SIRI, ARE OUR JOB PROSPECTS DOOMED? THE ECONOMIC ANXIETY AND OPPORTUNITY OF INNOVATION…
Today I talked into — actually more like with— an electronic device that is about two-and-a-half inches wide and five-and-a-half inches long, which responded to my requests. We had what I would consider a pretty lively conversation. You would normally think this is crazy talk, but most of you do the same. On this compact device, I ordered lunch and had it delivered through a third-party delivery service, got my friend a ride-hailing service from the airport, edited a work document, ordered a gift for my children (and the company made additional recommendations based on my search), watched live TV, texted, and called home. All on this little device. Even Doc Brown, the mad scientist from Back to the Future would be jealous.
We are in the midst of an unprecedented age of innovation. It has revolutionized our daily lives as consumers, students, patients, and workers. Innovation has also brought us to an unprecedented economic transition — one that promises economic prosperity, but also workforce anxiety. This is certainly not our first transition, and it won’t be the last. The steam engine, printing press, mass production of the automobile, electricity, the computer, among countless other inventions, dramatically changed how we live and work. These innovations displaced workers, but also resulted in new economic opportunity and growth.
Automation and advances in artificial intelligence — known as AI — are dramatically altering the landscape of the American workforce. A recent report by the Rockefeller Institute of Government found that more than half of jobs in New York could by automated over the next twenty years. More than half.
George Jetson — the main character from the 1960s show about the future — used to say to his wife, “Jane! Stop this crazy thing!” But there is no stopping AI and automation. Calls to overly regulate AI and other automation technology will not alter the tide of history; Americans will simply end up on the losing end. China, India, and other nations will develop and harness AI and other emerging technology and end up the economic winners.
Our challenge is to figure out how to harness innovation to our collective benefit. Change and transition are difficult, but we cannot pass overly protectionary policies that will hurt New York’s opportunity to benefit. Equally as bad would be to simply take the approach of the ostrich and stick our heads in the sand and hope it will pass.
Both are losing strategies.
Policymakers must foster the growth of AI in New York. There are trillions of dollars in potential economic activity that could benefit the state. There are limitless ways to improve healthcare, financial services, and cyber security through AI technology. The nation or state that make these AI breakthroughs will win the economic race.
And although New York could lose half its jobs to automation, it doesn’t mean we’re losing half of our jobs. It means the nature of the jobs are changing. Jobs in manufacturing, retail sales, administrative support, and transportation are being replaced by higher-skilled jobs such as engineering, computer sciences, health, and emerging jobs like data management. The challenge, therefore, isn’t a jobs problem; it’s an education problem. And we’ve got a lot of work to do on that front. Reaping the benefits of AI, rather than being left in its wake, will take continuous education. It will take individualized education. It will take new curriculum and new means to provide education to a greater number of people — be it online or transforming our traditional educational system. Yes, it’s Ph.Ds. and BAs, but also training certificates and apprenticeships. We must work with industry to provide continuous learning opportunities for New York’s workforce.
Our current system of education isn’t built for this challenge, but the pieces are there. We’ve got the largest system of public higher education in SUNY, the largest urban public system in CUNY and world-renowned private and independent colleges and universities. It’s incumbent upon us in education to provide the opportunities to those losing their jobs to automation as well as the to the future workforce.
But there is another compounding problem we must address that is associated with the age of innovation. The exploding growth of the gig economy — that is, marketplace platforms like ride-hailing apps whose labor markets are considered “alternative workforces” that don’t rely on traditional employment arrangements, but independent contractors and freelancers — is outpacing traditional job growth in the United States. A recent Princeton University Industrial Relations report found that 10 percent of the American workforce was made up of independent contractors in 2010 versus nearly 16 percent today.
The gig economy labor market is also here at a time when general worker preferences and behavior are changing. Younger people entering the workforce no longer see themselves in one career anchored to one company that provides health and pension benefits. More often than not, new entrants into the workforce will have multiple careers with a number of different companies.
As the gig and more mobile workforce change the benefits landscape, we need to fundamentally rethink our approach to core benefits that most Americans take for granted. Employer or work-based benefits — like healthcare or pensions — are going the way of the dinosaur. Labor rights that many just assume apply to every job, such as workers’ compensation and a minimum wage, are not guaranteed in the gig workforce, because gig workers aren’t considered traditional employees.
And there are consequences for this shift. For instance, the number of people going without a retirement plan is growing. A recent Rockefeller Institute report, A New Frontier for Saving for Retirement? The Creation of State Retirement Savings Marketplaces, found 3.5 million private sector workers in New York — nearly half the entire private sector workforce — don’t have a pension through their company. With benefits gaps growing, we need to take action.
One way to close benefits gaps in these cases is to make benefits portable, like the health exchange or state-managed exchanges to offer 401(k) and other retirement savings programs. President Barack Obama began looking to expand portable benefits through pilots at the federal level and states like New York are doing the same. Such policy innovations will give New York’s employees the freedom to pursue the best opportunities available, whether with a firm or as an individual. These changes will ultimately promote entrepreneurship and innovation. We must focus on labor protections for workers, while not stifling innovation — but labor protections are critical. A balance can and must be struck.
These changes are like an economic tsunami. It will eventually largely wash away the current labor market and the ways we do business today. In the end, we must remember that people are caught in the middle of the transition — those losing their jobs to automation and those having new work arrangements with companies moving into alternative workforces, like the gig economy. We must always remember that we must do everything in our power to help people through economic transitions. It’s our collective responsibility that progress must apply to all.
But we have the opportunity to emerge in an even better economic position. It’s incumbent upon policymakers to help the workforce transition, but stopping automation either through law or rhetoric is a losing strategy. Let’s not snatch defeat from the jaws of victory.
Jim Malatras is the president of the Rockefeller Institute of Government and an adjunct professor in political science at the University at Albany. He is the former director of state operations to Governor Andrew Cuomo and was the administration’s point person on education policy as well as the state’s property tax cap.