Vanishing Jobs

Some business leaders are concerned, but politicians seem strangely deaf to what is likely to be the most explosive issue of the decade.

"Will there be a job for me in the new Information Age?"

This is the question that most worries American voters--and the question that American politicians seem most determined to sidestep. President Bill Clinton warns workers that they will have to be retrained six or seven times during their work lives to match the dizzying speed of technological change. Speaker of the House Newt Gingrich talks about the "end of the traditional job" and advises every American worker to become his or her own independent contractor.

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But does the president really think 124 million Americans can reinvent themselves every five years to keep up with a high-tech marketplace? Does Gingrich honestly believe every American can become a freelance entrepreneur, continually hustling contracts for short-term work assignments?

Buffeted by these unrealistic employment expectations, American workers are increasingly sullen and pessimistic. Most Americans have yet to recover from the recovery of 1993-1995, which was essentially a "jobless" recovery. While corporate profits are heading through the roof, average families struggle to keep a roof over their heads. More than one-fifth of the workforce is trapped in temporary assignments or works only part time. Millions of others have slipped quietly out of the economy and into an underclass no longer counted in the permanent employment figures. A staggering 15 percent of the population now lives below the official poverty line.

Both Clinton and Gingrich have asked American workers to remain patient. They explain that declining incomes represent only short-term adjustments. Democrats and Republicans alike beseech the faithful to place their trust in the high-tech future--to journey with them into cyberspace and become pioneers on the new electronic frontier. Their enthusiasm for technological marvels has an almost camp ring to it. If you didn't know better, you might suspect Mickey and Pluto were taking you on a guided tour through the Epcot Center.

Jittery and genuinely confused over the yawning gap between the official optimism of the politicians and their own personal plight, middle- and working-class American families seem to be holding on to a tiny thread of hope that the vast productivity gains of the high-tech revolution will somehow "trickle down" to them in the form of better jobs, wages, and benefits. That thread is likely to break by election time if, as I anticipate, the economy skids right by the soft landing predicted by the Federal Reserve Board and crashes headlong into a deep recession.

The Labor Department reported that payrolls sank by 101,000 workers in May alone--the largest drop in payrolls since April 1991, when the U.S. economy was deep in a recession. In June, overall unemployment remained virtually unchanged, but manufacturing jobs declined by an additional 40,000. At the same time, inventories are up and consumer spending and confidence are down--sure signs of bad economic times ahead.

The psychological impact of a serious downturn coming so quickly upon the heels of the last one would be devastating. It is likely to set the framework for a politically wild roller-coaster ride for the rest of the decade, opening the door not only to new parties but to extralegal forms of politics.

Meanwhile, few politicians and economists are paying attention to the underlying causes of--dare we say it?--the new "malaise" gripping the country. Throughout the current welfare reform debate, for example, members of both parties have trotted onto the House and Senate floors to urge an end to welfare and demand that all able-bodied men and women find jobs. Maverick Sen. Paul Simon (D-Ill.) has been virtually alone in raising the troubling question: "What jobs?"

The hard reality is that the global economy is in the midst of a transformation as significant as the Industrial Revolution. We are in the early stages of a shift from "mass labor" to highly skilled "elite labor," accompanied by increasing automation in the production of goods and the delivery of services. Sophisticated computers, robots, telecommunications, and other Information Age technologies are replacing human beings in nearly every sector. Factory workers, secretaries, receptionists, clerical workers, salesclerks, bank tellers, telephone operators, librarians, wholesalers, and middle managers are just a few of the many occupations destined for virtual extinction. In the United States alone, as many as 90 million jobs in a labor force of 124 million are potentially vulnerable to displacement by automation.

A few mainstream economists pin their hopes on increasing job opportunities in the knowledge sector. Secretary of Labor Robert Reich, for example, talks incessantly of the need for more highly skilled technicians, computer programmers, engineers, and professional workers. He barnstorms the country urging workers to retrain, retool, and reinvent themselves in time to gain a coveted place on the high-tech express.

The secretary ought to know better. Even if the entire workforce could be retrained for very skilled, high-tech jobs--which, of course, it can't--there will never be enough positions in the elite knowledge sector to absorb the millions let go as automation penetrates into every aspect of the production process.

