How a Lack of Jobs is Changing the World - The Future of Work

The end of work as we know it may be responsible for the collapse of  the existing world order. Fewer people finding jobs or enough income for a living has destabilized the European Union, has fueled Brexit and has determined the US election.

There are several explanations for job scarcity and insufficient wages. One points to international trade as the culprit; another identifies technology as a job killer. Politicians promising jobs, jobs, jobs differ on which explanation they use for the job crisis, but all assume that they can create jobs, either by reducing or eliminating free trade or by slowing automation.

Those who blame other countries for the US job woes ignore the fact that manufacturing in the US had a pretty stable share on the overall GDP from 1960 to now. Its not that nothing is made in the US anymore, it is just that fewer people make it (Brookings).

Discourse during election campaigns doesn't dig deep, nor does it provide historical perspective. Politicians talk about jobs as if everybody understands the term the same way, as if "jobs" had been around forever and as if jobs were an immutable fixture of human history. Unions (labor), employers (capital), politicians and the media all talk about jobs. The framework defining the term seems to be the America of the fifties, nostalgia for the way to make one's living that excluded most women, many blacks and often cost workers their health or sometimes even their life.

Since work is so central to understanding what is happening in the world right now it warrants a deeper exploration of the history of work, the circumstances that created the current idea of job and the challenge and the opportunities that lie ahead.


The history of work

The current understanding of "job"is based on industrial production and originates in an industrial revolution which once before turned the world upside down. A world that had been agricultural, had seen feudalism (Europe) and slavery (US) and almost exclusively domestic production, saw its rural areas and villages depleted by factories springing up in cities. Rural areas declined and cities exploded in size.

Historic farming: Manual labor

Streetcars and the automobile eventually allowed the incredibly high density population centers to spread out, especially in the US. This brought a gradual decline of core cities and the rise of the suburb. That shift became precipitous when manufacturing and industrial production was replaced by the service industry. Lately, with the rise of Information Technology and tech companies that have little tangible product, cities are experiencing a resurgence and many suburbs see a slow decline.

Each of these phases had its own imprint on work and the meaning of job.

"Domestic" work wasn't really a job. A high percentage of the population provided for their own needs or those in their immediate community with the skills they had as farmers, cobblers, bakers or masons. In the pre-industrial period the duration of work was a function of the task to be performed and dictated by natural conditions such as weather, season, tide or harvest time. Work, leisure, and religious festivals were intertwined, with little demarcation between “work” and “life.” Work was physical and often hard. The 19th century economist Adam Smith described the distance between the need and the product as "toil and trouble", seeing work as a necessary evil and not as fulfillment. Not having to work was seen as a desirable a privilege. The "leisure class" cultivated a lifestyle without toil on the backs of those who were neither "independent" domestic workers nor worked for themselves but were tenant farmers, serfs, house-servants or even outright slaves. In the pre-industrial production regime only a few things were shipped to places outside or imported from outside the production area. Generation after generation replicated the same system and products with almost imperceptible change. Only a very limited number of people worked for pay and outside the production of food and goods: to keep order, serve in a militia, finance things, or preach on Sundays. For most, the connection between producer, product and consumer was immediate and direct even though conditions weren't necessarily fair.

Cannery, Montery 1930

Industrial production brought a new regime and upended centuries-old traditions. The factory system created an entirely new definition of work, with a fixed production time imposed by overseers and divorced from natural cycles. Workers began to sell their skills for money, specialized and made things for others often far away from the community. Division of labor became the norm. Knowledge, training and craft were reserved to a few who were separated from manual labor and freed as far as possible from the obligations of it. Overseers and those designing the production process or the products were separated from the interest of the workers and felt more like owners, even though they owned nothing except their salary. Workers and overseers with their wages and salaries bought what they needed for their livelihood. In the process they lost twice: first by being paid only a portion of the value they created in production (the rest paid for overhead and the owner's profit) and then by having to buy goods that also had overhead and profit added into the price. Most workers also didn't own their home anymore but had to pay rent. The efficiency of industrial production, thus, was diminished through a generally higher cost of living.

Most know that this industrial model was critically described by Karl Marx and Friedrich Engels and others as exploitative and "alienated" for the aspect of the diversion of added value. (Mehrwert) to the owner. Marx observed that work

in its historic forms as slave-labor, serf-labor, and wage-labor, labor always appears as repulsive, always as external forced labor; and not-labor, by contrast, as “freedom and happiness.” (Grundrisse). 

