up independently are not quite there yet.

What I’d like to get your sense of is, in addition to perhaps some tax reforms and other things, what kinds of tangible incentives can be put in place so that, say, in Pittsburgh, are five autonomous vehicle companies and the petabytes of data that are being generated every day.

Those kinds of things are leveraged to help frame these conversations. Thank you.

ASB: Would you guys like to…You’re welcome to take either or both. We have to wrap up.

TO: Let me take the incentive question. The one thing we have to kill, and by the way, this idea was reflected in a lot of the speeches that were made at this event, from the CEO of Starbucks to the woman who runs the Gates Foundation. The idea that the prime responsibility of business is to create a return for shareholders. That is not true.

That is an ideological framework that has been embraced in our country, but we have the power to reject it and redefine what the responsibility of business is in terms of social accountability, in terms of creating value in human society. In the absence of that shift, we’re all screwed.

[applause]

ASB: Would you like…

LT: I guess I want to point out a little comparative context here because earlier we were talking about the importance of unions. Again, think about the same technological challenges, the same issues about humanity are being addressed not just here.

This is a very particular discussion about the US. It’s being addressed around the world. For example, to take the case of Germany again which I mentioned, they basically have supervisory councils. They have works councils.

They have ways in which their government structures do represent workers differently. I will say that that’s a great positive. On the other hand, it is the truth that they have more robots per worker than in the US, and their manufacturing employment in automobiles is going down dramatically.

The same technological forces are at work, and different societies have different ways of trying to cope with them. On the issue of humanity and manufacturing versus services, the truth is the reason this has happened is because people over time want to buy more services.

That is what humans want. They want more services. They shift their income towards more services. Societies need to think about ways to do this.

One of the interesting questions for the future is, how do we combine the power of technology with people’s interest in services to create good jobs for people and good quality outcomes in the quality of life?

Humanity, we can do that. We have to pose it that way. We have to pose it that way. There will be transition problems though. Displaced truck workers, truck drivers may not at all be interested in taking care of the elderly or taking care of preschool kids. They just don’t want to do that.

The issue of the transition, how societies make this transition, whether in the process you end up with a lot of people suffering from no work, drug addiction, video games, whatever, because those are transitional problems.

It’s what you want to do with your life. What skills you have to do, what work means to you. For some people being displaced, the quality, the meaning of the jobs they can get does not appeal to them, it does not appeal to their humanity.

TO: Yeah.

ASB: Wait. Sorry, Tim. 10 seconds, and we have to go.

TO: I just want to respond to the one on is this natural? I’d say no, it’s a phase. It is a phase and we have a future phase ahead of us which is going to be the “oh shit” phase when we’re going to realize that our consumer culture is basically doing a lot of damage to our planet, and the planet’s about to bite back.

We’re going to have an economy that’s going to be based on moving 10s or 100s of millions of people to high ground. We’re going to be talking about an economy that’s based on, “Oh my God, this isn’t theoretical anymore. We actually have to transform our economy.”

We’re going to be putting a lot of people and a lot of machines to work, or we’re going to die.

ASB: At least, it’s not the robots getting us. Thank you all very much.

[applause]

NewCo Shift

Covering the biggest shift in business and society since…

NewCo

Written by

NewCo

NewCo explores the stories shaping the world’s most innovative companies through experiential festivals and media offerings. https://medium.com/newco

NewCo Shift

Covering the biggest shift in business and society since the industrial revolution

NewCo

Written by

NewCo

NewCo explores the stories shaping the world’s most innovative companies through experiential festivals and media offerings. https://medium.com/newco

NewCo Shift

Covering the biggest shift in business and society since the industrial revolution

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