In 1786, the cloth workers of Leeds, a wool-industry center in northern
England, issued a protest against the growing use of “scribbling”
machines, which were taking over a task formerly performed by skilled
labor. “How are those men, thus thrown out of employ to provide for
their families?” asked the petitioners. “And what are they to put their children apprentice to?”
Those weren’t foolish questions. Mechanization eventually — that is,
after a couple of generations — led to a broad rise in British living
standards. But it’s far from clear whether typical workers reaped any
benefits during the early stages of the Industrial Revolution; many
workers were clearly hurt. And often the workers hurt most were those
who had, with effort, acquired valuable skills — only to find those
skills suddenly devalued.
So are we living in another such era? And, if we are, what are we going to do about it?
Until recently, the conventional wisdom about the effects of technology
on workers was, in a way, comforting. Clearly, many workers weren’t
sharing fully — or, in many cases, at all — in the benefits of rising
productivity; instead, the bulk of the gains were going to a minority of
the work force. But this, the story went, was because modern technology
was raising the demand for highly educated workers while reducing the
demand for less educated workers. And the solution was more education.
Now, there were always problems with this story. Notably, while it could
account for a rising gap in wages between those with college degrees
and those without, it couldn’t explain why a small group — the famous
“one percent” — was experiencing much bigger gains than highly educated
workers in general. Still, there may have been something to this story a
decade ago.
Today, however, a much darker picture of the effects of technology on
labor is emerging. In this picture, highly educated workers are as
likely as less educated workers to find themselves displaced and
devalued, and pushing for more education may create as many problems as
it solves.
I’ve noted before
that the nature of rising inequality in America changed around 2000.
Until then, it was all about worker versus worker; the distribution of
income between labor and capital — between wages and profits, if you
like — had been stable for decades. Since then, however, labor’s share
of the pie has fallen sharply. As it turns out, this is not a uniquely
American phenomenon. A new report from the International Labor Organization
points out that the same thing has been happening in many other
countries, which is what you’d expect to see if global technological
trends were turning against workers.
And some of those turns may well be sudden. The McKinsey Global Institute recently released a report
on a dozen major new technologies that it considers likely to be
“disruptive,” upsetting existing market and social arrangements. Even a
quick scan of the report’s list suggests that some of the victims of
disruption will be workers who are currently considered highly skilled,
and who invested a lot of time and money in acquiring those skills. For
example, the report suggests that we’re going to be seeing a lot of
“automation of knowledge work,” with software doing things that used to
require college graduates. Advanced robotics could further diminish
employment in manufacturing, but it could also replace some medical
professionals.
So should workers simply be prepared to acquire new skills? The
woolworkers of 18th-century Leeds addressed this issue back in 1786:
“Who will maintain our families, whilst we undertake the arduous task”
of learning a new trade? Also, they asked, what will happen if the new
trade, in turn, gets devalued by further technological advance?
And the modern counterparts of those woolworkers might well ask further,
what will happen to us if, like so many students, we go deep into debt
to acquire the skills we’re told we need, only to learn that the economy
no longer wants those skills?
Education, then, is no longer the answer to rising inequality, if it ever was (which I doubt).
So what is the answer? If the picture I’ve drawn is at all right, the
only way we could have anything resembling a middle-class society — a
society in which ordinary citizens have a reasonable assurance of
maintaining a decent life as long as they work hard and play by the
rules — would be by having a strong social safety net, one that
guarantees not just health care but a minimum income, too. And with an
ever-rising share of income going to capital rather than labor, that
safety net would have to be paid for to an important extent via taxes on
profits and/or investment income.
I can already hear conservatives shouting about the evils of
“redistribution.” But what, exactly, would they propose instead?
