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The biggest threats to American workers

Rick Newman
Senior Columnist
Source: Thinkstock

A century ago, roughly one-third of U.S. workers toiled in agriculture. Now just 1.5% do. Yet agricultural output has skyrocketed, and the United States, after feeding itself, has plenty of food left over to export.

That explosion in agricultural productivity is considered a crowning achievement of 20th-century capitalism. Yet a similar trend that may now be underway in manufacturing and even the service economy isn’t viewed with the same reverential awe. Instead, the rise of robots and computers in place of workers looms as one of the great challenges in capitalism’s next century.

“The economic challenge of the future will … be providing enough good jobs,” Harvard economist Larry Summers wrote recently in the Wall Street Journal. “Technology is allowing the production of far more output with far fewer people.”

Summers penned his economic prognostications for the Journal’s 125th anniversary, which arrives as the job market has been recovering from a sharp downturn. The total number of employed Americans recently eclipsed the prior peak established before a grueling recession began in 2007. Job creation is approaching healthy levels of nearly 300,000 new jobs per month. Many economists expect GDP growth to finally hit levels associated with good times later this year.

Troubling trends

Still, Summers highlights several troubling trends. The number of manufacturing jobs, while slowly growing, is still far below levels of the late 1990s and seems unlikely to reach that pinnacle ever again. As blue-collar jobs have become scarce, the number of Americans receiving disability payments from the government has skyrocketed. That’s bad news for taxpayers footing the bill, and also for disability beneficiaries themselves, who may never reenter the workforce.

Men have suffered most from the contraction of the blue-collar economy, and they represent a high number of the economic dropouts who are capable of working but have simply stopped looking. Summers points out that, 50 years ago, barely 5% of men aged 25 to 54 were out of work at any given time. That could rise to an ambient level of 25%, Summers warns, with more than half of all men spending a year on the sidelines at some point during their working lives. Such a dystopian, slow-growing economy would produce fewer winners and more losers, and drag down prosperity for nearly everybody.

Summers isn’t necessarily right. Other economists argue that Americans will adapt in ways that haven’t come into focus yet. There have been other periods of technological disruption that made many workers obsolete but also freed them to do other things, leading to unforeseen innovations and totally new industries. The Industrial Revolution in the 1800s put many artisans out of work, for instance, but also created millions of new jobs and helped generate fabulous wealth that did, in fact, trickle down to a newly emerging middle class.

Smoothing the transition

The question now is what will it take to smooth the transition to a new world of ubiquitous automation and prevent robots from taking every single job? Summers advocates a new role for government in safeguarding workers from the relentless churn of technology. But he doesn’t spell out what, exactly, the government ought to do. Besides, gridlock in Washington shows no sign of abating, and small-government advocates seem likely to end up more, not less, influential during the next several years. So government solutions are probably limited, at best.

That might require individual workers to do more to protect themselves from obsolescence. For example, as Summers points out, software is devouring some industries once dominated by people. But software doesn’t design itself; people create software, and the number of college students earning the types of science and engineering degrees that lead to technology work has been going up. So some workers are, in fact, adjusting to the changing economy by ensuring they have skills likely to be most in demand.

More young Americans and their parents also seem to be scrutinizing the value of college as an investment meant to generate the highest possible return, rather than approaching it as a life experience merely meant to be enriching. Workers can take that one step further by remaining agile in their careers and alert to change, so they can get additional training if necessary or even move to a more dynamic field. And trends such as more people renting rather than owning a home and family members doubling (or tripling) up under one roof may provide a bit of breathing room as workers adjust to a demanding new economy — and get comfortable with the robots.

Rick Newman’s latest book is Rebounders: How Winners Pivot From Setback To Success. Follow him on Twitter: @rickjnewman.