It is less known that Marx also harbored some pretty contemporary ideas about the value of work for the individual:

the individual, “in his normal state of health, strength, activity, skill, facility,” also needs a normal portion of work, and of the suspension of tranquility.... overcoming of obstacles is in itself a liberating activity (Grundrisse)

Studs Terkel expressed his discontent with the term job this way:  

“I think most of us are looking for a calling, not a job. Most of us, like the assembly-line worker, have jobs that are too small for our spirit. Jobs are not big enough for people.” (Studs Terkel) 

Assembly line Work: Ford

Affordable consumer goods unattainable in the domestic work regime made capitalism attractive to the masses. Industrial work proved successful in not only providing society abundantly with goods but also provided workers with jobs and the means to make a living. Success, indeed, was so widespread that Marx' fundamental criticism was relegated to the fringes who continued to complain about commodification and the uneven distribution of wealth.
The industrial model is now so ingrained that it is hard to remember that there was a time without it and even harder to imagine that it may not exist in the future.


The crisis of capitalism 

The system begun to sputter in the first and second oil crisis and most recently in the financial crash. Since the first oil crisis the "limits of growth" have been discussed as a challenge to capitalism's dependency on growth. Concurrently growth and mass production have created environmental depletion of on a scale that now represents a global challenge that threatens to bury a system that created it.

Growth and reduction of green house gases, for example, are hard to reconcile even though many say that growth and environmental protection can go hand in hand. Additionally, the bifurcation between rich and poor has reached epic proportions on the global scale, as well as on the scale of many countries and even cities.  The recovery from the Great Recession is slowed by the lack of purchase power by "the masses", in other words, too many products and not enough money to buy them; the result of decades of stagnant wages and a persistent base of unemployable workers.
Infusion of cash artificially inflated purchase power and has indebted individuals and nations in unprecedented scales. Wealth is now accumulation in a tiny number of hands. Private and public debt is in large part financed by China, a country that as the world's maker of cheap goods was and is interested in selling the goods they make.

Income Disparity (CBO/Microcosm)

In addition to being a key economic concern, inequality represents the greatest societal concern associated with the Fourth Industrial Revolution. The largest beneficiaries of innovation tend to be the providers of intellectual and physical capital—the innovators, shareholders, and investors—which explains the rising gap in wealth between those dependent on capital versus labor. Technology is therefore one of the main reasons why incomes have stagnated, or even decreased, for a majority of the population in high-income countries: the demand for highly skilled workers has increased while the demand for workers with less education and lower skills has decreased. The result is a job market with a strong demand at the high and low ends, but a hollowing out of the middle. (World Economic Forum 2016)

Ironically, just when the system seemed to recover somewhat, with wages increasing across the board in 2016 and the unemployment rate slowly but steadily declining, public patience seems to have run out. Discontent has resulted in Britain and in the US in votes that may just topple the system, even though not in the way Marx had anticipated. Whatever revolution we may witness right now, it is one from above, in which workers are getting only lip-service.

The challenge

What can be offered to people who are out of work or can't get decent wages because of a continually advancing technology which makes human labor more and more superfluous? What hope is left when now even the service sector and the creative class are threatened by robots and artificial intelligence (AI)? What will people do and how will people get the resources they need to live if they can't earn a living through work? Is a life without work even worth living?

One answer is an attempted rewind to the past, with incredible growth rates and an end of global trade. Those growth rates, though, are likely unattainable, certainly unsustainable, and in the long run don't solve the systemic problem. Counting on job creation through growth or through shutting off foreign supply will have unintended consequences such as increased cost and lower efficiency. It really means that America won't meet the challenge while others will likely seize the opportunity.

Employment in Manufacturing and its share of GDP (Brookings)

Another answer is repatriation of production since labor cost and regulations rise in China (or other countries) as well, making it less attractive to outsource. This enables some production to come back to the US, if labor cost can be kept comparably low here. That can only happen with the help of automation, robots and AI. In other words, even a renaissance of manufacturing on our shores won't provide huge opportunities for employment. Thus the issue of job shortages remains, especially if one considers how many jobs would be needed globally. That has been described by the World Economic Forum in 2016:

Nearly 500 million new jobs will need to be created by 2020 to provide opportunities to those currently unemployed and to the young people who are projected to join the workforce over the next few years.At the same time, many industries are facing difficulty hiring qualified staff. One 2015 survey found that, globally, 38% of all employers are reporting difficulty filling jobs, a two-percentage point rise from 2014. (World Economic Forum 2016)

An abundance of products produced without much sweat and toil would not be a problem per se if the means existed to buy them. But the fact that a small group siphons off so many resources, i.e. the absence of a fair distribution, represents a big obstacle for the organization of a post industrial system. 

