Creating Opportunity in the Age of Automation

George Odwesso

BALDWIN’SAPPROACH

In the wake of an anti-free trade era hostile to liberalization policies and accentuated by events like the USChina trade war, countries, especially developed ones, are ever more expediently looking for ways to attain progress through other mechanisms than the established “competitiveness” paradigm proffered during the 1990s (Baldwin, p. 225). Baldwin offers various potential approaches to solving the problems facing industrialized nations that take into account new conceptual evaluations and place the emphasis of reformed trade policy on human capital and protecting American workers.

The first of the propositions aimed at tackling the existing industrial doctrine looks at the uptick in the prevalence and potential for service-based jobs in the 21st century as a source of continued growth. With manufacturing, since its efficacy and output will depend largely on “excellent and diverse service sectors,” the emphasis in the 21st century should shift less from actual industry and more on the service-oriented jobs to which manufacturing will be connected, acting as what Baldwin calls “twenty-first century industrial bases” (Baldwin, p. 232-233). This shift is demonstrable in Japan where many manufacturing-related jobs are “increasingly” service jobs (Baldwin, p. 233). The benefit in facilitating viable service-related jobs, due to the dependency of industry on these occupations, is the increased growth and competitiveness of the manufacturing sector. I personally would advocate for more policies placing significant emphasis on service-based jobs due to what seems to be their ever-increasing availability and significance in the market. The underscore of potential with the augmentation of the service industry will provide a relatively untapped sector of jobs for Americans domestically, and in some ways combat the trend of offshoring to markets with lower wages abroad.

Another shift in emphasis in 21st century trade policy relating to human capital is concerned with the consideration of cities as 21st century factories. Because cities are where large concentrations of people gather to exchange ideas, communicate, and develop technologies, among other things, they should be recognized as the foundation for work and productivity moving into the twenty-first century (Baldwin, p. 234). Cities have the ability, as Baldwin notes, to act as “skill-clusters” where high concentrations of highly educated individuals increasingly interact face to face; as a result, productivity in these highly concentrated areas tends to be high (Baldwin, p. 235). The evidence of this policy in action is exhibited by a report issued by the Netherlands Bureau for Economic Policy Analysis which found that the advances of the information age have led to “spikier work landscapes” where “start-ups flourish and face-to-face interactions increase productivity” (Baldwin, p. 235). The implications on policy are quite clear for governments looking to optimize the inherently productive nature of cities for increased economic output. Governments can start viewing their cities as “complex workplaces” involving not only industrial production but the dissemination of knowledge and generation of “new ideas” (Baldwin, p. 235). With an emphasis on both service jobs and the creative potential of clusters of people in cities, jobs once solely associated with manufacturing and the fabrication stage specifically can be dispersed in pre- and post-fabrication stages (also known as fragmentation of manufacturing). In these stages, which will largely take part in urban areas, we can see the

increased significance of the service industry on total output and overall efficiency.

REDISTRIBUTION SCHEMES

Academics Scheve and Slaughter offer redistribution schemes as a viable proposal to restoring the ladder of opportunity so easily attainable in the past (Scheve & Slaughter, p. 105). Such redistribution can be implemented in one decisive way that both authors find a worthy investment: human capital and education. In restoring opportunity for the future generations of Americans, they propose investment in early childhood education programs, federal funding for community college students pursuing an associate degree, full tuition coupled with limited income support for the 2.9 million high school graduates not attending college to attend a two- year community college, and a lifetime training scholarship available to all who do not have a four-year degree (Scheve & Slaughter, p. 105-106). The gains to be realized from enacting these policies, according to the authors, are “well-documented cognitive benefits” for children, the mitigation of crippling figures of student debt incurred, boosted graduation rates, and increased projected income rates (Scheve & Slaughter, p. 106). This presents a particularly compelling argument for investing inAmerica’s youth, as access to education in an increasingly cognitively stratified world and job market is perhaps more important now than ever before.

