What the Robots Are Doing to the Middle Class

The simplistic response to the impact of artificial intelligence (AI) on employment is that we've experienced this before, during the Industrial Revolution and beyond, and that the "market" will eventually provide plenty of jobs. The reality is that tens of millions of Americans will have to accept food service and retail and personal care jobs that don't pay a living wage.

The Deniers: The Middle Class Has Nothing to Worry About

Optimism is the feeling derived from sources like The Economist, which assures us that "AI will not cause mass unemployment...The 19th-century experience of industrialisation suggests that jobs will be redefined, rather than destroyed.." The Atlantic concurs: "The job market defied doomsayers in those earlier times, and according to the most frequently reported jobs numbers, it has so far done the same in our own time." And even economist Dean Baker scoffs at the tech takeover of jobs: "Large numbers of elite thinkers are running around terrified that we will have millions of people who have no work because the robots have eliminated the need for their labor...The remarkable aspect to the robot story is that it is actually a very old story. We have been seeing workers displaced by technology for centuries, this is what productivity growth is."

Perhaps most significantly for the optimists, the New York Federal Reserve found that since 2013 over two million jobs have been added in transportation, construction, administration, social services, education, protective services and other middle-wage areas.

The Doomsayers: The Middle Class Is Disappearing

According to a comprehensive study by Citi and Oxford University, nearly half of American jobs are susceptible to automation. Based on analysis that one reviewer calls "some of the most important work done by economists in the last twenty years," a National Bureau of Economic Research study found that national employment levels have fallen in U.S. industries that are vulnerable to import competition, without offsetting job gains in other industries. Bank of America Merrill Lynch estimates an annual $9 trillion in employment costs within ten years due to the impact of AI and robots. The McKinsey Global Institute concludes that technology and related factors are having "roughly 3,000 times the impact" of the Industrial Revolution.

Recent reports by Pew, the IMF, and Randstad all confirm the phenomenon of job polarization, with new jobs trending toward either low-wage or upper-middle-class positions.

The Reality: BOTH SIDES ARE RIGHT -- The Middle Class is Splitting into Upper-Middle and Lower-Middle

A Brookings report summarizes: "The traditional middle of the job market...has indeed been declining rapidly. But another set of middle-skill jobs - requiring more postsecondary education or training - in health care, mechanical maintenance and repair and some services - is consistently growing." In confirmation, an Urban Institute report notes that the upper middle class grew from 12.9 percent of the population in 1979 to 29.4 percent in 2014.

As globalization has eliminated many blue-collar jobs, technology is driving the surge to high-skilled positions, and an expanding service economy is creating jobs that usually fail to pay what people are worth. Most of the jobs anticipated for the near future are low-wage occupations -- customer service, food processing and delivery, health care, personal care, teaching assistants, 'caring' jobs. The Department for Professional Employees estimates that nearly 10 million service industry jobs will be added in the next decade. At the other end are the tech and professional and high-paying jobs: Java application developer, internet security specialist, nurse practitioner, dental hygienist, statistical analyst, data mining specialist, physical therapist. As for the aforementioned mid-level jobs in transportation and construction, many of them will be threatened, respectively, by driverless vehicles and 3D printers.

The Fear: Upper-Middle-Class Jobs Going to People of Privilege

The living-wage middle-class jobs added in recent years primarily benefit of people with experience, people with education and connections, people who are male and white. Many of them became Trump supporters. Black workers, including those with education and experience, have been disproportionately hurt by the cutbacks in federal, state, and local government, which had employed one out of five black adults.

Now middle-class jobs are indeed appearing in contractor and construction and carpentry and managerial positions, but getting a job is a job in itself. In New York City, for example, jobseekers waited eight days for a chance to apply for a carpentry apprenticeship. Black applicants face ugly forms of discrimination: studies show that white men with criminal records are more likely to get a callback than blacks without a criminal record. And that applicants with white-sounding names are 50% more likely to get a callback than those with black-sounding names.

The Curse: Society Moves Much More Slowly Than Technology

A final relevant consideration was hinted at by The Economist, in talking about technological revolutions of the past: "It took several decades before economic growth was reflected in significant wage gains for workers -- a delay known as Engels' pause."

There's no reason to expect anything different today. It may be worse, considering the degree of political inertia in job creation. We will need a guaranteed income, ideally through guaranteed jobs, with the implementation of a financial transaction tax, and with a commitment to alternative energy infrastructure development.

This may be the only way to compete with the robots.