(January 6, 2017) The present path may seem to have an inexorable direction. But the past provides a better guide.
This article first appeared in the Financial Post
Is work going out of style?
That view, once propagated by those on the left through books like Jeremy Rifkin’s 1995 bestseller, The End of Work, is now mainstream, accepted across the political spectrum. Rifkin predicted that information technology and automation would devastate blue-collar and other forms of menial work, leading to the loss of millions of jobs in manufacturing and the service sector.
That prediction and others like it look prescient today, America’s Rust Belt being Exhibit A. Those who blame NAFTA for the loss of manufacturing jobs — Donald Trump and labour unions among them — are inevitably rebutted by studies showing those jobs would have disappeared through automation anyway. One study, from the Center for Business and Economic Research at Indiana’s Ball State University, attributes 88 per cent of the job loss in recent years to automation and other productivity improvements.
Today’s automation has no more profound effect than those in the past
The trend can seem inevitable. Driverless cars and trucks are about to put taxi and truck drivers out of work. McDonald’s is buying robots able to flip hamburgers. One recent report predicts six per cent of all U.S. jobs will disappear within five years. Work is on the way out; we are in a new normal, capitalist free-traders and Marxists alike agree. President Obama pointed it out himself. “When you go to a bank you use the ATM, you don’t go to a bank teller,” he said. “Or you go to the airport and you use a kiosk instead of checking in at the gate.”
The present path may seem to have an inexorable direction. But the past provides a better guide. Industrial innovations today have no more profound effect than in the past, when automated telephone exchanges put switchboard operators out of work, or the automatic elevator phased out elevator operators. Rifkin’s book itself provides a compelling lesson. Since it was published two decades ago, the world economy has seen one technology-driven upheaval after another — computers and the Internet, social media, and smartphones have radically transformed the way we transact business. Yet the unemployment rate today is little changed from its 1995 level, when The End of Work hit the bookshelves.
The End of Work’s lasting legacy wasn’t in the accuracy of its prediction but in its seduction. Because ever-rising unemployment and the dog-eat-dog world it implied seemed so inevitable to so many, concepts such as the guaranteed annual income and a living wage gained currency as requirements for the imagined victims of progress. The cultural shift toward this social safety net led to self-fulfilling prophecies. We see it today in the drive to establish a $15-an-hour minimum wage, which only spurs employers to automate more. We have seen it for decades in the educational system, which devalues the pursuit of well-paying jobs in the trades while glorifying university education (as Slate magazine put it, approvingly: “when was the last time a guidance counselor told a student, ‘I think you should consider going into factory work?’”). We have seen it in NAFTA and other trade deals, where government negotiators, accepting as inevitable that blue-collar workers were dinosaurs unsuited for a modern economy, sealed their extinction.
Companies move offshore for many reasons, low wages being but one, and not always a decisive one. America’s high taxes and red tape often loom larger. In fact, the counter trend of bringing jobs back to the U.S. — known as “reshoring” — has been quietly building, sometimes because wages have been rising in China and other Third World countries, sometimes because the fracking revolution has made the U.S. more competitive than foreign countries, and sometimes because some companies find that the logistical drawbacks of doing business abroad can override labour differentials. As a rule of thumb, a company will reshore its jobs when the costs of doing business at home are within 10 per cent of the costs abroad.
Trump’s tax and regulation changes will be lowering the offshoring advantage to within 10 per cent, changing the corporate calculus of where to locate — this week’s decision by Ford Motor Company to abandon a plant in Mexico in favour of the U.S. is just one of many free-market job preservers to come. NAFTA’s negotiators decades ago could have chosen to preserve American manufacturing in the same way, and possibly would have, if they hadn’t imbibed the conventional wisdom that manufacturing jobs had become obsolete.
The end of work? Work without end will be required to provide quality care for an aging population, and quality education for children, where a long-neglected school system has suffered from too few teachers. Law enforcement needs more staff to combat crime and terrorism; airports need more trained agents — not more body scanners — to suss out those who would do harm. The U.S. is about to launch a US$1-trillion infrastructure program, a down payment on the trillions more needed to fix the nation’s long-neglected roads, bridges, buildings and public utilities.
The only work that needs to be ended is in government bureaucracies, which impede the economy’s natural functioning through job-killing decrees in every sphere of commercial life. Fix that and the rest takes care of itself.
Lawrence Solomon is a columnist with the Financial Post and the executive director of Energy Probe. Email: LawrenceSolomon@nextcity.com.