The promise

As fixated as some are on the status quo or the job conditions of the fifties, it is useful to remember that humans can work differently: Not as 9-5, not as toil, not as selling oneself. What if parts of the pre-industrial work environment could be combined with self determination, joy, fulfillment and self realization? What if work were disconnected from the urgency of survival and creating life's essentials? What if satisfaction could be found by practicing personal skills and creativity in volunteer work, teaching, charity and philanthropy? What if the pleasures of a life could be enjoyed without work?  What if leisure could be had but the toil was not performed by indentured servants, menial laborers but by robots? What if the liberation that consumption brought to the masses were followed by the liberation through mass leisure, if the lifestyle of the "leisure class" would become available to everyone? How can the absence of "work as a curse" be a fearsome prospect? Wouldn't it be like a reversal of the expulsion from paradise?

In the sweat of thy face shalt thou eat bread, till thou return unto the ground; for out of it wast thou taken: for dust thou art, and unto dust shalt thou return.(Genesis).

Kinsey Report

Seen from that perspective politicians promising jobs, jobs, jobs would be seen as having a lack of imagination and not as prophets for a great future. From jobs to work that is self determined and liberating:.

.. posited as aims which the individual himself posits—hence as self-realization, objectification of the subject, hence real freedom, whose action is, precisely, labor. ... (Marx, Grundrisse). 

For the first time in history, then, work could be neither needed for immediate survival (food, shelter) nor "externally forced" as in the industrial work that included alienation and exploitation. 

Like the revolutions that preceded it, the Fourth Industrial Revolution has the potential to raise global income levels and improve the quality of life for populations around the world. To date, those who have gained the most from it have been consumers able to afford and access the digital world; technology has made possible new products and services that increase the efficiency and pleasure of our personal lives. Ordering a cab, booking a flight, buying a product, making a payment, listening to music, watching a film, or playing a game—any of these can now be done remotely.

Robotic production

In the future, technological innovation will also lead to a supply-side miracle, with long-term gains in efficiency and productivity. Transportation and communication costs will drop, logistics and global supply chains will become more effective, and the cost of trade will diminish, all of which will open new markets and drive economic growth. (World Economic Forum 2016)

The Intuit 2020 report also sees a bright future for women. Under the heading "It's a She Economy" the report states:

Women, especially those in emerging markets, will be a dominant force in the global market - taking increased leadership responsibilities across business, government and education. According to an analysis by Booz Allen & Company, 870 million global women who have not previously participated in the mainstream economy will gain employment or start their own businesses.

This perspective should appeal to American optimism. As hard as it is to believe right now, America's best narrative is optimism. The response to the work challenge requires everything that America always saw as its marquis qualities: openness, collaboration, creativity, curiosity and ingenuity. Needed is a radical re-think of how we see work: Less toil more fun. All this isn't as Utopian as it sounds. Some of the promise is already here.

The future has already begun

The US is a place where a nascent new definition of work can already be observed. As Josh Bersin puts it in Forbes:

The Future Of Work: It's Already Here -- And Not As Scary As You Think

In a time when manufacturing employs only around 10% of the workforce, an ever larger share of work has gone to making nothing tangible, including managing processes, finance, insurances, information, marketing or entertainment. The largest companies today are worth billions and produce nothing (Facebook). As a result, work itself has changed, in the corporate environment and outside. It is no longer the industrial model that prevails. The information revolution has broadened access to information and democratized communication. The emerging maker movement may bring access to production and distribution of tangible product to the masses as well. Start-ups, i.e. companies that have not been around for more than ten years or so, are occupying an ever larger share of GDP in the non tangible fields of information (Google) as well as in conventional products (Tesla).

Kinsey Report

Meanwhile the dominant work models of  "creative class" versus "burger flippers" persists. Work in the service sector is poorly paid, requires little or no qualification and resembles in many aspects the industrial model without providing a "living wage". This sector of work is likely to disappear as automation and robots become more common in the service sector. Whether new ways of making things broaden access to manufacturing remains to be seen.