THE WORKAHEAD

With the incorporation of machines and automation in the 21st century economy becoming more prevalent, many workers have found that these technological innovations could pose a grave detriment to them, potentially “exacerbat[ing] inequality” and “leav[ing] moreAmericans behind (Alden & Taylor-Kale, p. 3). The capabilities of automation’s rapid adoption could serve to displace as much as a third of American workers in merely a decade (Alden & Taylor-Kale, p. 9). These negative implications are compounded by the unfortunate co- occurrence of increased demand for skilled labor and lack of accessible education, painting a bleak picture of the economic opportunities available for current and future members of the labor force (Alden & Taylor-Kale, p. 4). However, despite these fundamental transformations to the global economy, there are a variety of solutions proffered by authors Alden and Taylor-Kale for remedying these issues and restoring economic opportunity that can both accelerate growth and increase wages. These policy prescriptions range from attracting investment, increasing access to postsecondary education, eliminating barriers of labor mobility, boosting wages and employment, and heightening focus on research and development to cultivate new economic opportunities (Alden & Taylor-Kale, p. 5).

AsAlden and Taylor-Kale have identified, automation has become the “biggest cause of job disruption in recent decades,” a trend that only appears to accelerate, endangering thousands of low-wage jobs (Alden & Taylor-Kale, p. 11).Although these innovations could mean the creation of new jobs not before conceived, the potential displacement and loss of jobs could be calamitous in an already tumultuous economy, with estimates of job replacement via machine reaching as high as half of all jobs (Alden & Taylor-Kale, p. 12). On top of job loss purely to automation, higher level jobs that remain will require an increased abundance in the skills that machines are incapable of forming such as empathy, creativity, and critical thinking; these jobs will also require higher levels of training and education not before expected (Alden & Taylor- Kale, p. 14). One of the solutions proffered on the federal level to combat the adverse impacts of these sweeping technological advancements is a new infrastructure package, which the authors think could address urgent needs such as the maintenance of roads and transportation services, as well as the construction of new “smart cities” and high-speed transport (Alden & Taylor-Kale, p. 58). These developments under an infrastructure package would put a great number of Americans to work in a variety

of sectors and industries and could also increase access of those in disadvantaged communities to participation in the economy with the expansion of broadband coverage being included (Alden & Taylor-Kale, p. 58).At the state and local level, government officials could support the increase in investment of local businesses and entrepreneurs while also encouraging exports and attracting foreign companies; these developments would likely lead to bigger payoffs for those local existing companies through nurture and expansion (Alden & Taylor-Kale, p. 60).

Ameliorating stagnating technological innovation conditions could prove significantly helpful in both maintaining the United States’ status as a world leader while remaining competitive in the face of increased investments from key rivals like China (Alden & Taylor-Kale, p. 16). In addition to improvements in investment in research and development, access to foreign markets and ease of immigration for workers can also play significant roles in achieving growth and prosperity forAmerican businesses and workers (Alden & Taylor-Kale, p. 18).As such, federal policies like loosening of immigration restrictions for students and highly skilled workers and encouragement of free trade agreements like NAFTA and TPP will greatly aid the development of future entrepreneurs and skilled workers (Alden & Taylor-Kale, p. 18). Immigrants in particular are especially imperative in maintaining the United States’role as lead innovator and are consistently “significant” contributors to that innovation (Alden & Taylor- Kale, 65). The increase in support for basic research in turn can work to spur those companies in the private sector in conducting research and developing marketable products that will benefit everyone (Alden & Taylor-Kale, p. 65).At the state and local level, governments can emphasize and incentivize investment in cities or regions where a comparative advantage is present to further capitalize in the areas where they enjoy local advantages (Alden & Taylor-Kale, p. 66). Success for this approach can be seen with the Global Cities Initiative, which has aided local governments in building on strengths by identifying best practices regarding economic planning (Alden & Taylor-Kale, p. 66).

EDUCATION

To understand the necessity of investment in education, it is essential to look at how education has changed over the decades from how many people are going to college to the value of a college degree. In the first half of the 20th century the United States saw high school participation and graduation rates rise exponentially, outcompeting all other industrialized nations at the time for decades to come (Alden & Taylor-Kale, p. 25). However, unlike today, many of these high school graduates did not go on to college but matriculated into the workforce directly after graduating, signifying high school degrees with the same value to the labor market as a college degree holds today. This would eventually change following World War II where more emphasis was being placed on postsecondary education with policies like the GI Bill, which ensured veterans a right to free public education and, as a result, rates of postsecondary participation and graduation soared (Alden & Taylor-Kale, p. 26). The existing model of education today, however, inadequately prepares today’s youth for the changing conditions and needs prevalent among employers in the labor market and therefore needs repurposing. While not necessarily the primary focus in the past, workforce preparation should be front and center when discussing education outcomes according to Alden and Taylor-Kale. One of the distinct measures that can be taken to achieve this outcome is emphasis on real world skills that are valuable to a wide range of employers; these skills can include graphic design, data analysis, and even computer programming irrespective of major, each of which can “roughly double” the job opportunities available to young graduates and provide a marked increase in initial salaries by as much as $6,000 (Alden & Taylor-Kale, p. 28). Companies should also work to improve their direct relations with local learning institutions like community colleges, which can provide a reliable pipeline for employment following graduation; in doing so, companies can

