Employment and Jobs

Work Reimagined

June 13, 2018  • Mark Warner

New technology is creating new jobs and eliminating others. The nation needs a plan to retrain and educate its workforce in a shifting economy.

Alexa, what does a 21st-century economy look like?”

Government leaders in the United States and around the world are wrestling with that question. Cars and trucks are driving themselves. Robots are delivering takeout. Alexa and Siri are household names, and the artificial-intelligence technology that powers them is being used to pick optimal stock portfolios, diagnose diseases, and discover new planets.

These changes are happening faster than our government can adapt to. Americans are increasingly concerned about the impact of groundbreaking but disruptive technology on the nature of work. In a recent survey by the Pew Research Center, 72 percent of Americans were “worried” about a future in which robots and computers serve as substitutes for humans. Another survey found that more than half of the American workforce is not certain that their jobs will even exist in 20 years.

In some industries, these are not recent developments. Manufacturing workers, in particular, have been living with this uncertainty for decades. Since 1973, manufacturing output has nearly doubled, in large part due to productivity gains from the computing industry. But this increase has been accompanied by a dramatic decrease in manufacturing employment. Between 2000 and 2010 alone, 5.6 million manufacturing jobs were lost. And all evidence seems to suggest automation will continue to disrupt the manufacturing sector, along with other industries.

For an example of how automation is changing today’s workplace, look no further than the food industry. In 2017, Wendy’s and McDonald’s announced major efforts to replace cashiers with self-service kiosks. You can now order a cheeseburger from a burger-fl ipping robot in California, dumplings from an automated restaurant in Chicago, or cocktails from mechanized bartenders in Las Vegas.

It is hard to know how quickly automation will spread, but the cost savings to companies are clear: you don’t have to give a robot Social Security, Medicare, unemployment insurance, or a 401(k). All of these mounting changes to the nature of work, driven by technology, are creating a pressing problem for Americans: growing income insecurity.

The best way to address this is by investing in human capital. Of the nearly 12 million jobs created between 2010 and 2016, more than 99 percent were fi lled by workers with at least some post-secondary education. The unemployment rate for those with college degrees is currently 2 percent—half the rate for those with no more than a high-school diploma. Student debt is now at a record level, $1.4 trillion, preventing a high number of students from completing two- and four-year degree programs. American families can’t be left to bear this burden alone.

For years, conventional wisdom has held that the most productive approach for the government was to invest in plants and equipment over people. The terminology made it clear: plants and equipment were assets; people were a cost. Once you got a job, your employer—not the government—would continue to train you and reward your hard work for the rest of your life. In an era when workers change jobs an average of once every three to fi ve years, however, businesses have fewer incentives to invest in training their workforce. Workers—especially low- and middle-wage workers—may not have trouble getting that first job, but they have no way to move up the economic ladder.

The truth is that Congress missed an opportunity to realign business incentives when it passed deeply fl awed tax legislation last December. The law now makes it even more likely that a company will prioritize investment in machines over people, further tilting the tax code’s bias in favor of investing in physical capital over human capital.

Having spent more time in business than in politics, I recognize that our current economic system is not working for enough people. With my colleagues in the Senate and in the House, I introduced legislation to provide the same treatment for investments in workers that we provide for those in research and development. Our goal is to create a new tax credit, modeled on the popular Research & Development tax credit, for employers who make new investments in training their low- to moderate-income workers, allowing them to acquire skills that are in demand.

Another idea is for policymakers to support lifelong learning and training accounts. Both workers and their employers would contribute to these portable, tax-advantaged accounts to help workers pay for training to advance their careers or to retrain for new jobs in response to displacement. Other countries and states have already adopted policies that provide lifelong learning to their workers. Singapore recently established and funded individual learning accounts for each citizen over the age of 25 to spend on training programs. France is overhauling its training system and will give workers 5,000 euros over their careers to spend on training courses of their choice, including up to 8,000 euros for those who start with no qualifi cations. Maine and Washington have experimented with lifelong learning account options; other states have introduced learning-account legislation.

Unfortunately, the United States is already behind the curve. It is clear that new technologies will continue to simultaneously create and eliminate jobs, while changing the nature of many existing jobs. The most urgent challenge we face is helping workers transition to the jobs of the future by accessing education, training, and re-employment services throughout their careers.

To get this right, we have to reframe the political debate. These are not Republican or Democratic ideas. Our new governing philosophy must focus on not leaving those millions of workers behind, stuck in an economic model that no longer works for the 21st century. In the end, Americans want an economy that works for them. It is time we give them peace of mind about their future.