3D printing, resource-efficient sustainable production and robotics are all seen as strong drivers of employment growth in the Architecture and Engineering job family, in light of a continued and fast-growing need for skilled technicians and specialists to create and manage advanced and automated production systems. This is expected to lead to a transformation of manufacturing into a highly sophisticated sector where high-skilled engineers are in strong demand to make the industrial Internet of Things a reality. (World Economic Forum 2016)

Neither model of work provides a concise framework, neither provides 9-5 schedules, neither is a lifelong "vocation". The "creative work" model, though, shows traces of the promise for fulfilling work and satisfaction, not so much in the corporate setting where it remains in spite of fuss-ball and ping-pong tables embedded in the profit motive and external determination. The promise rests more in the setting of  freelance work, contract work or self employment. A Harvard/Princeton report indicates that their surveys show that the percentage of workers engaged in alternative work arrangements – defined as temporary help agency workers, on-call workers, contract company workers, and independent contractors or freelancers – rose from 10.1 percent in February 2005 to 15.8 percent in late 2015. The report concludes that "a striking implication of these estimates is that all of the net employment growth in the U.S. economy from 2005 to 2015 appears to have occurred in alternative work arrangements."

Independent worker typology (Kinsey)

Technology such as the Internet and 3-D printing, support opportunities which are often called the "gig economy" or, with a term McKinsey International used in a 2016 study, the independent workforce:.

To better understand the independent workforce and what motivates the people who participate in it, the McKinsey Global Institute surveyed some 8,000 respondents across Europe and the United States. We asked about their income in the past 12 months—encompassing primary work, as well as any other income-generating activities—and about their professional satisfaction and aspirations for work in the future.

Kinsey's report, Independent work: Choice, necessity, and the gig economy, finds that 20 to 30 percent of the working-age population already engage in some type of independent work. The demographically diverse, independent workers are categorized in four groups called free agents, people who actively choose independent work and get most of their income from it; casual earners, who use independent work to supplement other income and do so by choice; reluctants, who make their primary living from independent work but would prefer traditional jobs; and the financially strapped, who do independent work out of necessity to augment income.

To date the various types of independent employment are still a pretty small portion of the overall workforce and not nearly as large as it was in 1900, during the early stages of industrial production. But technology could make it a growing segment of the economy again. For example 3-D printing. 

Employment share by occupational categories comparison 1900 and 2000 

One of the speculations about the future of production is that it is no longer based on scale but on customization, enable by production methods that are highly programmable and therefore flexible, such as 3-D printing. If custom production replaces economies of scale at least in some areas, it would have significant consequences for work and for the industrial system of production and capital accumulation. The economist Schumpeter, who had built economic theories around the concentration of capital needed to afford the huge investments for machines of mass production, could be buried for good.

Many people could not only become inventors but also producers of proto-types ("proof of concept") with any number of products being developed in rapid succession. Goodbye assembly line! Goodbye factory floor! Goodbye to the large corporations that manage the complicated set-up from product development to production! Goodbye to 3-5 year product development periods! Hello to products being proto-typed and produced in the same year! Goodbye to the big overhead that comes from the inefficiencies of big corporations which are only so big and unwieldy because the infrastructure needed to produce in mass is so exorbitantly expensive. Goodbye merger mania! Big isn't needed anymore. Goodbye bankers and money handlers! The future doesn't cost much more than a 3D printer and some spools of materials.

A lot of the current mass produced, globally-distributed products won't remain competitive if people can make those in their own basements or garages without any need for shipping. That means less trucking, less air cargo, less road space, fewer cartons. Shippers FedEx and UPS are still growing  because of rapidly expanding online-shopping. But if even a small part of online shopping is replaced by domestic production, shippers could see a reversal of fortunes, and a much greener, and more sustainable reality would replace worldwide shipping.

Kinsey

New forms of decentralized domestic production can replace some industrial jobs, they also accelerate job loss outside production in services such as shipping, banking and product development.

The independent worker may be a happier worker, but independent work will likely not be able to replace all traditional jobs, and even less the income derived from past industrial emplyment and its various off-shoots.

Exactly how bad is the job situation going to be? An Organization for Economic Cooperation and Development study concluded that 9% of American jobs are at risk. Two Oxford scholars estimate that as many as 47% of American jobs are at risk. Even the optimistic scenario portends a serious problem. (Charles Murray, American Enterprise Institute in an WSJ article).

