By John P. Desmond, AI Trends Editor
Rising productivity brought on by automation has not led an increase in income for workers. This is among the conclusions of the 2020 report from the MIT Task Force on the Future of Work, founded in 2018 to study the relation between emerging technologies and work, to shape public discourse and explore strategies to enable a sharing of prosperity.
“Wages have stagnated,” said Dr. Elisabeth Reynolds, Executive Director, MIT Task Force on the Work of the Future, who shared results of the new task force report at the AI and the Work of the Future Congress 2020 held virtually last week.
The report made three areas of recommendations, the first around translating productivity gains from advances in automation to better quality jobs. “The quality of jobs in this country has been falling and not keeping up with those in other countries,” she said. Among rich countries, the US is among the worst places for the less educated and low-paid workers.” For example, the average hourly wage for low-paid workers in the US is $10/hour, compared to $14/hour for similar workers in Canada, who have health care benefits from national insurance.
“Our workers are falling behind,” she said.
The second area of recommendation was to invest and innovate in education and skills training. “This is a pillar of our strategy going forward,” Reynolds said. The report focuses on workers between high school and a four-year degree. “We focus on multiple examples to help workers find the right path to skilled jobs,” she said.
Many opportunities are emerging in health care, for example, specifically around health information technicians. She cited the IBM P-TECH program, which provides public high school students from underserved backgrounds with skills they need for competitive STEM jobs, as a good example of education innovation. P-TECH schools enable students to earn both their high school diploma and a two year associate degree linked to growing STEM fields.
The third area of innovation is to shape and expand innovation.
“Innovation creates jobs and will help the US meet competitive challenges from abroad,” Reynolds said. R&D funding as a percent of GDP in the US has stayed fairly steady for states from 1953 to 2015, but support from the federal government has declined over that time. “We want to see greater activity by the US government,” she said.
In a country that is politically divided and economically polarized, many have a fear of technology. Deploying new technology into the existing labor market has the potential to make such divisions worse, continuing downward pressure on wages, skills and benefits, and widening income inequality. “We reject the false tradeoffs between economic growth and having a strong labor market,” Dr. Reynolds said. “Other countries have done it better and the US can do it as well,” she said, noting many jobs that exist today did not exist 40 years ago.
The COVID-19 crisis has exacerbated the different realities between low-paid workers deemed “essential” needing to be physically present to earn their livings, and higher-paid workers able to work remotely via computers, the report noted.
The Task Force is co-chaired by MIT Professors David Autor, Economics, and David Mindell, Engineering, in addition to Dr. Reynolds. Members of the task force include more than 20 faculty members drawn from 12 departments at MIT, as well as over 20 graduate students. The 2020 Report can be found here.
Low-Wage Workers in US Fare Less Well Than Those in Other Advanced Countries
In a discussion on the state of low-wage jobs, James Manyika, Senior Partner, McKinsey & Co., said low-wage workers have not fared well across the 37 countries of the Organization for Economic Cooperation and Development (OECD), “and in the US, they have fared far worse than in other advanced countries,” he said. Jobs are available, but the wages are lower and, “Work has become a lot more fragile,” with many jobs in the gig worker economy (Uber, Lyft for example) and not full-time jobs with some level of benefits.
Addressing cost of living, Manyika said the cost of products such as cars and TVs have declined as a percentage of income, but costs of housing, education and health care have increased dramatically and are not affordable for many. The growth in the low-wage gig-worker type of job has coincided with “the disappearance of labor market protections and worker voice,” he said, noting, “The power of workers has declined dramatically.”
Geographically, two-thirds of US job growth has happened in 25 metropolitan areas. “Other parts of the country have fared far worse,” he said. “This is a profound challenge.”
In a session on Labor Market Dynamics, Susan Houseman, VP and Director of Research, W.E. Upjohn Institute for Employment Research, drew a comparison to Denmark for some contrasts. Denmark has a strong safety net of benefits for the unemployed, while the US has “one of the least generous unemployment systems in the world,” she said. “This will be more important in the future with the growing displacement caused by new technology.”
Another contrast between the US and Denmark is the relationship of labor to management. “The Danish system has a long history of labor management cooperation, with two-thirds of Danish workers in a union,” she said. “In the US, unionization rates have dropped to 10%.”
“We have a long history of labor management confrontation and not cooperation,” Houseman said. “Unions have really been weakened in the US.”
As for recommendations, she suggested that the US strengthen its unemployment systems, help labor organizations to build, raise the federal minimum wage [Ed. Note: Federal minimum wage increased to $10/hour on Jan. 2, 2020, raised from $7.25/hour, which was set in 2009.], and provide universal health insurance, “to take it out of the employment market.”
She suspects the number of workers designated as independent contractors is “likely understated” in the data.
Jayaraman of One Fair Wage Recommends Sectoral Bargaining
Later in the day, Saru Jayaraman, President One Fair Wage and Director, Food Labor Research Center, at the University of California, Berkeley, spoke about her work with employees and business owners. One Fair Wage is a non-profit organization that advocates for a fair minimum wage, including for example, a suggestion that tips be counted as a supplement to minimum wage for restaurant workers.
“We fight for higher wages and better working conditions, but it’s more akin to sectoral bargaining in other parts of the world,” she said. Sectoral collective bargaining is an effort to reach an agreement covering all workers in a sector of the economy, as opposed to between workers for individual firms. “It is a social contract,” Jayaraman said.
In France, 98% of workers were covered by sectoral bargaining as of 2015. ”The traditional models for improving wages and working conditions workplace by workplace do not work,” she said. She spoke of the need to maintain a “consumer base” of workers who put money back into the economy.
With the pandemic causing many restaurants to scale back or close, more restaurant owners have reached out to her organization in an effort to get workers back with the help of more cooperative agreements. “We have been approached by hundreds of restaurants in the last six months who are saying it’s time to change to a minimum wage,” she said. “Many were moved that so many workers were not getting unemployment insurance. They are rethinking every aspect of their businesses. They want a more functional system where everybody gets paid, and we move away from slavery. It’s a sea change among employers.”
She said nearly 800 restaurants are now members of her organization.
For the future, “We don’t have time for each workplace to be organized. We need to be innovating with sectoral bargaining to raise wages and working conditions across sectors. That is the future combined with workplace organizing,” she said.
Read the 2020 report from the MIT Task Force on the Future of Work; learn about IBM P-TECH and about One Fair Wage.