The Future of Work

 A recent special in The Economist painted a notably optimistic picture about the future of work. Largely limited in its scope to developed countries, it pointed to a number of trends and data points to support a theory that before the pandemic things were getting better for most workers and that the pandemic, while disastrous for many, might accelerate some even more beneficial changes. By and large I found the report quite compelling, and a few of its insights very helpful.

 

One starting point of the report was to look at employment trends in the years immediately before the pandemic. In most industrialised countries unemployment was low and falling, real wages were rising at all levels but especially at the bottom of the wage ladder, and job satisfaction was increasing.

 

While this is true and encouraging, one of my main problems with the report is its choice of starting point, a favourite trick of all statisticians wishing to make an argument. Inequality was indeed falling in 2016-19, but this can be as a minor correction after years of rising inequality. Whether you start around the financial crisis or go back as far as 1980, it becomes less tenable to point to a gain of a percent or two as a triumph for unbridled capitalism and trickle down theory.

 

Even so, we on the left have to acknowledge that capitalism is the force that creates innovation that leads to opportunity for many and the chance for more fulfilling lives for most of us. It is galling to admit the truth that the best recent years for the low-waged came under Trump and May/Johnson and despite regressive tax policies.

 

To its credit, the report does acknowledge that leftist policies may have played a part in the revival, notably minimum wages, long derided as job killers on the right but now accepted as smart by all but the most rabid.

 

The Economist report discusses automation extensively, referring to the many times in history that pessimists have predicted the collapse of employment prospects owing to various technological advances, most recently AI and robots. We are reminded that new generations machines do indeed remove jobs, but that so far new jobs have been created elsewhere in the economy to compensate. Sometimes the new jobs are made possible by the machines. Usually the new jobs are more fulfilling than the jobs they replace.

 

If we were not so wedded to the idea of work as always a good thing and full employment a key policy goal, then I think we would be able to celebrate automation even more. Who wants to spend forty hours of every week flipping burgers or stacking boxes? In earlier days, a lot of work was downright unhealthy, such as mining, and led generations to early graves.

 

The only reason people flip burgers is to earn enough money to live a decent life. Well, can we not let a machine flip the burgers and either find different work, divide the remaining work more equally or find alternative compensation for those displaced?

 

The same argument can be used to defend offshoring. Trade is all about specialisation. If workers in a less developed country can improve their life with work that is no longer viable in a developed one, then everybody can gain.

 

The report is clear that the pandemic has been a catastrophe in any aspects of work. Many lost good jobs and are still out of work. Some are fearful of returning to work or have been partially disabled by long covid. Many others have been forced to continue working at great risk to their health, and indeed many have died.

 

There is also a widened cleavage in society between those forced to work at dangerous jobs and those now able to be well paid working safely in their homes, many of whom now rarely see their less fortunate brethren. Historically such shifts have presaged civil unrest.

 

But the report finds evidence that the good jobs have improved. People are saved commutes and many like a hybrid experience. The trend for improving job satisfaction has accelerated. A hypothesis is that the pandemic have forced manages to do a better job, being more diligent about communication and engagement. Seeing each other in our homes may have humanised us too.

 

Taking a longer perspective, I would also argue that many lower paid jobs have improved as well. On the left we love to hate Amazon, with its pay by the hour and defined expectations. But Amazon pays fairly and clear expectations are good. Keeping a job with Amazon does not require accepting leers from peers or other abuse from a boss or having to do the well-connected long-serving guy’s shift for him, or accepting cash so the bosses can fiddle the taxman.

 

Another radical shift I would advocate is that all jobs be like gig jobs. We can all negotiate our hours week-by-week and year by year. We would not have any tenure, but could also have more autonomy over our careers. This would help people build families and be better for women and working pensioners.

 

A gig approach would also be a great way to engineer mobility. One issue in today’s economy is that people struggle to move quickly enough where the jobs are. People will not risk moving when in a unionised, tenured, protected job, but are in the wrong place with the wrong skills when that job vanishes. The report highlights Denmark, where a tough regime with low employee tenure is matched by generous support for the jobless seeking new work.

 

The Economist reportalso comments on public policy. Even in the few weeks since publication, its main claim has been vindicated. The claim is that the pandemic has opened up possibilities that had been closed for forty years. The vindication has come in the series of transformative policies now with a chance of progress in the US congress. The cash payments and the infrastructure plans have drawn most comment and are welcome enough, but for me the biggest news is elsewhere. The child tax credit, family leave and subsidised childcare and boost for carers would move the US at least some of the way towards European good practice and might signal a welcome new normal in family and welfare policy.

 

Excited as I am about this, part of me wonders why Clinton and Obama did so little. With one party committed to an absence of government, the inaction of Clinton and Obama has led to forty years of regression. The pandemic is part of the answer, because it has awakened the general population and spurred innovation by economists. But another enabler has been the era of ultra-low interest rates, making debt less of a constraint to central bankers. It is neat, because in a way the corporates and bankers have been hoist by their own petard. Having created a debt-lenient environment for their own benefit, central bankers have belatedly caught up.

 

I do wish the Biden team were rather more imaginative. To be fair, they probably only have two years to make a difference. But old-fashioned protectionism, support for restrictive unions and hurling cash at sectors is not ideal. Much of the cash for the care sector may be wasted or purloined by suppliers. I still believe Reimbursement for Care would work better. It would target precisely the same goals, but use the market and individual incentive to drive radically improved outcomes.

 

Despite my reservations, I was encouraged by the Economistreport. Perhaps the generation entering the workforce really do have fulfilling careers to look forward to, and not just the privileged few who can saunter through college and into protected professions. Such progress is not before time.