Although jobs have been a common campaign issue in recent history, the anger and resentment that accompanied it in the 2016 election revealed the depth of the public’s fear, and its doubt about whether this is a problem our government will be able to solve. But when it comes to identifying the source of the problem, or how to fix it, many economists think people are misguided: it is not globalization but automation that is to blame. Yet there must be blame, because eliminating jobs is bad, right? Right?
Lost Jobs and Who’s To Blame
The Trump victory clearly showed the direction of many people’s resentment and their answer of who is to blame. The suspects are globalization, free trade, and immigrants, and they have all been found guilty. As we might expect, given the perpetrators, this has precipitated a rise in nationalism, xenophobia, and cultural sadism. While these are condemnable in their own right, we should also explore if the “culprits” really are to blame.
One study by researchers at MIT did find that globalization, and specifically trade with China, likely caused the rapid loss of between 2 million and 2.4 million jobs between 1999 and 2011. That is substantial, but amounts to less than half of the manufacturing jobs lost in the same timeframe. Although charges against NAFTA are debatable, its effect on U.S. employment largely seems to be negligible based on a review of the impact of NAFTA over its first two decades. The effects of immigration have some caveats, but a study by the National Academy of Sciences last year found that immigration has an overall positive impact on long-run economic growth in the U.S.; although first-generation immigrants are more costly to governments than native-born, the “the second generation are among the strongest fiscal and economic contributors in the U.S.”
But if these culprits don’t fully explain it, then who is to blame for job losses? Increasingly, experts say automation. One often cited study from Ball State found that about 13 percent of manufacturing jobs were lost to trade, while the rest were due to increases in productivity primarily driven by automation. This is an interesting point that bears some further attention. The key fact is that productivity is now at odds with employment, and recent history already shows us which of these seems likely to win out. Many analysts now claim that manufacturing jobs are not coming back, due to the simple fact that manufacturing has been coming back to the U.S., but the jobs haven’t. Since 2009, manufacturing output has increased over 25 percent, but in that time manufacturing employment is up less than 5 percent.
Source: Bureau of Labor Statistics via FRED
In the longer term, America has lost more than 7 million factory jobs since 1979, but American factory production has more than doubled in that time period. Put another way: in 1990, the average American autoworker made 13 cars per year; in 2010 the average autoworker made 18 cars per year. In short, you can now make more cars with fewer workers.
And yet for a number of reasons it is much easier to blame people than to blame technology. For one, technological advance is seen as a sign of progress — it represents both wealth and the means by which we produce more wealth. Clearly, it leads to more productivity, which is proclaimed as the antidote to our economic woes. We cannot stand in opposition to production, so we must look elsewhere to find the guilty parties.
Moreover, technology is associated with scientific progress — each new technical innovation provides further proof that we are coming to better understand the physical world. We value the devices in our pockets, and the increasingly complex products that make our lives easier.
