an editorial opinion
In the future these could be the good old days
By Marvin Cetron
President, Forecasting International
In 2011, this young businessman's virtual reality computer interface was the stuff of Hollywood movies. In 2021, it is in daily use.
AI pervades modern airplanes, which take off and land, navigate congested airspace, avoid collisions, diagnose their own faults, and even make some in-flight repairs to instruments and electronics, all without human intervention.
As a result, many airlines and corporate fleets now fly with a single pilot where 2 would have been required even 5 years ago. Few pilots have lost their careers as a result, but few are being hired except to replace retirees.
Coping with change
The world is very different from how it was in 2011. It has been more than 10 years since the American economy created enough jobs for everyone who needs them. Young people coming into the labor market compete for employment with those who, in an earlier day, would have retired at 65. We are coping with this transformation in a variety of ways, including some that would have been unthinkable in 2011.
In the Great Depression of the 1930s, President Franklin Roosevelt created the Civilian Conservation Corps, the Tennessee Valley Authority, and other programs under which the federal government hired the unemployed when private industry could not.
In the recession of 2007–08, more than one liberal economists suggested that it was time to follow Roosevelt's example. President Obama declined, perhaps because he feared adding to the federal budget deficit, or perhaps because his Republican opposition in Congress would have blocked the measure.
By 2014, there was little alternative. Some 2 million jobs lost in the previous recession had yet to be replaced, and young people entering the labor market had been failing to find work at a rate of more than 20,000 per month since 2009. U6 was already over 20%.
A few economists suggested that true unemployment was higher still because even U6 omits discouraged workers who dropped out of the job market in the relatively distant past. It also omits the self-employed who cannot find enough work to fill a normal week.
In Jul 2014, the administration created the National Infrastructure Authority (NIA). Over vocal conservative opposition, Congress funded it with $1 trillion in long-term borrowing.
NIA quickly became the nation's employer of last resort. By 2015, it had hired some 3.5 million Americans, most of them at slightly more than the minimum wage. It put them to work repairing bridges, highways, city water systems and other long neglected public assets. Seven years later, NIA employs 4 million people and shows no sign of becoming obsolete.
A second measure cut the work week from 40 hours to 37, even for salaried employees, and required triple overtime for anyone forced to work longer. As a result, in less than a year US companies hired 1 new worker for every 20 already on their payroll. Average salaries declined to compensate for much of the additional cost, but at least people had jobs.
Many companies also loosened their work requirements to let 2 people share 1 job. This was particularly helpful for seniors and mothers with younger children, who might need extra income and had the skills and experience employers needed, but did not want to take on a full-time job.
Today, in 2021, an estimated 7% of nominal 37-hr jobs are shared.
We have also witnessed the rise of local/nano economies and pseudomoney. People with useful skills and time on their hands offer their work at online barter sites in exchange for credits that serve as onsite money.
In a typical transaction, an unemployed carpenter might offer to work for 15 credits per hour, then use 25 credits to hire a babysitter for an evening. Most barter sites operate locally in small cities or even neighborhoods. However, some that specialize in information services operate internationally.
In the past 5 years, a few barter sites have begun offering reciprocity programs, enabling members with credits earned on an international site to spend them locally. Others make it possible to buy goods with credits, and sometimes even to exchange for cash.
There are no reliable statistics to measure the value of these barter programs. In many countries, barter sites may eventually grow into a substantial, and largely unaccountable, addition to GDP.
The years since 2011 have been difficult for many of us throughout the developed world. Virtually all of us have found it necessary to adapt to an age in which human labor is increasingly replaced by machines, work is scarce, incomes are limited, and the future promises only more of the same.
Yet we have managed to adapt and survive. And we build meaningful lives despite the loss of jobs as a central part of existence. In the years ahead, more jobs will be lost as computers learn to do almost everything humans can. One of the most difficult challenges we face is figuring out how to distribute goods and services in a world where the concept of work for pay is obsolete.
This article paints a deliberately extreme scenario. It includes many events that may not come to pass. For example, Europe may not suffer a financial meltdown, in which case it will be a much better position to support the US economy in time of need.
It also omits many positive developments. "What about the future evolution of electric cars, wind power, solar power, the reduction of people getting married and thus less babies coming in to the world," asks Steve Varsano, managing director of The Jet Business, in London, England. "What about new entrepreneurial inventions, discoveries or developments?"
He is right. Not everything that happens in the next 10 years will be disastrous. However, a few potential calamities have been omitted as well. "Don't forget climate change, warming oceans and their direct/indirect impact," writes Jetcraft Avionics VP Avionics Systems Ken Elliot. "Weather extremes will become the norm [as they already are in some places], causing major world-changing events that will completely shift the dynamics of our forecasting. More despots [may] emerge and make huge influences on this planet—and we're due another major world conflict."
We strongly suspect also that the so-called Arab Spring will fail and hopes of democracy in northern Africa and the Middle East will die. In that case, Islamist movements are likely to take over Libya, Iraq—a good bet in any case—and perhaps even Saudi Arabia. This could threaten US access to much of the oil it now depends on. Anyone old enough to remember the blocks-long gas lines of the early 1970s will understand what that implies.
However, our main points are not speculation.
They are observation and forecast. Technology really is displacing jobs faster than economies now create them. This is particularly true in the US. Over the next 10 years, these losses will spread from manufacturing and middle management into the professions.
And jobs lost to recession, like most of the jobs lost in 2007–08, will be lost permanently.
Thus far, policy makers in Washington and other capitals have not dealt effectively with this reality. In fact, they show no sign of understanding what is to come. That failure will make our future much more painful than it needs to be. Thus, this retrospective from one possible if all too likely future.
The notion that we will support ourselves by working for a salary or wage is not quite obsolete—but it will be in the foreseeable future. Figuring out how to distribute goods and services fairly in this new age may be the most difficult and revolutionary societal challenge since the invention of the job itself more than 500 years ago.
Forecasters are sometimes mistaken for optimists. In fact, we are neither optimists nor pessimists. We go where the data leads. Over the next 10 years, it leads to growing unemployment and the loss of jobs as a useful tool for the distribution of society's benefits.
Marvin Cetron is a forecaster and futurist. He has carried out studies for about 450 of the Fortune 500 companies, as well as numerous trade associations and government agencies. Cetron was an adviser to the White House from the days of President Kennedy through the 2nd Clinton administration.