You, I, Computers and Robots Replace the Middle Class

Manufacturing may be returning to the US, but the jobs are nowhere to be found. Moreover, the higher the salaries of workers, and the more benefits workers demand, the greater the incentives of manufacturers to eliminate humans. If you want to blame something for the loss of manufacturing jobs, blame increased productivity from our technological progress, not China or NAFTA. The vast bulk of production and services can be produced and delivered by computers, robotics, smart systems, and ubiquitous computing devices with only a small fraction of the human labor force we have today.

We love it! We can’t wait for iPhone6; new apps; free information at our fingertips. And similarly, corporations are eager to replace workers, with their irritating need for pay, health care, and retirement plans, with robots and computers who will work 24 hours a day without complaining, and in many cases do a job much better. Those who have the capital to invest in machines are reaping all the financial benefits, while workers are increasingly being pushed into the generally lower paying jobs that machines cannot do well, like home health care, cleaning, fixing cars, or anything that needs both physical and problem-solving skills. This is bad news for the middle class in our country.

Economists scoff at this idea. Technology sometimes replaces workers in the short run, but in the long run it spurs economic growth -- and economic growth improves prospects for workers across a range of industries. But this time could be different. Artificial intelligence machines are getting so good, so fast and increasingly able to perform tasks in which humans were once unquestioned masters, that they're poised to replace workers across a wide range of industries. And quickly pay for themselves - Apple plans to install a million robots in China to "supplement" its work force.

Much of what we enjoy from technological progress is a new sort of outsourcing. How much time do you spend on things that are made easier and that you now do for yourself with the help of computers? You do them now because computers have made it possible for you to do them. You take care of your appointments and a lot of the service issues; you don't employ anyone when you do these things. The largest area of outsourcing is not to India or China. Our jobs are being outsourced to us when we get cash from an automatic teller, or pay for groceries or a plane ticket at a self-service kiosk. The jobs are moving from the producer to the consumer side of the ledger. And some of that work comes in the guise of entertainment. How much of your work is being done as you do your e-mails and surf the web, keep yourselves busy with your apps as you commute to work? So it is not only that computers are replacing workers, they are turning consumers into unpaid workers. Consumption is increasingly oriented toward virtual goods – consuming YouTube, tweets and social networks, games and reality TV shows. These take little in terms of labor – or for that matter, capital – to produce.

Corporation computers are not simply displacing jobs; they are taking out the middle. The biggest effect is not improving the production of industrial goods; it is, again, a sort of outsourcing. Consider, JCPenney plans to eliminate all checkout clerks using RFID chips and self-checkout; if that idea catches on for major retail stores, tens-of-thousands of jobs will vanish. Computers are good at routine cognitive tasks in the middling white-collar range, the desk jobs, the jobs that require keeping track of things, making arithmetic calculations. They are not so good at motor tasks, the blue collar jobs that require coordination and manual dexterity; we have robots for that!

In the new Tesla factory, a robot might do up to four jobs replacing as many as 20 people: welding, riveting, bonding and installing a component. At Earthbound Farms, four newly installed robot arms with customized suction cups swiftly place clamshell containers of organic lettuce into shipping boxes far faster than the two to five workers they each replaced. 128 robot arms with yoga-like flexibility endlessly form three perfect bends in two connector wires and slip them into holes almost too small for the eye to see working so fast that they must be enclosed in glass cages to prevent supervisors from being injured. And they do it all without a coffee break — three shifts a day, 365 days a year replacing hundreds of workers that used their hands and specialized tools to assemble electric shavers. With video cameras to guide them, robots are capable of feats well beyond the most dexterous human. Soon they’ll drive our cars and trucks, or as Toyota proposed “a foundational shift in the industry, from selling cars to selling transportation.”

Are we also seeing an end to work? This is the very definition of economic progress - to free up people from the drudgery of manual labor, so they have the time to do things that add far more value to our world. Soon, robots will be diagnosing our diseases, dispensing our medicine, and handling our lawsuits. So far, most economists aren't taking very seriously the idea that computers might significantly disrupt high-skilled labor markets. However, until something does come along, we are in a creative destruction phase in which technological advancement destroys more jobs than it creates. Maybe we should get the education needed to compete in this new economy, and hope that new technologies will again lead to employment in fields that have not even been imagined yet.