In 1913 a man named Ford rigged up the first automotive assembly line so he could mass produce his innovative Model T car. A little over a century later, another man named Ford is warning of how automation could lead to an unemployment crisis the likes of which the world has never seen.
The irony was not lost on me when the Financial Times awarded its Business Book of the Year award to Martin Ford for Rise of the Robots. Ford offers a detailed and often disturbing insight into the future of work and reflects growing unease about the impact of automation on jobs.
Oxford University estimates that 47 percent of U.S. jobs could be automated within the next two decades. It can be somewhat frustrating that it takes the founder of a Silicon Valley development firm to repeat what trade unions have been saying for years for the business world to sit up and take notice, but it is a positive thing that jobs are back on the agenda.
The jobs likely to be most affected by automation will be those in the service sector but according to Ford, “nearly any white-collar job that involves sitting in front of a computer manipulating information” is also under threat. Today, services are feeling the effects of cognitively advanced machines replacing human workers – self-service checkouts, online banking services and e-commerce are a few examples. Such advances could pale into insignificance when a revolution in automation hits our workplaces in the next two decades and Ford’s book gives some examples of what we can expect.
Take, for example, the San Francisco startup that has fully automated the production of gourmet hamburgers at a rate of 360 burgers per hour. 4.1 million people work in the U.S. fast food industry. McDonald’s is the nation’s third-largest employer. With an average age of 29 years, many of these workers have families to support, childcare costs to cover and rent to pay.
We can also expect the retail workspace to be revolutionized. Amazon, led by chief digital capitalist Jeff Bezos, dominates the online market and takes jobs out of shops and into warehouses – nothing wrong with that in theory. However, Amazon’s introduction of the KIVA robotics system into its warehouses means that robots are already able to locate items and bring them to a single human worker to package. Bezos’ labor rights record was rumbled by Harvard Business Review this year when they dropped him in their list of best performing CEOs from first to eighty-seventh due to his environmental, social and corporate governance performance.
The humble vending machine has been upgraded and now poses arguably the second greatest threat to the retail sector. iPads and iPods are some of the items we are already able to buy from intelligent vending machines which are becoming increasingly common in airports and hotels and can be expected to be found in many other venues in the near future. Ford is right to point out that vending machines will also create jobs in terms of manufacturing and restocking, but the numbers will be minuscule when compared to those lost from the shop floor.
Perhaps our hope for action on these issues lies in the fact that the rich will also be affected by automation. According to the Guardian, since 2000, the number of financial workers on Wall Street has fallen by 50,000 – around a third – due to sophisticated trading software which completes 100,000 transactions in a 10th of a second.
What does this all mean? Well it’s clear already that automation has left fewer people in work. The decline in labour participation has fallen by three percent since 2000, Ford says. At the same time we are seeing a rise in applications for social security, exacerbated by a growing gap between productivity and wages which has resulted in a new social group known as the working poor.
Physicist Stephen Hawking warns that if machine owners of the future successfully lobby against a fairer distribution of the machine-produced wealth, most people will end up miserably poor and new technology will drive ever-increasing gap between rich and poor. With such inequality, social unrest is never far away. Ford predicts a mass worker revolt. Plutocrat Nick Hanauer has warns that “the pitchforks are coming.” It is, sadly, inevitable that we will see growing unrest and people taking to the streets when governments are stripping away their social support at a time when it is needed most.
Ford agrees with a sentiment I raised myself at the WorldPost Future of Work Conference earlier this year where I said that we needed a new social safety net which includes basic income guarantees. We need to go further. We have to lift the wage share in wealth produced, pursue living wage guarantees, gender pay equality and limits on CEO pay. If we lift the wage share and public investment we can create millions of jobs. If we refit to green our economies we can create millions more.
It won’t be long before robots have the cognitive skills to think, act and react like humans. What does a new species mean to our own? We must develop our own skills alongside the robots. We must be able to complement the work they do. We must evolve.
Unions are evolving, we have more freelancers, more professionals, and new demands for our services. Trade unions are on the front foot in responding to the challenges thrown up by the future world of work. WeWork, which provides office space for entrepreneurs, freelancers and start-ups, was unionised recently after a campaign by cleaners in New York and Boston. At UNI Global Union we represent millions of service sector workers across the world and we are leading pioneering research into the effects of automation such as our report with the New Economics Foundation Including You in the Future World of Work.
However, it’s clear that the fall in trade union density is a major factor in rising levels of inequality as productivity outstrips wages and the social floor is removed from under our feet. Automation will be the defining social and political issue of the next decade and our first priority is to ensure our leaders do not try to whitewash over the seriousness of the jobs challenge and what it could mean for the global economy.
A little while after Henry Ford had installed his new assembly lines Walter Reuther, the President of the automobile workers union, was being shown through one of the plants. A company official proudly pointed to the automatic machines and asked Reuther “how are you going to collect union dues from these guys?” Reuther replied: “How are you going to get them to buy Fords?”
Philip Jennings will open the OECD Policy Forum on the Future of Work in Paris on 14-15 January 2016