New Policies Needed to Help Workers Displaced by Machines

Perhaps the biggest technology story of the year is also the most general—the recognition that machine intelligence is poised to displace more people in the labor market more rapidly than ever before.  Among many other treatments, two economists wrote a well reviewed book, the Second Machine Age, on the subject, the financial commentator Nouriel Roubini took note of the trend, and the New York Times recently wrote a long piece trumpeting the development. I wrote about  machine intelligence’s imminent invasion of the legal space. But this news is all around us. Google and others are developing self-driving cars. Self-service kiosks are replacing cashiers.

The cause of this development is the most important phenomenon of our age—the relentless exponential increase in computer power. Until a certain level of power is reached, computers cannot compete with humans. But once they get into a domain they can improve rapidly until they oust human competitors. I could beat the best chess computer as a high school student. Now I am humiliated by my smart phone.

This trend does not necessarily mean more unemployment—at least for the next few decades. Machines create the need for new jobs—more programmers for example. Human desires are infinite and greater wealth will create more positions to which humans are still uniquely suited—perhaps more personal trainers, and many others that we can no more imagine than contemporary occupations unknown to those in the century past.

But the accelerating pace of the machine age does create more problems of transition for people whose jobs are outsourced to machines and who have little training for other work. Three million people drive for a living, and self-driving cars will be here within a decade. Machines will in short order do most of the work of short-order cooks in fast food restaurants. And while these are relatively low-skilled jobs, machines are coming for white-collar jobs as well. To be sure, machines will complement rather than substitute for many of these jobs, like some of those in my own legal profession. Nevertheless, they are likely to extend the reach of those at the top of the professional pyramid, and yet decrease overall employment in the sector.

So here are four legal polices that are more important than ever in the machine age. It is certainly not an exhaustive list.

  1. First do no harm. Raising the minimum wage will hasten substitution and make transitions more difficult for low-wage workers by making the transitions less gradual.
  2. Change the government’s educational benefits and structures so that they are focused on education over life rather than concentrated in the college years.
  3. Bring back the idea of apprenticeships. There will be a premium on learning new skills. This education may be best done by employers for employees well past college age. Yet education will still expensive to the employer, particularly in a society as mobile as ours where an employee can easily leave before the employer reaps the benefits of training.
  4. Focus immigration policy on getting high-skilled workers. As Reihan Salam argues, better educated workers are less likely to face substitution (and I would add better able to make transitions to new jobs if they do). Accordingly, it is problematic to have immigration policy attracts relatively more low-skilled workers because of its focus on family reunification.