Say Goodbye To Single Digit Unemployment

Innovation and technology will change the world--we've heard that one for a hundred years, right?
Of course, innovation and technology have already changed the world, in a whole host of ways, causing massive shifts in our lives and societies. But so far, innovation and technology haven't had their full impact on the working world just yet. That's because technology, so far, has created more jobs than it has replaced.

But experts say that will soon change. Both technology and job loss will accelerate rapidly, and a massive, automated robotics revolution will have a profound impact on just about everyone.
When two researchers at Oxford University--Carl Benedikt Frey and Michael Osborne--explored the impact of automation on American jobs in 2013 they concluded that 47 percent of jobs in the US are "at risk" of being automated in the next 20 years. Their research revealed that jobs in every sector, "especially transportation, logistics, and office and administrative support, are at 'high risk' of automation. More surprisingly, occupations within the service industry are also highly susceptible, despite recent job growth in this sector." Even information workers, the study found, are at risk.

Try to imagine it--two decades, and half of our jobs are gone, replaced by the computer automation revolution. Several forward-thinking observers have already started to explore the reality: Jerry Kaplan, in his book Humans Need Not Apply; and Martin Ford, who wrote Rise of the Robots: Technology and the Threat of a Jobless Future. Both authors foresee a future of mass unemployment caused by automation. Ford finds:The golden era for American workers - when new machinery and technology required employees to learn valuable skills - is gone. Today, workers can't expect raises or advanced training when new technology appears. Instead, they should fear for their jobs.

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Let's just take one of those sectors the Oxford study identified--transportation--and look at the disruptive potential. I believe the biggest revolution we are about to experience in the coming years has to do with the massive changes to the automotive industry, primarily led by the introduction of autonomous vehicles--whether surface vehicles or drones. The introduction of autonomous vehicles, plus the rapid adoption of sharing technologies and models, as well as the logistics companies such as Uber and Lyft, will result in many fundamental changes in our car-intensive societies:

  • Many fewer vehicles will be produced. On average, vehicles are utilized 5% of the time and the rest of the time they sit idle, parked.
  • Sharing vehicles and maximizing utilization could result in the manufacturing of 95% fewer vehicles.
  • But let's get conservative here and account for peak usage--and say that we can live with 80% fewer vehicles.
  • That seismic shock means the car industry, as we know it, will not and cannot continue to exist in its present form.

When the number of vehicles we need goes down by 80%--and by the way, much of the remaining 20% will probably carry the emblem of Google, Apple and Tesla--it means enormous change will occur, and occur very rapidly. This does not even account for the market that will be lost to autonomous drones, which as I have said in my previous blogs I believe could be the primary mode of transportation in the near future.

This huge shift will displace more workers than we have probably ever seen in history:

  • millions and millions of truck drivers and taxi drivers
  • factory workers at the traditional car manufacturers
  • parts makers, wholesalers and retailers
  • service shops and dealerships
  • the traditional oil industry and its gas stations

On top of all that, think about the tremendous amount of obsolete real estate currently used as parking lots and structures, service shops and car dealerships. When the core industry changes, the supporting industries change even more dramatically, resulting in workers losing jobs and cities getting devastated when much of their vehicle-intensive real estate loses functionality and value.

Some argue that vehicles will be used more efficiently in the near future, but believe that the mileage driven will ultimately remain the same--so cars will have to get replaced more often, and therefore the same number of cars will be necessary.

But that assumes vehicles will have the same life expectancy as they have had in the past--and we know that's no longer the case. The longevity of electric vehicles such as Tesla, with a lot fewer moving parts, changes the equation. Also, let's not forget that out of 16 million new vehicles sold in the U.S. every year, many if not the majority are sold, not because the previous car had reached the end of its useful life, but rather because the owner simply wanted the new model with the new features and more horsepower. As we move from vehicle ownership to vehicle sharing, all those factors will matter less and less. Instead, service offered through the vehicle-sharing platforms, the connectivity and the personalization of the experience will matter much more. Assuming that the increased mileage on a per vehicle basis will protect the number of vehicles sold is a fallacy.

Some also argue that those who lose their jobs will get placed elsewhere in the economy--just like what happened during the last century, when we moved from the horse and buggy to internal combustion.

That's dangerous thinking, because it promotes inaction, and inaction will have a significant human toll on millions of families who lose their livelihood in a newly automated sharing economy--not to mention the major instability such losses will cause in our societies.

The idea that our information economy will be able to put to work the millions who will lose their jobs is utter ignorance. On a much smaller scale, we have seen how an entire industry can get devastated... do you remember travel agents? There were hundreds of thousands of them!

So, what's the solution? I would recommend two possible solutions, and add one saving grace:

  • A new focus on high quality food production. Industrial agriculture has driven down the quality of our food. Farming is not only one of the noblest professions, but is also fundamentally in need of transformation to focus on quality, not quantity. A hundred years ago we needed to grow great quantities to feed the world, but today distribution is the problem, not production. We can and we will put millions of people back into farming.

  • A shorter work week. As human beings will finally free ourselves from the shackles of 40+ hour work weeks. Our economies will allow some of the efficiencies gained to be shared with workers, rather than all of it benefiting corporations.
  • And lastly, about that saving grace: Most industrialized societies are aging, which means there will be fewer working people for every retired person. This will clearly mean that, as time progresses, the active workforce will automatically reduce its numbers.
  • With all of these radical changes colliding, the next few decades will be highly tumultuous and dangerous. But as humanity evolves from its previous century of materialism, we also have a chance to build a new millennium focused on knowledge accumulation, spiritual growth and quality of life.

    However, to get there with less social upheaval, danger and turbulence, we will ideally need help from our government and its policy makers. Rather than politicians promising people they will bring back lost manufacturing jobs, they should tell them the truth--those jobs won't be coming back, nor should they. That would be regress. Even China will lose jobs to machines. We have entered a new age, and everyone will be affected by it.

    Rather than celebrating the best year the automotive industry has had, driven partly by the free money poured into some of the car makers by the government and the economy's "quantitative easing" policies, ideally our politicians for once will see ahead of the curve. The smart ones will tell us about their policies for how they plan to address the inevitable automation-driven disruption that the automotive industry and all related sectors are about to experience. They will make it easier for displaced workers to acquire new skills. They will encourage and help companies to hire those newly retrained employees. Let's make that switch now, from the old reactive policy-making approach to a new, honest and forthright approach that will help alleviate the inevitable hardship caused by previously-unseen levels of unemployment.

    We live in pivotal times, and if we begin to prepare now, rather than creating painful social upheaval, we can make the outcome a truly exciting and dynamic one.