It's not as if this is a revelation. For years the Tofflers and the Naisbitts of the world have lectured the rest of us that the end of the industrial age also means the end of "mass production" and "mass labor." What they never mention is what "the masses" should do after they become redundant.

Laura D'Andrea Tyson, who now heads the National Economic Council, argues that the Information Age will bring a plethora of new technologies and products that we can't as yet even anticipate, and therefore it will create many new kinds of jobs. After a debate with me on CNN, Tyson noted that when the automobile replaced the horse and buggy, some people lost their jobs in the buggy trade but many more found work on the assembly line. Tyson believes that the same operating rules will govern the information era.

Tyson's argument is compelling. Still, I can't help but think that she may be wrong. Even if thousands of new products come along, they are likely to be manufactured in near-workerless factories and marketed by near-virtual companies requiring ever-smaller, more highly skilled workforces.

This steady decline of mass labor threatens to undermine the very foundations of the modern American state. For nearly 200 years, the heart of the social contract and the measure of individual human worth have centered on the value of each person's labor. How does society even begin to adjust to a new era in which labor is devalued or even rendered worthless?

This is not the first time the issue of devalued human labor has arisen in the history of the United States. The first group of Americans to be marginalized by the automation revolution was black men, more than 40 years ago. Their story is a bellwether.

In the mid-1950s, automation began to take a toll on the nation's factories. Hardest hit were unskilled jobs in the industries where black workers concentrated. Between 1953 and 1962, 1.6 million blue-collar manufacturing jobs were lost. In an essay, "Problems of the Negro Movement," published in 1964, civil rights activist Tom Kahn quipped, "It's as if racism, having put the Negro in his economic place, stepped aside to watch technology destroy that 'place.'"

Millions of African-American workers and their families became part of a perpetually unemployed "underclass" whose unskilled labor was no longer required in the mainstream economy. Vanquished and forgotten, many urban blacks vented their frustration and anger by taking to the streets. The rioting began in Watts in 1965 and spread east to Detroit and other Northern industrial cities.

Today, the same technological and economic forces are beginning to affect large numbers of white male workers. Many of the disaffected white men who make up ultraright-wing organizations are high school or community college graduates with limited skills who are forced to compete for a diminishing number of agricultural, manufacturing, and service jobs. While they blame affirmative action programs, immigrant groups, and illegal aliens for their woes, these men miss the real cause of their plight--technological innovations that devalue their labor. Like African-American men in the 1960s, the new militants view the government and law enforcement agencies as the enemy. They see a grand conspiracy to deny them their basic freedoms and constitutional rights. And they are arming themselves for a revolution.

The Information Age may present difficulties for the captains of industry as well. By replacing more and more workers with machines, employers will eventually come up against the two economic Achilles' heels of the Information Age. The first is a simple problem of supply and demand: If mass numbers of people are underemployed or unemployed, who's going to buy the flood of products and services being churned out?

The second Achilles' heel for business--and one never talked about--is the effect on capital accumulation when vast numbers of employees are let go or hired on a temporary basis so that employers can avoid paying out benefits--especially pension fund benefits. As it turns out, pension funds, now worth more than $5 trillion in the United States alone, keep much of the capitalist system afloat. For nearly 25 years, the pension funds of millions of workers have served as a forced savings pool that has financed capital investments.

Pension funds account for 74 percent of net individual savings, more than one-third of all corporate equities, and nearly 40 percent of all corporate bonds. Pension assets exceed the assets of commercial banks and make up nearly one-third of the total financial assets of the U.S. economy. In 1993 alone, pension funds made new investments of between $1 trillion and $1.5 trillion.

If too many workers are let go or marginalized into jobs without pension benefits, the capitalist system is likely to collapse slowly in on itself as employers drain it of the workers' funds necessary for new capital investments. In the final analysis, sharing the vast productivity gains of the Information Age is absolutely essential to guarantee the well-being of management, stockholders, labor, and the economy as a whole.

Sadly, while our politicians gush over the great technological breakthroughs that lie ahead in cyberspace, not a single elected official, in either political party, is raising the critical question of how we can ensure that the productivity gains of the Information Age are shared equitably.

