The Future of Work and Pay – Part 2

November 30th, 2017

Automation, Output, and Employment

 

Today’s post is by Mike Figueroa, Assistant Director of Customer Services at SafeSourcing.

When I was in high school, a music album cost me $15-$20. Today, for $10 a month or less, I can literally listen to any song in the world as much as I want. Similarly, the amount of calories that are available to me for relatively little money is greater than it’s ever been in the history of mankind. Medical advancements have lowered mortality rates, and will allow me to live longer than I ever would have been able to in past decades. So in many ways, you could say that even after compensating for inflation, we are more wealthy today than we have ever been just in terms of access to more, cheaper, and better quality resources. However, we also need to consider that the producers, like in the music industry, are making only tiny fractions of what they used to. This loss of profit margin spans across all industries being affected by automation, and equates to there being less jobs available, as well as less pay available  for those positions. However, there are many who think that because income used to be higher when compared to inflation, and things like education and healthcare used to be cheaper, that we should revert back to the industrial practices of previous decades.

Although manufacturing is critical to output, not all manufacturing practices should be lumped together in the same bucket. To say that an industrial machine press of 30 years ago is the same as one from 2017 would be ludicrous. Today’s machine presses have a throughput that is higher, and their operation takes much less man power than of previous generations. Factory jobs that used to need thousands of workers now take hundreds, and require much more advanced education. So when it is proposed that the solution to all of America’s problems is to gain back the factory jobs of the 90’s, we should take the advice Steve Job’s gave to Obama in 2011 when he said, “American manufacturing jobs are not coming back”. To go back to the factory jobs of 30 years ago, would be to reduce the available efficiency, and therefore increase the cost of current goods. In short, there’s no going back to “the way things were”.

For America to be competitive in the marketplace, manufacturing jobs will need to either have the same level of automation that modern international factories do, or be able to pay their laborers pennies on the hour as they do in countries with lower wage markets. Obviously, more productive capacity per capita is always the better option, but society will have to adjust to a new normal of lacking low-skill labor opportunities.

Work, career goals, professional community, and monetary incentive to produce goods and services are important reasons to keep the able-bodied working. So how do we keep our society doing fulfilling work, at a livable wage without de-incentivizing high level output and innovation? There are a few ideas being discussed right now:

• Universal Basic Income: A flat income rate, given to every citizen, regardless of how much or how little they work, or income they have.

• Negative Income Tax: A flat tax rate across all income brackets, but with payments (negative tax) given to those individuals whose income falls below a minimum.

• Working Income Tax Benefit: A tax credit that is given out for to those who work, with the benefit being tied to how much they work, up to a certain threshold.

These are just a few of the models being discussed right now that have risen to prominence. However, the conversation is far from over, and there will be many considerations to explore for a very complex problem. One thing is certain: That either technology will stop advancing, or work as we know it will fundamentally change.

What other potential solutions are there?  We would love to hear your feedback. Please leave a comment or for more information on how SafeSourcing can assist your team with this process or on our “Risk Free” trial program, please contact a SafeSourcing Customer Service Representative. We have an entire customer services team waiting to assist you today.

 

 

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