Lant Pritchett says the world’s wealthiest nations will face a significant labor shortage, and labor mobility is the best way to deal with it.
Pritchett is an economist and research director for the Labor Mobility Partnerships (LaMP). He joined Simon Johnson, professor of entrepreneurship at the Massachusetts Institute of Technology’s Sloan School of Management, on June 12 for the Brookings Institution’s presentation, “People over robots: How policy distorts decisions around automation.”
The two experts said that government policy and social mores must evolve with technology for society to reap the greatest benefits. Johnson said this means simultaneously developing technology and public policy to help workers rather than replace them.
“It starts out with ‘Let’s teach machines to play chess better than people.’ And then they can run the checkouts at the grocery store better than people,” he said.
Johnson co-authored “Power and Progress: Our 1,000-Year Struggle Over Technology and Prosperity” with Daron Acemoglu. He said that by studying the past 1,000 years of technological advancements, one could also explore the impact those advancements had on society and the labor force.
Johnson said that when new technology is developed, it is almost always sold as benefitting people—and, over time, it generally does. However, he pointed out that time is only a friend to some.
“Everybody is going to gain eventually, but the key word is ‘eventually,’” he said.
For example, Johnson said the industrial revolution in England began in the 1720s with automation at a silk mill. By the 1840s, much of British manufacturing had been mechanized. This resulted in better products and more financial security for many people. But the workers displaced in the initial changes were long dead.
“That’s 120 years; how do we get something more immediate?” he asked.
According to Johnson, history has shown that society must consider three things when new technology, like AI, is developed. They are the developer’s vision, the “bandwagon” effect, and the impact on the labor force.
Johnson said it is essential to understand the technology’s intended function. Is it something to boost productivity? Is it going to meet a real need, or is it a convenience?
“What are you trying to invent here, and what is its purpose?”
The bandwagon effect is how the market adopts the technology. That figures into its impact on the labor force. Historically, the technologies that had the most favorable result have been those that help people.
Johnson said that the industrial revolution eliminated thousands of farm jobs. Those were replaced with factory jobs, making the machines that eliminated the farm jobs. He said the American car industry was a good example.
In the early 1900s, before innovations introduced by Henry Ford, the American automobile industry produced about 3,500 cars annually. With the advent of the assembly line and electricity in manufacturing, American car makers were turning out approximately 3.5 million cars a year by the end of the 1920s.
The industry employed more than 400,000 people.
“Most of them were doing tasks that no one had ever done before. What really matters is, do you create new tasks?” Johnson said.
But, Pritchett said current demographics have thrown a new wrinkle into the equation.
He predicted that in 30 years, there would be a severe labor shortage in wealthy countries like the United States. Pritchett said that current research focuses mainly on automating certain jobs, such as cashiers in retail businesses. And that has been successful.
“Computers are really good at repetition,” Pritchett said.
But, he said many jobs that will be open in the future can only be done by humans. Building maintenance, health care, and skilled trades require the human touch. Pritchett told the group at Brookings that he had stayed in the hotel the night before and knew that hotel employees cleaned the room after he checked out.
“You need people to clean hotel rooms,” he said.
He said that given the distribution of wealth and populations, the focus should be on finding workers, not doing away with their jobs. He said that poor nations had huge populations capable of working but needed more work to do.
“There are no poor people,” Pritchett says. “There are people who live in poor areas.”
According to Pritchett, governments should consider policies that allow people who need work to travel to areas that need workers. He said the idea that all jobs must be automated is a “false necessity.”
“Necessity may be the mother of invention, but false necessity is the mother of dumb invention,” Pritchett said.
Don’t Need More Self Checkout
“If there’s one thing the world does not need it’s self-checkout in Kenya,” Pritchett said.He said a better solution for the wealthy nations’ coming labor shortage would be policies allowing “labor mobility.”
He acknowledged that immigration can be a contentious issue, but he says he is not talking about immigration. Pritchett said he is talking about allowing truck drivers from other countries to take unfilled truck driving jobs in the United States without the thorny question of citizenship.
But, he said, that would require rethinking immigration laws. It involves something akin to a guest worker program that allows foreign-born workers to earn money in one country while remaining permanent citizens of another country.
Citizens have valid concerns about national security and controlling who may enter their country. But they must also be aware of their labor shortages in just a few years. He said now is the time to develop public labor policy. Pritchett called this “social technology.”
“It’s about solving the legitimate concerns of citizens about order and control.”
