Continuing from an earlier post, the effects of this second Industrial Revolution won’t appear overnight, and when the shift is in full swing, new jobs will be created to “manage and maintain the machines.” In this post, we’ll take a quick look at what the possible economic effects could be.
In a world of machines doing entry level quality work, economic inequality could soar in such a world, but unemployment would not necessarily spike. If governments refuse to allow jobless workers to fall too far below the average standard of living, then you’d hope the minimum wage would rise steadily, and ever more workers may find work unattractive. On the other hand, the higher the minimum wage rises, the greater the incentive to invest in capital that replaces labor. Any new jobs that would be created would require skills and education that many mid-wage workers lack and this could contribute to a growing economic inequality.
So while technology might eliminate jobs in some older industries, as long as new technologies generate major new demand meeting new needs, the net effect does not mean permanent unemployment. Clearly some new technologies such as the driverless car will, indeed, address major unmet needs. In this process, specific jobs and specific occupations will be eliminated. This may increase economic inequality for a time. And the new opportunities will require new skills and new business models; these might be difficult and slow to develop. Nevertheless, this view of the future differs sharply from the predictions of a dystopia with permanent mass unemployment and ever-widening economic inequality. Yet the data show that the first wave of computer technology has displaced workers, not replaced them.
As long as technology continues to address major unmet needs, machines do not determine our fate. Just because machines take over some human tasks, that does not mean the end of jobs. We do, however, need to figure out how workers can develop new skills and how entrepreneurs can create new business models to generate the new demand that will provide growing employment.
P.S. – Learn how to code (for the hundredth time)