BOTH the conservative notions of “pull yourself up by your bootstraps” and strong business orientation AND the liberal respect, support, and opportunity for the worker. To adapt to the new economy, companies, educational institutions, and workers themselves all need to do their part...
During the campaign season, Trump created a stir by targeting the Carrier Corporation's decision to move a plant from Indianapolis to Mexico. What people don't know is that Carrier offered to pay for tuition, books, and fees for those employees to return to school for up to 4 years. Despite this, most workers balked at the offer. Even though it is agonizing and extremely unsettling to lose a job, current American workers in certain industries need to wake up to the fact that the economy has fundamentally changed and they may need to change with it to stay employed – and they may need to move to find a job in another part of the country. Carrier provides an example of BOTH keeping a strong and competitive business edge while at the same time being pro-worker by providing the equivalent of a free bachelors degree. Pro-business and pro-worker.
It's About Cost And Work Ethic
This dynamic in our changing economy also occurs on the front end of the labor market. When I co-founded a technology company, we needed computer programmers and looked for bids from a wide variety of firms. We narrowed it down to 3 companies in the U.S. and 2 companies overseas. As we entered the final phases of selection, the Indian company not only cost about 4 times less, but they were willing to provide finished and completed units of software before we paid. The American firms, on the other hand, all said things like “we don't really know how long it is going to take” and “we will need to simply have an hourly rate” rather than agreeing to provide finished work products. For us, it wasn't just about the cost – it was a about the work ethic and attitude. It was quite clear that the overseas firms were hungry for the business and were hungry to develop a strong reputation. The American firms essentially told us to take it or leave it. Though we off-shored nearly all of our actual coding, we were able to hire over 100 people in higher level software engineering, analyst, and project management positions in the U.S. - a move that would not have been possible without the immense cost savings and hard work ethic of the Indian firm.
Un-Freeing the Free Market At Our Peril
Though Trump was able to swoop in and make a big spectacle about keeping the Carrier jobs in Indianapolis through promises of incentives – his approach is an artificial interruption to capitalism that is not sustainable. For the free market to work, it must be just that... free. Borrowing from an NPR story, Mark Perry, an economist from the conservative-leaning Enterprise Institute, explained that threatening to tax companies for offshoring jobs is a road we have been down in the past and is known as mercantilism. It became enshrined in the 1930 Hawley Tariff Act. Most experts say it backfired as our trading partners ended up simply taxing our goods back. Perry said that many people believe that Hawley “...made the Great Depression great.” The consumer needs to be considered as well as the worker.
Educational Status Quo = High Levels of Future Unemployment
Educational institutions also need to wake up and stop graduating / certifying students in areas of work that don't exist or that should be off-shored. Technological innovation has always delivered more long-term employment, but not without short-term job loss for those in careers that become obsolete. Education is the only thing that resets and modernizes the workforce. But, as an article in the January 2014 Economist cautions, things could be different this time around because we have never seen rapid innovation of the sort we are now. As we start to experience the disorienting and uncomfortable change from what MIT professor Andrew McAfee calls the “Second Machine Age,” are educational leaders doing enough to focus student learning on the right skills or are we graduating students who will have no chance in a radically different future job market?
Rewind the tapes to 1930 when economist John Maynard Keyes wrote an essay that envisioned “a middle way between revolution and stagnation that would leave our grandchildren a great deal richer than their grandparents” (Economist, 2014, p.24) but not without a period of time when generations of new workers leave school unprepared because the education system failed to adapt to what was to come. Former treasury secretary Larry Summers recently pointed out that the proportion of American adults participating in the labor market hit its lowest levels since 1978 and, if left to the current educational status quo, this could lead to 1 in every 7 adults being unable to participate in the labor market.
Lessons From Past Periods of Innovation
How can we tell which jobs will become obsolete and then begin to ensure that we are preparing today’s students for success tomorrow? In the past, jobs that involved routine and repetitive tasks such as weaving, tilling the soil, mathematical computations, and assembling were the first to become outdated. But, innovation was not just about replacing muscle with steam, it was about reshaping the jobs themselves to become complementary to the newly defined processes and technologies. As Northwestern economic historian Joel Mokyr highlights, more intricate machines and techniques required “careful tending and the workers who were prepared to provide that care were well rewarded” (Economist 2014, p.25).
What We See Now
Fast forward to recent innovations. Do you remember the job called “travel agent” and how online, do-it-yourself, flight sites seemed to erase that career almost overnight? Think about how the even more recent phenomenon known as crowd-sourcing (i.e. letting the user community do things that were once reserved for a select few) is starting to have a profound impact on the economy. Uber, Lyft, and other transportation mobile apps are forcing the taxi industry to improve availability and service or face extinction because of easy consumer access to cheaper, higher quality, options. Think about how Yelp has changed which services and products are consumed by providing an easy way to read reviews and learn more. And, cloud-based hosting services and do-it-yourself website creation tools have made it possible for anyone with a great idea and a vision to throw out a digital shingle and compete in the marketplace without having to invest in computer hardware or designer services from a professional coder. What does this mean for the future labor market? The impact of technological innovation takes awhile to appear and has a different impact on each industry.
The future belongs to students who are lucky enough to be educated in environments that:
Place an emphasis on building the machines and improved processes of the future through a process of trial and error and creativity that requires human flexibility.
Encourage entrepreneurship and practice using the multitudes of tools that make it easy to create a new startup with a big idea / innovation that fills a need in the modern economy.
Build cognitive dexterity, or the ability to adapt to unique and complicated problems as they arise.
Offer opportunities to specialize in more emotive occupations that are not yet suited to machines.
If history repeats itself, technological innovation and a global workforce will squeeze many people in the short term but will lead to overall higher levels of wealth in the long term – that is, if we don't artificially meddle with the market. This period of uncomfortable maladjustment and dangerous concentrations of wealth to a handful of a lucky few can be minimized if companies follow Carrier's example and re-train current workers who are being displaced, if educational leaders accelerate the changes necessary to adapt programs to graduate students in appropriate and available jobs, and if current and future workers brave adversity and show a willingness to work hard and change – even if it doesn't seem fair.