Robots Versus the Middle Class

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Photographer: JOHANNES EISELE/AFP/Getty Images

Among the vexing challenges facing the middle class is one that will probably go unmentioned in the next presidential campaign: What happens when the robots come for their jobs?

Don't dismiss that possibility entirely. About half of U.S. jobs are at high risk of being automated, according to one recent study. And the middle class may be disproportionately squeezed. Many lower-income jobs, such as gardening or day care, don't appeal to robots. But many once-secure middle-class occupations -- trucking, financial advice, optometry, software engineering -- have aroused their interest, or soon will. (The rich own the robots, so they'll be fine.)

This isn't to be alarmist. Optimists point out that such technological upheaval has benefited workers in the past. The Industrial Revolution didn't go so well for the Luddites whose jobs were displaced by mechanized looms, but it eventually raised living standards and created far more jobs than it destroyed. Likewise, increased automation today should boost productivity, stimulate demand by driving down prices, and free many workers from drudgery to focus on more creative pursuits.

Read more in this series:
How to Save the Middle Class
Bring Back American Enterprise
Simplify Taxes and Make Work Pay
The Middle Class Has a Debt Problem
Obamacare 3.0
America's Coming Retirement Crisis

But there's no guarantee of a smooth transition. In the short term at least, the economy is probably in for what John Maynard Keynes called a "phase of maladjustment" as workers struggle to catch up to technological changes. That could mean depressed wages, widening inequality, increased unemployment and deepening social problems.

QuickTake The Middle Class

Easing this maladjustment for the middle class is likely to become one of the central public-policy challenges of our time.

The first step, as Erik Brynjolfsson and Andrew McAfee argue in "The Second Machine Age," should be rethinking education and job training for the robotics economy. Easier said than done, of course. But curriculums -- from grammar school to college -- should evolve to focus less on memorizing facts and more on creativity and complex communication. Vocational schools should do a better job helping students work alongside robots and fostering problem-solving skills.

And technology itself can be part of the answer. Online education may never replace the traditional kind, but it can supplement it. Equally important, it could make extra training and instruction -- tapped more frequently during the course of a worker's career or careers -- affordable. Professionals trying to acquire new skills will be able to do so without getting into debt.

The challenge of coping with automation underlines the need for the U.S. to revive its fading business dynamism: Starting new companies must be made easier. In previous eras of technological flux, entrepreneurs smoothed the transition by dreaming up new ways to combine labor and machines. The best uses of 3-D printers and virtual reality haven't been invented yet. The U.S. needs the new companies that will invent them.

Finally, because automation threatens to widen the gap between capital income and labor income, taxes and the traditional safety net will have to be rethought. Adding an equity component to Social Security, for instance, would be one way to spread the ownership of capital. Taxes on low-wage labor need to be cut, and wage subsidies such as the earned income tax credit should be expanded: This would boost incomes, encourage work, reward companies for job creation and reduce inequality. The next editorial in this series will look more closely at tax reform.

One thing people tend to forget about the Luddites: Even if their solution was crazy, the problem they foresaw was real. Technology will improve society in ways big and small over the next few years -- yet this will be little comfort to those who find their lives and careers upended by automation. Destroying the machines that are coming for our jobs would be nuts. But policies to cushion the victims and help workers adapt will be indispensable.

To contact the senior editor responsible for Bloomberg View’s editorials: David Shipley at davidshipley@bloomberg.net.