As fleets of driverless cars are hitting the streets this month, what will happen with the drivers? Some tech CEO’s claim that new jobs will emerge easily, but experts paint a picture of a future with a heavily decreased human labor force.
Automation starts on the roads
There’s no doubt that 2016 has been a sensationally hot year for auto tech. This week’s acquisition of Chariot by auto manufacturer Ford marked just another indication that big auto makers are seriously entering ride-sharing services. Other M&A activity this year such as GM’s acquisition of Cruise or Volvo’s partnership with Uber has firmly pointed to big auto certainly also starting to secure paths for monetizing on the future fleets of autonomous vehicles.
In August, CB Insights pusblished the great timeline below of auto tech M&A activity. It’s now already becoming outdated at a rapid pace.
These recent energitic developments, as well as Elon Musk’s Master Plan Deux, makes one thing clear; the transition to autonomous autos will be a reality sooner than later.
The tech CEO answer to unemployment
Consequently, the debate on unemployment for drivers is a pressing matter. The world’s labor force in transportation is today around 1% of the population; 70 million people on a global scale and around 3.6 million in the US. Does that mean more than 3 million people in the US will be out a job soon?
Uber’s CEO Travis Kalanick recently stated that drivers shouldn’t worry, as complete new sub-industries and jobs will emerge from this forthcoming technological revolution.
The analogous classic example, favored by LinkedIn’s Reid Hoffman, is the story about the American food production industry. Here 40% of the population which was once employed in the industry relocated to new industries without any problems, as the 40% has dropped to only 2% over the years. As the theory goes; losses of incomes in one place create new incomes in another place.
Why we can’t use the past to predict this one
This time it’s different however. We’re not any longer dealing with railroads substituting horses, or textile mills taking over the manual jobs of artisans. Machines are not any longer confined to singular tasks, but now able to do decision making on their own, which according to leading researchers from MIT and Oxford changes everything.
For the first time, the next technological wave may not be a net creator of jobs, but a net destroyer. The forthcoming transition to autonomous cars is just the first wave of machines taking over human jobs. The World Economic Forum predicts a net loss of 5 million jobs globally just by 2020, across many industries due to automation.
Our future generations will increasingly all lose their jobs to digital minds of intelligent machines. But hey, that’s fine. Being the optimist that I am, I prefer to believe that we can live in abundance with more prosperity and free time for everyone, all achieved through technology. Cool right?
However, until we reach this beautiful future equilibrium, there are some serious challenges ahead of us that need to be addressed. As you have probably guessed, the main ones are structural unemployment and large wealth gaps.
Societal class warfare - wow, that escalated quickly
As always, the first jobs to go are the low-skilled middle-class jobs. Experts argue that the pace of technological development will be increasingly faster than the pace of new job creation and re-location for unemployed labor. This means that unemployment will not decrease and the middle-class will be the first to deteriorate economically.
This is very visible from the growing gap between productivity and the typical worker’s compensation. Since the ancient times of the Aristotle, a strong middle-class which pays tax and spends their income, has been widely recognized as a critical economic factor in a sustainable society. A ruined middle-class will have vast consequences for economic and political stability globally. Instabilities could even reach extreme levels such as riots and societal class warfare, due to automation.
What should leaders really do?
I am truly very inspired by the vision and execution of Travis Kalanick. Uber is more than any other company (maybe just except for Otto) crushing it, riding the inevitable wave of technological development. But as such a central figure in the scene, stating that unemployment caused by automation and machine learning will just fix itself is just disappointingly inaccurate.
The first part of solving a problem, is acknowledging its existence. Leaders from all over the world, corporate and political, must acknowledge the challenge ahead of us. A challenge which can be solved. But only if we all acknowledge it and work together and prepare for the waves of unemployment that will inevitably hit us.
A world without work
So, what’s the solution? The World Economic Forum addressed the matter on the annual meeting in Davos this year, resulting in the report “The Future of Jobs”. The report suggests re-skilling, better training of labor and job rotation as a few of the solutions.
HR - and workforce strategies will not merely have to take into account the best outcome for the organization, but play a vital role in global employment dynamics. Suddenly Corporate Social Responsibility (CSR) will increasingly gain a completely new definition.
Another more disruptive alternative suggested by researchers and economists the world over is the basic income concept. Stretching back to the 1600s, the idea has through time been proposed by figures such as Martin Luther King Jr. and Milton Friedman. With supporters and opponents on both the left and right, basic income experiments have so far shown great results.
However practice is often far from theory, and far from perfect too. The basic income experiments are still merely experiments. Only if both corporate and political leaders work together responsibly on how we can adapt to a new world order with less jobs, can we find the practical and most optimal solution that will bridge our path to abundance. As luxury industry and private equity multi-billionaire Johann Rupert recently put it “We’re in for a huge change in society, get used to it and be prepared”.
What do you think? Will job-stealing robots be our end? Don’t hold back with comments. Thank you for reading.