(Newswire.net — April 10, 2017) — In a recent open letter to shareholders, JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon expressed his concern that there was something “wrong” with the economy. His top concerns were the sorry state of inner-city school education, lack of infrastructure spending, and the lower job participation rate.
Politicians, of course, have a number of reasons to explain the low job creation and labor participation rate – rampant globalization. Trump, for example, has frequently bemoaned the loss of manufacturing jobs to China and India.
Decades of outsourcing to emerging markets has eroded jobs in the developed world. Manufacturing and low-skilled labor may have moved abroad over the years, but economists say this isn’t the only factor leading to job losses and economic stagnation. Experts believe a bigger issue is automation.
For example, while there’s still plenty of demand for certified forklift safety experts, the forklifts may soon be operated autonomously. In fact, many of the manufacturing jobs lost over the past two decades have gone to robots rather than foreigners. This is apparent in the data. As manufacturing jobs declined 30% since the year 2000, manufacturing output has risen in line with GDP figures over that same period. The average number of cars manufactured per worker was 13 in 1990, while in 2010 it hit 18. In other words, there’s still a lot being manufactured, here in America, but by machines.
While this transition may be beneficial, it’s not likely to be easy on middle-class workers across the nation. More than 7 million factory jobs have been lost since 1970.
It’s still too early to say whether rapid automation at this pace will create more jobs in other fields. Some experts argue that factory workers may have to re-skill themselves to program and manage computers. However, retraining millions of workers past their prime working age could prove to be an even bigger challenge. Many will be forced out of their jobs and unable to support themselves and their families.
Factories shutting down in certain cities could have a disproportionate impact on the local community. One way to counter the social impact, according to billionaire Bill Gates, is a so-called ‘robot tax’. A tax on automation, he argues, could slow the rise of the machines and help society fund new forms of employment for the future. While it may seem far-fetched now, a robot tax may not be inconceivable when manufacturing declines further and governments are compelled to step in with regulations.