Tech Is Splitting the U.S. Work Force in Two - The New Jobs are Low Paying
Tech Is Splitting the U.S. Work Force in Two
A small group of well-educated professionals enjoys
rising wages, while most workers toil in low-wage jobs with few chances to
advance.
Taser assembly at Axon in Scottsdale, Ariz. While some
jobs are changing or being eliminated because of automation, many positions at
Axon still require the dexterity of human hands.CreditCreditDominic Valente for
The New York Times
By Eduardo Porter Feb. 4, 2019
•
• PHOENIX — It’s
hard to miss the dogged technological ambition pervading this sprawling desert
metropolis.
There’s Intel’s $7 billion, seven-nanometer chip plant
going up in Chandler. In Scottsdale, Axon, the maker of the Taser, is hungrily
snatching talent from Silicon Valley as it embraces automation to keep up with
growing demand. Start-ups in fields as varied as autonomous drones and
blockchain are flocking to the area, drawn in large part by light regulation
and tax incentives. Arizona State University is furiously churning out
engineers.
And yet for all its success in drawing and nurturing
firms on the technological frontier, Phoenix cannot escape the uncomfortable
pattern taking shape across the American economy: Despite all its shiny new
high-tech businesses, the vast majority of new jobs are in workaday service
industries, like health care, hospitality, retail and building services, where
pay is mediocre.
The forecast of an America where robots do all the work
while humans live off some yet-to-be-invented welfare program may be a Silicon
Valley pipe dream. But automation is changing the nature of work, flushing
workers without a college degree out of productive industries, like
manufacturing and high-tech services, and into tasks with meager wages and no
prospect for advancement.
Automation is splitting the American labor force into two
worlds. There is a small island of highly educated professionals making good
wages at corporations like Intel or Boeing, which reap hundreds of thousands of
dollars in profit per employee. That island sits in the middle of a sea of less
educated workers who are stuck at businesses like hotels, restaurants and
nursing homes that generate much smaller profits per employee and stay viable
primarily by keeping wages low.
Even economists are reassessing their belief that
technological progress lifts all boats, and are beginning to worry about the
new configuration of work.
Recent research has concluded that robots are reducing
the demand for workers and weighing down wages, which have been rising more
slowly than the productivity of workers. Some economists have concluded that
the use of robots explains the decline in the share of national income going
into workers’ paychecks over the last three decades.
Because it pushes workers to the less productive parts of
the economy, automation also helps explain one of the economy’s thorniest
paradoxes: Despite the spread of information technology, robots and artificial
intelligence breakthroughs, overall productivity growth remains sluggish.
“The view that we should not worry about any of these
things and follow technology to wherever it will go is insane,” said Daron
Acemoglu, an economist at the Massachusetts Institute of Technology.
Semiconductor companies like Intel or NXP are among the
most successful in the Phoenix area.
From 2010 to 2017, the productivity of
workers in such firms — a measure of the dollar value of their production —
grew by about 2.1 percent per year, according to an analysis by Mark Muro and
Jacob Whiton of the Brookings Institution. Pay is great: $2,790 a week, on
average, according to government statistics.
But the industry doesn’t generate that many jobs. In 2017,
the semiconductor and related devices industry employed 16,600 people in the
Phoenix area, about 10,000 fewer than three decades ago.
“We automate the pieces that can be automated,” said Paul
Hart, a senior vice president running the radio-frequency power business at
NXP’s plant in Chandler. “The work force grows but we need A.I. and automation
to increase the throughput.”
Axon, which makes the Taser as well as body cameras used
by police forces, is also automating whatever it can. Today, robots make four
times as many Taser cartridges as 80 workers once did less than 10 years ago,
said Bill Denzer, Axon’s vice president for manufacturing. Workers’ jobs were
saved because the company brought other manufacturing work back from Mexico.
The same is true across the high-tech landscape. Aircraft
manufacturing employed 4,234 people in 2017, compared to 4,028 in 2010.
Computer systems design services employed 11,000 people in 2017, up from 7,000
in 2010.
To find the bulk of jobs in Phoenix, you have to look on
the other side of the economy: where productivity is low. Building services,
like janitors and gardeners, employed nearly 35,000 people in the area in 2017,
and health care and social services accounted for 254,000 workers. Restaurants
and other eateries employed 136,000 workers, 24,000 more than at the trough of
the recession in 2010. They made less than $450 a week.
