When Work Is Disrupted by Digital Progress

As technology-driven job displacement accelerates, governments have a big role to play in managing its impact.

People using self checkouts at a store.
A University of Oxford study predicts that automation will cause the most job losses in retail sales.
(FlickrCC/pin add)
Digital progress -- the improvements in societal value attributable to technology -- requires that those technologies work as they should and that users become more productive, and it needs sustained support from a public that includes those displaced from earlier ways of working.

These challenges are largely sequential. From the beginning of digital innovation, attention has gone overwhelmingly to the first two. "Downstream" impacts, especially harm to those whose jobs have been displaced by technology, have until recently gotten far less attention. Finding new work and lifestyles for those whose jobs have been disrupted by technology was long seen as too small to worry about or, more lately, too unwieldy to fix.

Quite recently, however, technology-driven job disruption has grown bigger and more important. After a half-century or more of exponentially increasing digital productivity -- in processing power, storage and communications -- roughly three-fourths has arrived in just the past four years. Innovations that started with simple calculations and accounting have expanded to the redesign of massively larger and interconnected value chains. But as digital productivity has grown, so have inequitable divisions of income and wealth, mistrust of governmental and other authority, and political gridlock -- all of which will be intensified by accelerating job disruption. Serious research suggests that occupations accounting for nearly half of U.S. employment are at "high risk" of being disrupted by automation in the coming years.

Given the trends, it's time to respond, if we can. As is typical of presidential elections, the next year and a half will be important in setting federal priorities. But the most critical roles will be those for state and local leaders.

Fortunately, ideas that promise good traction have emerged from both thinkers (academia, think tanks and consultants) and doers (public- and private-sector institutions and leaders). A pragmatic assembly of evidence and advice is provided by the Aspen Institute's Future of Work Initiative. Analyzing a comprehensive range of options, Aspen explores better ways of finding work, strengthening the social safety net and rebuilding the social compact between workers and employers:

Finding work: Spending by governments at all levels in the United States on training and other programs to help workers find jobs is just 0.1 percent of GDP, lower than that of all of the Organisation for Economic Co-operation and Development countries except for Mexico and less than half of what it was 30 years ago. Recommendations to improve job-finding include tax credits and personal accounts for worker training (firms won't do enough on their own, since the workers they train may leave for other jobs); expanded business-relevant education, including apprenticeships; and funding for industry-sector and regional-workforce partnerships (job development and training at a scale larger than individual firms are capable of). Such initiatives are most effective in metropolitan areas with diverse labor capabilities, among industries that export beyond the local area, and with educational institutions that work with both employers and students.

Strengthening the safety net:
Help for those who can't find work in the high-tech world requires strengthening and redesigning programs that have eroded over the past half-century. Wage subsidies and the minimum wage need to keep up with the cost of living, as do income-support programs such as unemployment insurance and the Earned Income Tax Credit. Strong public and public-private services -- such as those for education, health care and transportation -- are needed to counterbalance poverty and economic insecurity.

Rebalancing the social compact: Value through capital investment requires governance that understands and maximizes stakeholder value, not just shareholder value. Unfortunately, and especially over the past half-century, corporations have done more for shareholders and their own executives than for their workers. CEOs, who in the 1950s earned roughly 20 times more than their companies' average workers, now earn 361 times more. For more equitable results, we need a stronger labor and customer voice in business decisions, including plans for digital transformation in both government and private institutions. While creating broadly shared and community-oriented governance will clearly be difficult, it's not impossible, as other countries -- Germany and Sweden are leaders -- have demonstrated.

The goal, when all is said and done, is to ensure that the economy encourages continued technological innovation while at the same time supporting the value and dignity of work through broadly shared prosperity.

A consultant and former faculty member of the Harvard Kennedy School