Automation of Work and its Implications for the Future of the Labor Market

During my time here in Brazil, one thing I always notice is the amount of people doing jobs that are normally done in the U.S. by machines. One easy example is metro service. In the U.S., we normally buy our tickets out of machines that dispense change automatically, whereas in Brazil there are ticket counters run by attendants. Construction work here is also much more labor-intensive, employing a large workforce with little equipment, especially in terms of heavy machinery such as cranes and tractors. There is little doubt, though, that Brazil is steadily going the way of the U.S. by replacing workers with machines. Almost all bank interactions here are done through ATMs and large-scale farm equipment has radically reduced manual labor input in agriculture. Although rich countries have more money to employ machines on a much wider scale, developing countries are rapidly catching up. Across the world, the automation of work is changing human society in fundamental ways.

The use of machines is certainly nothing new to humanity. Since the beginning of civilization, we have steadily developed more-advanced tools to improve our productive capabilities and minimize our labor. In fact, it was just these sorts of technological breakthroughs that allowed the West to dramatically increase its production despite a small population during the 19^th century, leading to a huge divergence in material living standards compared to the rest of the world. With the advent of the digital age, information technology (computers, cell phones, the internet, etc) is once again revolutionizing our lives.

The benefits of the industrial and digital revolutions are obvious in many ways. As a society, we are now able to produce significantly more while doing much less work. This has clear benefits for individuals. A farmer no longer has to spend his entire life doing backbreaking labor in the field under a hot sun to produce a few basic foodstuffs. A construction worker no longer has to carry heavy brick back and forth, up and down stairs, to build a house. A ticket counter attendant no longer has to sit underground for eight hours a day, simply handing change back and forth. By replacing this work with machine inputs, we are freeing people from painful and unnecessary physical labor and dull, monotonous tasks.

But there is a flip side to these benefits. Under our current labor market paradigm, people need to work in order to take advantage of societal production. No job, no money. No money, no consumption. Although the ticket counter attendant may be saved from an unpleasant job, he or she is now in a worse position because they are unemployed. Instead of saving people from unnecessary work, automation thus condemns them to live within an economic system in which they cannot fully participate. (There is also the very legitimate question of undermining the dignity and accomplishment people can get from their work, which is often an emphasis of Marxist critique, but not the focus of this post.)

In political debates about jobs, globalization is the most common culprit. American factory workers lobby fiercely against free trade, blaming desperate Chinese or Indians for “stealing” their jobs. There is certainly no denying that a globalized labor market has led to some jobs leaving the rich countries, where labor costs are high. But studies show that automation has had a larger effect on employment figures across the world. Factory workers are not primarily losing their jobs because industry is moving to new, cheaper locations. Rather, they are losing their jobs because we are developing new machines that make human labor obsolete.

This trend will only continue to accelerate. A recent study by the McKinsey Global Institute divided work into three broad categories: transformational (normally physical work involving building or making things), transactional (routine in-between jobs, such as bank teller or call center attendant), and interactional (using knowledge, critical thinking, and teamwork, usually to produce ideas or actions). Ever since the industrial revolution, machines have been able to replace many workers in transformational jobs, and it is just these sorts of jobs in the manufacturing center that are often at the center of political debates. But with the digital age and rapid improvements in computing and internet technology, transactional jobs are also in danger. ATMs and grocery store check-outs are obvious examples, but the potential goes much further. Any sort of work that can be reduced to a repetitive task, or a series of basic algorithms, is in danger. As artificial intelligence continues to develop, even lawyers’ and doctors’ jobs will be put in jeopardy. Eventually, the truly necessary, irreplaceable “interactional” jobs could be few and far between.

While the question of artificial intelligence raises many particular questions and worries of its own (think The Matrix), the more pressing issue to be dealt with is what the automation of work means for our economic societies. Overall, we should see this as an unequivocally good thing. Much of the world’s work is dull and tedious. If we can get the same results (or possibly better ones) without having to do any of the work, human society will be free of the bondage of constant labor. Who wouldn’t enjoy a permanent vacation?

Yet, within our current economic structure, this result would be a disaster. As we are already seeing in the rich countries of the world, automated work throws people out of jobs, destroying their ability to take advantage of societal production. The reason so many people around the world are willing to endure awful work conditions and horrendous schedules is simple: they need the money. In the U.S., the automation of work has slowly eroded away at middle class spending power, a fact temporarily masked by an enormous credit bubble forty years in the making, but laid painfully bare in the aftermath of the 2008 economic crisis.

In our shortsighted political climate we have desperately groped around for easy answers to the jobs crisis: repeal environmental regulations, simplify the tax code, or promote green energy (a good idea for other reasons, but certainly not a panacea for the jobs market). This is a moment in which we need to be asking ourselves a more fundamental question: what is the future of the world economy going to be when most of our work is done by machines, and jobs thus cease to be a source of income for all? (Whether they were ever a source of income for all is debatable in itself, considering the labor market has never achieved zero percent unemployment, but that’s a different story.) Will all wealth and power become concentrated in the hands of those who own the machines, or those whose unique cognitive abilities still gives them a useful skill to sell in the labor market? Or will we develop new systems in which consumption is no longer tied directly to production? Will the labor market cease to exist? And if so, what will replace it? How will we determine who has the rights to what goods and services?

It is very hard, if not impossible, to come up with answers to these questions. But I certainly find them far more relevant than the hot political topics of whether or not ozone standards increase unemployment, or whether new industrial policies could jump-start job growth, as if simple government actions could reverse a structural decline decades in the making. Ultimately, what we will need is an economic paradigm shift. While I do not know what it will look like, or when it will occur, I have no doubt that increased automation of work will eventually render our modern economic system obsolete. We need to at least start thinking about what will replace it.

On a more specific note, I want to mention that I spend a lot of time reflecting on the implications of work automation in the recycling sector, and the catadores in particular. As people who have long been shut out of the formal labor market, they are no strangers to these concerns. But even within this new sector they have created out of their own hard, physical labor, the dangers will ultimately arise. As government subsidies turn recycling into a profitable economic activity that attracts the formal sector (see my earlier post about reverse logistics), private businesses will enter the fray, and the catadores will find themselves competing not only with formal-sector workers but also trucks (which will replace the transport they do with their carts) and robot waste sorting machines (currently in experimental phases, although heavy-duty magnets are already commonly used to sort scrap metal). While new recycling processing technologies are a boon for the environment, they could ultimately undermine all the hard-earned progress made by the picker cooperatives I accompany here in Brazil.