In the past, when new technology increased productivity--such as in the 1920s when oil and electricity replaced coal- and steam-powered plants--American workers organized collectively to demand a shorter workweek and better pay and benefits. Today, employers are shortening not the workweek, but the workforce--effectively preventing millions of American workers from enjoying the benefits of the technology revolution.

Organized labor has been weakened by 40 years of automation, a decline in union membership, and a growing temp workforce that is difficult to organize. In meetings with union officials, I have found that they are universally reluctant to deal with the notion that mass labor--the very basis of trade unionism--will continue to decline and may even disappear altogether. Several union leaders confided to me off the record that the labor movement is in survival mode and trying desperately to prevent a rollback of legislation governing basic rights to organize. Union leaders cannot conceive that they may have to rethink their mission in order to accommodate a fundamental change in the nature of work. But the unions' continued reluctance to grapple with a technology revolution that might eliminate mass labor could spell their own elimination from American life over the next three or four decades.

Working women may hold the key to whether organized labor can reinvent itself in time to survive the Information Age. Women now make up about half of the U.S. workforce, and a majority of employed women provide half or more of their household's income.

In addition to holding down a 40-hour job, working women often manage the household as well. Significantly, nearly 44 percent of all employed women say they would prefer more time with their family to more money.

This is one reason many progressive labor leaders believe the rebirth of the American labor movement hinges on organizing women workers. The call for a 30-hour workweek is a powerful rallying cry that could unite trade unions, women's groups, parenting organizations, churches, and synagogues. Unfortunately, the voice of trade union women is not often heard inside the inner sanctum of the AFL-CIO executive council. Of the 83 unions in the AFL-CIO, only one is headed by a woman.

The women's movement, trapped in struggles over abortion, discriminatory employment practices, and sexual harassment, has also failed to grasp the enormous opportunity brought on by the Information Age. Betty Friedan, the venerable founder of the modern women's movement and someone always a step or two ahead of the crowd, is convinced that the reduction of work hours offers a way to revitalize the women's movement, and take women's interests to the center of public policy discourse.

Of course, employers will argue that shortening the workweek is too costly and would threaten their ability to compete both domestically and abroad. That need not be so. Companies like Hewlett-Packard in France and BMW in Germany have reduced their workweek while continuing to pay workers at the same weekly rate. In return, the workers have agreed to work shifts. Management executives reason that, if they can operate the new high-tech plants on a 24-hour basis, they can double or triple productivity and thus afford to pay workers the same.

In France, government officials are playing with the idea of forgiving the payroll taxes for employers who voluntarily reduce their workweek. While the government will lose tax revenue, economists argue that fewer people will be on welfare, and the new workers will be taxpayers with purchasing power. Employers, workers, the economy, and the government all benefit.

In this country, generous tax credits could be extended to any company willing both to reduce its workweek voluntarily and implement a profit-sharing plan so that its employees will benefit directly from productivity gains.

The biggest surprise I've encountered in the fledgling debate over rethinking work has been the response of some business leaders. I have found genuine concern among a small but growing number of business executives over the critical question of what to do with the millions of people whose labor will be needed less, or not at all, in an increasingly automated age. Many executives have close friends who have been re-engineered out of a job--replaced by the new technologies of the Information Age. Others have had to take part in the painful process of letting employees go in order to optimize the bottom line. Some tell me they worry whether their own children will be able to find a job when they enter the high-tech labor market in a few years.

To be sure, I hear moans and groans from some corporate executives when I zero in on possible solutions--although there are also more than a few nods of agreement. But still, they are willing--even eager--to talk about these critical questions. They are hungry for engagement--the kind that has been absent in the public policy arena. Until now, politicians and economists have steadfastly refused to entertain a discussion of how we prepare for a new economic era characterized by the diminishing need for mass human labor. Until we have that conversation, the fear, anger, and frustration of millions of Americans are going to grow in intensity and become manifest through increasingly hostile and extreme social and political venues.

We are long overdue for public debate over the future of work and how to share the productivity gains of the Information Age. The 1996 election year offers the ideal time to begin talking with each other--both about our deep misgivings and our guarded hopes--as we journey into a new economic era.

Jeremy Rifkin is president of the Foundation on Economic Trends and the author of The End of Work: The Decline of the Global Labor Force and the Dawn of the Post-Market Era (Jeremy P. Tarcher/Putnam, 1995).