The U.S. economy has a technology problem, and it could use an intervention.
Every major wave of "disruptive" technology that has hit the economy since the 19th century has put millions of people at risk of permanent unemployment. The U.S. government has intervened to help in all but one of those technological waves: the one we're in right now.
The current tech revolution has improved living standards and created massive wealth for people at the top of the income scale. Tech proselytizers like Facebook CEO Mark Zuckerberg claim it will create millions of jobs in the future. But so far, the tech boom has coincided with poor job growth for ordinary workers and contributed to widening income inequality. Without bold action to help workers adapt to the upheaval of recent decades, those negative side effects could become permanent fixtures of the American economy.
“Whether the Internet and these other technologies are going to destroy jobs or create jobs, it totally depends on our response and what we do," said Erik Brynjolfsson, the director of MIT’s Center for Digital Business.
Facebook's recent purchase of the messaging app WhatsApp perfectly illustrates tech's impact on the job market and inequality. Critics noted that the social-networking giant paid $19 billion for a company with just 55 employees -- doing little to create jobs, while creating massive wealth for a tiny handful of people with highly specialized skills.
Zuckerberg claimed that WhatsApp and similar innovations have the potential to connect 1 billion more people to the Internet, creating 100 million new jobs.
But without government help, it's unlikely that technology will ever meet Zuckerberg’s lofty goal.
And history suggests this intervention should be pretty radical: When the industrial revolution transformed the agrarian U.S. economy, we pushed mass universal education to prepare Americans for factory work, Brynjolfsson pointed out. With the rise of automation in the early 20th century, we sent students to high school. And when veterans returned from World War II and found that many pre-war jobs had disappeared, we gave them money for college.
“Each of those three times, we protected a bunch of people from becoming unemployed because they didn’t have the right skills anymore,” said Brynjolfsson, the co-author of The Second Machine Age: Work, Progress and Prosperity in a Time of Brilliant Technologies.
President Franklin D. Roosevelt puts his signature on the G.I. Bill of Rights at the White House, putting into law the measure for veterans' aid, June 22, 1944.
The Internet certainly has the potential to boost employment. Internet connections give people more access to work opportunities, and the wealth created by startups like WhatsApp feed an "ecosystem" of coffee shops and car dealerships where the newly rich spend their money.
But this is small-scale, trickle-down job creation. Meeting the full promise of the Internet will require the commitment of the kind of big-scale money and time that businesses don't have. Bringing the Internet to a developing country, for example, often means building infrastructure like roads and power lines, the kind of projects that require tax dollars.
“The capacity for creating jobs is obviously there. The question is: Is this going to happen on its own?” said John Schmitt, a senior economist at the left-leaning Center for Economic and Policy Research. "It has to be part of a larger political process.”
The next government intervention must be a bit more “creative” than just pushing people into more schooling as we've done in the past, said MIT's Brynjolfsson. He suggested programs to support entrepreneurship and reforming the tax code in ways that encourage companies to hire, an approach also advocated by Microsoft co-founder Bill Gates.
But education is still key, Brynjolfsson said. He suggested a "grand bargain" with teachers, raising their salaries in exchange for greater accountability, to help recruit top college graduates into the field. Another approach is using technology to get the best teaching and materials to students of all income levels. Changing the K-12 curriculum and making the school day longer could also help better prepare students for the future job market.
“Learning how to sit quietly and follow instructions was really valuable in the 20th century,” Brynjolfsson said. “There are some different kinds of skills that we need to teach, and I do think things like creativity and leadership and motivation can be taught."
An approach being pushed by business leaders in Michigan is to boost state funding for higher education, with money tied to colleges meeting certain goals like graduation rates and the number of students on federal grants. An overall downward trend over the past few years of state funding for colleges has made four-year degrees unaffordable for many students. This trend needs reversing, said Domino's Pizza CEO J. Patrick Doyle, one of the execs spearheading the campaign.
"In order to generate more job growth and economic growth, we're going to need to increase the percentage of workers that have four-year degrees," Doyle said in an interview. He noted that 40 percent of all U.S. sales for Ann Arbor-based Domino's are online, and nearly one-third of its employees use advanced technology in their jobs.
"That is a very different workforce than what Dominos had a decade ago," said Doyle, who wants to take the campaign national. "If it's affecting a pizza place, then I can tell you the same thing is happening at the automotive companies, and at furniture companies, and all the other employers in Michigan."
Projected job growth of various industries until 2022.
In the meantime, people are trying out some smaller-scale fixes. For example, the San Francisco-based nonprofit SamaUSA teaches students in low-income pockets of northern California to use technology to find new jobs with old-school skills. The program turned a truck driver into an online consultant for trucking companies, and it taught a tattoo artist how to create a website to get his work known beyond his immediate hometown.
So far, SamaUSA gas trained 80 people and the majority have gotten jobs. Their average hourly wage is $14.50, up from $11.50 before they joined, the organization says. Tess Posner, the program's director, said she's confident it could be scaled up nationally, with online work training at government employment offices across the country.
Another fix could be to pay people for the value they're creating on the Internet. If a human translator's work is grabbed by an automated translator like Google Translate, then the human translator should get paid, according to Jaron Lanier, author of Who Owns The Future. If someone becomes a YouTube star, they should get paid for that, too.
"Previously when jobs were lost, it was because the world no longer needed what the people did,” Lanier said. “Now people are pretending that we don’t need them.”