So how will people make a living?

Guaranteed minimum income

As in the pre-industrial world, some of the domestic production would not be performed with the purpose of earning money, but with the immediate aim of meeting some of the needs of the person doing the work. Some food would be grown domestically and integrated into urban living through hydroponic production, green walls and the like. Some clothing, dishes and other consumer articles could be made with 3-D printers. Significant cost for transport could be eliminated when work takes place at home and many products wouldn't need to be shipped or bought at distant places, i.e. the cost of living could go down. It is also conceivable that providing meaningful labor opportunities to those who lost traditional employment would include production for larger needs like a home. Some housing, especially outside dense urban settings, could become part of domestic production. In short, the cost of living could go down. Still, the future of work without pay seems daunting. The need for monetary income will likely remain, even with sharply increased domestic production. From where, if not from employment, would money come?

Everyone a basic income? (WSJ graphic)

Enter the guaranteed minimum income (GMI), or Universal Basic Income (UBI). The former originated with the free market economist Milton Friedman after WW II, the latter is a variation sometimes also called a social wage. GMI isn't a socialist idea even though it involves paying every adult a salary regardless of work (various models spell out various exceptions). The thinking goes like this: if people no longer had to worry about "making ends meet", they could pursue the lives they want to live.

The original libertarian idea was to replace welfare payments with this minimum guaranteed income. In a time of insufficient work through traditional employment because of automated production  UBI or social wage would not only serve a different purpose, but would also have a different funding source. Instead of being paid from the general funds of the Government or from diverting welfare payments, it would be paid from a share of the proceeds of goods made robots and automated factories. Some of the savings from not paying human labor would be shared via payments into the UBI funds.

I think that a UBI is our only hope to deal with a coming labor market unlike any in human history and that it represents our best hope to revitalize American civil society...It takes a better imagination than mine to come up with new blue-collar occupations that will replace more than a fraction of the jobs (now numbering 4 million) that taxi drivers and truck drivers will lose when driverless vehicles take over. Advances in 3-D printing and “contour craft” technology will put at risk the jobs of many of the 14 million people now employed in production and construction.The list goes on, and it also includes millions of white-collar jobs formerly thought to be safe.  (Charles Murray, WSJ article)

A Swiss referendum on GMI was defeated last year. Finland is still experimenting with it on a small scale. The idea of a basic salary for all may not yet be ready for prime time. But the future of work will be such that something like it will have to be considered.

Basic income promotion

Conclusion

Work as we know it, indeed, will mostly disappear. Traditional employment opportunities will be drastically below the number of people seeking it, even accounting for demographic shifts, new jobs from new technologies and the fact that all past prognosis of the end of work have been wrong. Remaining employment opportunities will initially be even more bifurcated than now, with low paying, low skill work on the one side and high skill, high paying work on the other. Much of current unskilled labor will quickly be eliminated by further progress in automation and robots. Creative work will also face a challenge from artificial intelligence, a path not easy to predict at this time.

Individual "domestic" (at home) production and independent work will increase to meet personal demand and as part of the supply chain. Cost of living will go down because increased production efficiency will lead to lower cost of products and a reduced need for purchase and travel.

Domestic production and independent work will increase satisfaction with the work itself, and open opportunities to live a fuller life with more time for personal relations, care giving, learning and personal travel, if a system of universal income is created that lets everyone, not just a few, participate in the efficiencies of automated production.

Of course, these conclusions depict a desirable outcome. The end of work as we know it does not have to instill fear. But the alternative path of trade wars, walls, real wars, massive destruction of wealth, restrictions on knowledge and travel, and a general stifling of progress are equally plausible. History has many examples where whole societies "forgot" what they had already achieved. In the past, those "dark ages" have sometimes lasted for centuries. It is hard to imagine that with today's global connectedness a back to the past option would last long. But we may not live to see the end of it.

Klaus Philipsen, FAIA
edited by Nayna Philipsen, JD, PhD, RN, CFE, FACCE

The History of work (slideshare)
The Atlantic: A World without Work
The Rise and Nature of Alternative Work Arrangements in the United States, 1995-2015 
The Future of Work
The Future of Jobs
The Fourth Industrial Revolution
The meaning of work against Marxist perspective
The 2020 Inuit Report

http://fivethirtyeight.com/features/universal-basic-income/

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