make known the skills required for employment and thus have a robust pool of potential employees with the specific skill sets for which they are looking (Alden & Taylor-Kale, p. 30). Evidence for success related to this approach can be seen across the board with companies like Google and Pixar establishing relationships and comprehensive programs with schools to best equip students majoring in certain industries with skills that are advantageous to their hiring immediately following graduation; as a result, salaries for graduates of these programs far exceed the averages for community college students (Alden & Taylor-Kale, p. 30). Similarly, companies like Toyota have worked to provide clear pathways for employment for students by coordinating with NGOs to encourage students to acquire the technical skills necessary for employment. They have even gone so far as to set up workexperience programs in conjunction with community colleges, where students will acquire a paid internship on top of a two-year degree that is “effectively paid for by the company (Alden & Taylor-Kale, p. 31). While work-study and apprenticeship programs such as these have proved to be successful in granting opportunity to students, the availability of these kinds of programs is far from widespread (amounting to only 20 percent) and thus requires expansion to ensure opportunities for both four-year and two-year degree holders (Alden & Taylor-Kale, p. 31-32). One significant feature to note of today’s labor market related to education is the increasing demand for workers to be able to continually learn on the job. This translates to both acquiring new skills and cultivating those already formed which is “critical to success.”

WAGES

In the effort to achieve widespread prosperity and growth for the country, the raising of wages for common workers and disadvantaged communities can be one of the more reliable and successful approaches (Alden & Taylor-Kale, p. 21). Since wages have not only been stagnant but have exhibited a steady decline since the 1970s, it is imperative to counterbalance this with measures ensuring steady and robust wage growth to come such as those incentivizing full employment (Alden & Taylor-Kale, p. 22-23). One policy promoting wage growth would target sectors of the economy where productivity has slowed or tapered; service-oriented sectors like healthcare and retail for instance would be good targets for this measure (Alden & Taylor-Kale, p. 23).Additionally, a popular measure which has already taken place in multiple states across the country would be an increase in the minimum wage which would significantly benefit poor and working-class people in particular (Alden & Taylor-Kale, p. 23). Although the policy is somewhat controversial on the federal level due to the unique conditions of each state’s economies, when left to state governments and localities the policy has been shown to increase earnings for the lowest-paid workers while having little detrimental impact on employment (Alden & Taylor-Kale, p. 70). Measures to enhance workers’ buying power similarly implemented by the federal government in the past like the Earned Income Tax Credit and Child Tax Credit, both policies which disproportionately benefit low-wage earners, have also been shown to be extremely effective at mitigating poverty; Alden and Taylor-Kale have gone so far as to deem the former policy “one of the most effective anti-poverty programs in the country” and as such have called for its expansion (Alden & Taylor-Kale, p. 68-69). The private sector can also be instrumental in boosting growth and income. One initiative that has shown promise is the “high-road workforce strategy” which ensures employees decent wages, ample benefits, and training opportunities (Alden & Taylor-Kale, p. 71).As a result of this policy, companies have found that their workplaces are more attractive to potential employees, productivity has increased, and workers are more loyal than they would have been without the policy (Alden & Taylor-Kale, p. 71). State governments across the country have taken this initiative in stride and have actually encouraged companies to register as “benefit corporations” or companies whose goals are not only profit and return but general societal benefits as well as community growth and environmental responsibility (Alden & Taylor-Kale, p. 72). In securing

widespread economic opportunity, it is also important to focus on geographically disadvantaged communities who already face fundamental setbacks relative to big cities like lack of access to reliable telecommunication and internet services (Alden & Taylor-Kale, p. 73).Alden and Taylor-Kale thus propose the construction of new enterprise zones done at the federal level which have been effective in yielding “higher employment,” “stable house prices,” and increased investment, which are especially pertinent factors to the progression of distressed communities (Alden & Taylor-Kale, p. 73).