The biggest single employer in town is Banner Health,
which has about 50,000 workers throughout a vast network that includes
hospitals, outpatient clinics and home health aides. Though it employs
high-paid doctors, it relies on an army of lower paid orderlies and
technicians. A nursing assistant in Phoenix makes $31,000 a year, on average. A
home health aide makes $24,000. While Banner invests heavily in technology, the
machines do not generally reduce demand for workers. “There are not huge
opportunities to increase productivity, but technology has a significant impact
on quality,” said Banner’s chief operating officer, Becky Kuhn.
The 58 most productive industries in Phoenix — where
productivity ranges from $210,000 to $30 million per worker, according to Mr.
Muro’s and Mr. Whiton’s analysis — employed only 162,000 people in 2017, 14,000
more than in 2010. Employment in the 58 industries with the lowest
productivity, where it tops out at $65,000 per worker, grew 10 times as much
over the period, to 673,000.
The same is true across the national economy. Jobs grow
in health care, social assistance, accommodation, food services, building
administration and waste services. Not only are some of the tasks tough to
automate, employers have little financial incentive to replace low-wage workers
with machines.
On the other end of the spectrum, the employment
footprint of highly productive industries, like finance, manufacturing,
information services and wholesale trade, has shrunk over the last 30 years.
Economists have a hard time getting their heads around
this. Steeped in the belief that technology inevitably leads to better jobs and
higher pay, they long resisted the notion that the Luddites of the 19th
century, who famously thrashed the weaving machines that were taking their
jobs, might have had a point.
“In the standard economic canon, the proposition that you
can increase productivity and harm labor is bunkum,” Mr. Acemoglu said.
By reducing prices and improving quality, technology was
expected to raise demand, which would require more jobs. What’s more,
economists thought, more productive workers would have higher incomes. This
would create demand for new, unheard-of things that somebody would have to
make.
To prove their case, economists pointed confidently to
one of the greatest technological leaps of the last few hundred years, when the
rural economy gave way to the industrial era.
In 1900, agriculture employed 12 million Americans. By
2014, tractors, combines and other equipment had flushed 10 million people out
of the sector. But as farm labor declined, the industrial economy added jobs
even faster. What happened? As the new farm machines boosted food production
and made produce cheaper, demand for agricultural products grew. And farmers
used their higher incomes to purchase newfangled industrial goods.
The new industries were highly productive and also
subject to furious technological advancement. Weavers lost their jobs to
automated looms; secretaries lost their jobs to Microsoft Windows. But each new
spin of the technological wheel, from plastic toys to televisions to computers,
yielded higher incomes for workers and more sophisticated products and services
for them to buy.
Something different is going on in our current
technological revolution. In a new study, David Autor of the Massachusetts
Institute of Technology and Anna Salomons of Utrecht University found that over
the last 40 years, jobs have fallen in every single industry that introduced
technologies to enhance productivity.
The only reason employment didn’t fall across the entire
economy is that other industries, with less productivity growth, picked up the
slack. “The challenge is not the quantity of jobs,” they wrote. “The challenge
is the quality of jobs available to low- and medium-skill workers.”
Adair Turner, a senior fellow at the Institute for New
Economic Thinking in London, argues that the economy today resembles what would
have happened if farmers had spent their extra income from the use of tractors
and combines on domestic servants. Productivity in domestic work doesn’t grow
quickly. As more and more workers were bumped out of agriculture into
servitude, productivity growth across the economy would have stagnated.
“Until a few years ago, I didn’t think this was a very
complicated subject; The Luddites were wrong and the believers in technology
and technological progress were right,” Lawrence Summers, a former Treasury
secretary and presidential economic adviser, said in a lecture at the National
Bureau of Economic Research five years ago. “I’m not so completely certain
now.”
The growing awareness of robots’ impact on the working
class raises anew a very old question: Could automation go too far? Mr.
Acemoglu and Pascual Restrepo of Boston University argue that businesses are
not even reaping large rewards for the money they are spending to replace their
workers with machines.
But the cost of automation to workers and society could
be substantial. “It may well be that,” Mr. Summers said, “some categories of
labor will not be able to earn a subsistence income.” And this could exacerbate
social ills, from workers dropping out of jobs and getting hooked on
painkillers, to mass incarceration and families falling apart.
Silicon Valley’s dream of an economy without workers may
be implausible. But an economy where most people toil exclusively in the
lowliest of jobs might be little better.
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