25 Sep 2014

Technology steals your job!

Mathijs writes:*

I am a techno optimist! For me the technological revolution is begun, it is unstoppable, and it will bring us to an utopian kind of society soon! Although before we can enjoy the utopian life we have to deal with some problems. In this blog post I will address one of these problems, that, because I’m a humble student, I will NOT solve! This problem is with the increasing influence of technology on the labor market. Simply stated: the machines are taking the jobs of low skilled laborers, and we choose to make them the victims of this.

Andrew MCAfee has an interesting TED talk in which he discusses the influence of technology on the labor market. He is able to show that we are making more money with less people, and relates this to technological progress. Of course, this increase in labor productivity is good thing. Laborers working with technology can make more, when laborers make more, society becomes richer. The problems with it, is that other figures show that we don’t need those laborers anymore! And the projection is that we need laborers less and less. Their jobs are being replaced by machines, and there are no other jobs to replace them.

This will go as followed: A factory owner is confronted with a machine that can do the job of one of her employee cheaper than her employee. The factory owner, that rightfully seeks to maximize her profit, has two options. Which are the following: replace this employee by a machine, or ask her employee to work for less money. In the Netherlands where the majority of employees with these jobs have a minimum wage, the factory owner has only one option: fire the employee. When this scenario is repeated again and again, low skilled laborers will get less and less money, or lose their jobs again and again. They are victims of the development.

The last thing I like to emphasis is the urgency of the problem. Information technology progresses with an exponential rate, jobs will therefore be replaced faster and faster. Today already, in cities all over the world, autonomous Google cars are driving. Predictions are that in 2020 the first autonomous cars will enter the commercial market. How long will it take to replace truck drivers and taxi drivers!? How many jobs in this one example will be taken by machines, and never be replaced!? My message is therefore simple. It is time to think about solutions for the people that can’t compete with new technologies, and that are victims of this beautiful development.

Bottom Line: Jobs are taken by new technology and not replaced. This happens more and more and faster and faster. It is time to have better solutions for the people that lose their jobs than unemployment offers today.

* Please comment on these posts from my microeconomics students, to help them with unclear analysis, other perspectives, data sources, etc.