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Rise of the Machines, Decline of the Workers

Visalia Direct: Virtual Valley
January 2, 2014 Deadline
February 2014 Issue

Rise of the Machines, Decline of the Workers

Historians will compare the current economic shift to the Industrial Revolution, and that might understate the seismic change to our workforce. Our schools are not preparing students for the changes underway, a structural change in the workplace that rewards the “superstars” and leaves many others behind. Our private and public institutions are also failing to prepare, despite contributing to these changes.

If you wonder why both the Occupy and Tea Party movements rose to prominence, you need only ask what unified them: a sense that our system is failing the middle class. How they protest and their solutions differ, but underlying the broad discontent lies a realization that economic imbalance is increasing.

Although members of both groups believe that Wall Street was bailed out at the expense of Main Street, what many don’t realize is that the financial industry cut more than a quarter million jobs in the last six years. Wall Street is shrinking, with the superstars and executives “winning” while bank tellers, brokers, floor traders, analysts and many others lose their jobs.

Today, more stocks are traded by software than humans. Small teams of computational finance experts develop software that trades for institutions, pension funds and large investor pools. Mathematical models have replaced scores of brokers and analysts as “technical trading” has edged out old-fashioned research-based investing. High-frequency trades, executed by software in milliseconds instead of minutes, represent the majority of stock, bond and options transactions.

When tellers were replaced by ATMs, the brokers and analysts saw this as a “good thing” that resulted in greater profits and higher efficiency. Now, the brokers are losing their jobs en masse to a handful of computer programmers and statisticians.

We might not shed tears for unemployed financial analysts, but what of other workers with jobs that are increasingly scarce?

The publishing industry has paradoxically expanded and collapsed thanks to technology. Anyone can write and publish a blog, challenging newspapers and magazines. Publishing a book requires little more than uploading a Word file to Amazon’s CreateSpace service. More “books” and more “articles” are published monthly than at any time in history. Yet, the publishing business is in trouble. Books required many people in the production chain. Now, there’s an author and a mouse click.

I read several newspapers daily on my smartphone. I pay nothing for this news. What becomes of the press operator? The paste-up crew? The delivery drivers and the young people who gained their first work experiences throwing papers onto doorsteps? The cuts don’t end there. In 2013, The Chicago Sun-Times released its photography staff, now relying on reporters to take digital photographs while covering stories. Other newspapers soon followed.

In college, I worked part-time at several radio stations. In the 1980s, stations were shifting from cartridges and board operators to satellite feeds. Recently, I learned that my favorite small, privately-owned station has released every employee (except the owner). Radiologik, a $300 software suite, uses iTunes to broadcast regulatory compliant radio programming. The software uses a generated voice to air station identification, announce the time, deliver local weather updates and give the titles of songs played.

Consider how many technologies we use daily have eliminated jobs. We pump our own gas, download books and music, pay bills online, use self-checkout lanes at stores, drive through EZPass tollbooths, send email instead of letters and so on.

The best sandwich in our rural community is available at a GetGo Market. The market, like three others in town, uses a kiosk for ordering. The kiosks replaced cashiers. GetGo, in some locations, is also testing an automated sandwich assembly system.

Rethink Robotics sells automation robots, curiously named Baxter, for $22,000 each. Baxter is rated to last ten years, with annual maintenance covered by a $100 contract fee per robot. The ordering kiosks cost $1500 and last approximately three years, with a $2 monthly service fee. For that $2, they load receipt paper and make sure the system is functioning properly. (Stores must still pay the paper costs and other consumable expenses, of course.)

What happens to the teenager or young adult who worked the sandwich counter? What became of the cashier?

The medical office my wife and I visit recently replaced three receptionists with a kiosk. You scan an ID card and a touchscreen confirms your information and current insurance. That’s not comforting, but it does cut medical costs.

Kiva Systems is installing thousands of warehouse robots for Amazon. Already an innovator in logistics and cost-control, Amazon hopes to reduce the need for future warehouse employees with an army of robots. Amazon invested $775 million in Kiva, and believes future labor costs can be halved. It isn’t merely salaries that are saved, either. Robots don’t require liability insurance, worker’s compensation, Social Security payments, retirement funds, or many other extra expenses.

The rise of the machines, the reliance on algorithms and a general embrace of technology have altered societies globally. In most instances, these changes will eventually result in a better quality of life, but the disruptions taking place now concern a great many scholars and experts. I work alongside some of the best economists in the world and hear them voice their worries.

I support my passion for theater by teaching at the Tepper School of Business at Carnegie Mellon University. I teach research methods, writing and rhetoric. This post grants me the opportunity to learn from advisers to past and present governors, presidents and world leaders. Our faculty has received nine Nobel Memorial Prizes in Economic Sciences.

Every professor I’ve met worries about the effects of abrupt technical changes on society, regardless of his or her political leanings. Our faculty is not alone.

In 2012, MIT professors of economics and business Erik Brynjolfsson and Andrew McAfee published the awkwardly, but bluntly titled book Race Against the Machine: How the Digital Revolution is Accelerating Innovation, Driving Productivity, and Irreversibly Transforming Employment and the Economy. Their upcoming book, The Second Machine Age: Work, Progress, and Prosperity in a Time of Brilliant Technologies raises more troubling questions about technology, employment and social safety nets.

We need to be thinking about these questions. We cannot have a global economy with economic elites, robots… and the unemployed.

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