Working till 2025: Crossing the Bridge

We are not here to curse the darkness, but to light a candle that can guide us through the darkness to a safe and sure future. For the world is changing. The old era is ending. The old ways will not do.” — John F. Kennedy

In the “introduction” to this series, I said that I “visualize myself running across a wood plank footbridge that is collapsing behind me: to remain working I must continuously stay one step ahead of rapidly changing economic conditions.” I also said that this series was not going to Foot_bridge_Bahia_Drakebe all about doom and gloom, yet you may feel that I’ve laid out a pretty bleak picture of both the current and future jobs situation. Before talking about the benefits of this new digital age, let me briefly discuss where we’ve been. In the second post, “past economic trends,” I introduced the raging debate among economists about the influence technology has on the economy. I showed that the historic trend, of wages tracking productivity, began breaking down in 1975. Since then, productivity has continued to climb, but wages have remained flat, except for workers with the highest skill levels. Also, demand is up for workers at the two ends of the spectrum, high and low skills, but down for the large pool of people who are middle skilled. In the third post, “life is tough these days,” I told you many things that you likely already knew: unemployment remains high, the labor participation rate is declining, long-term unemployment is a trap, average household income is falling, and it really does not feel like the recession has been over for more than four years. Also, I tried to cut through the noise of monthly labor reports, and define a macro trend for the “at risk” population (people who are suffering from unemployment, involuntary part-time employment, or underemployment). My conclusion was that one-third of the potentially working population is at risk, and the numbers are rising. In the fourth post, “the digital revolution,” I explained why I believe that technology is driving a historic shift, one that is at least as significant as the industrial revolution, and one that will happen with great speed. I ended with a study, featured on the London School of Economics and Political Science Blog, that concluded that computerization threatens about 50% of current occupations in the U.S. Maybe new occupations will emerge, but I think I’ve made a good case that many people will find the transition phase unpleasant.

I’ve dedicated this last post in the series to crossing the bridge. What do I mean by this, and why do I think it will take so long? First, I expect poor economic conditions to continue. Paul Krugman recently wrote a column, “A Permanent Slump?“, where he asked “What if depression-like conditions are on track to persist, not for another year or two, but for decades?” He calls this “secular stagnation,” a persistent state in which a depressed economy is the norm. Krugman notes that if consumer demand remains weak, unemployment will remain high. He suggests possible macroeconomic reasons, including slowing population growth and persistent trade deficits. He does not mention technology, so let’s put that to the side for the moment. The point is that the economy is not likely to recovery soon. Second, zealots will continue to make it difficult to govern, and so it will be hard to put policies in place to solve these economic problems. Consider that a minority party forced a government shutdown, blocked judicial appointments, and, at the state level, has led a campaign against workers (including efforts to limit or restrict sick leave, workplace safety standards, time for meals, child labor standards, and minimum wage). Third, while these problems are happening, we will enter the digital age where about half of current U.S. occupations will be under threat of computerization. Economic issues, government challenges, and technological changes will make getting to the other side of the bridge quite challenging.

What will a prosperous twenty-first century economy look like? I don’t know the answer to that question, but, more importantly, I don’t believe that economists know either. One narrative is that macroeconomic principles will play out as they always have in the past. New occupations will emerge to replace those that have become obsolete, and we’ll return to rising productivity and full employment. An alternative narrative says that, as we continue to transform from connected regional economies to an integrated world economy, the dynamics of the economy will change. Our experiences from the past won’t guide us to accurate predictions about the future. Our economy will have become a single closed system where it may no longer be possible for the U.S. to have continuously increasing productivity, and the full employment that went along with it. Economists may need to build new models for the twenty-first century economy, and we may need to reconsider the nature of work itself.

The Next Enlightened Age

Regardless of how the economists settle this debate, this new technological age is a great opportunity. Many authors have suggested that we can, if we choose, enter into an age of abundance and sustainability. For instance, Peter H. Diamandis and Steven Kotler offer an optimistic view of the future in their book Abundance, The Future is Better Than You Think.  The technology that is coming will give us the opportunity to solve massive problems, including poverty, disease, climate change, and more. But, technology alone is no silver bullet. We need to re-think our core principles and figure out how to build a sustainable economy. Exponential growth cannot continue forever; we need to imagine a steady state that provides security, opportunity and prosperity to everyone.

We need a society where the workforce is fluid, and people can easily move between jobs. Switzerland is considering a proposal to give every citizen a basic income, no strings attached. I think this idea is worth more study. Some worry about the cost, not to mention creating a disincentive to work. But, perhaps those worries are overblown. Perhaps people would be more willing to take risks, and become entrepreneurs, if we guaranteed everyone a minimum income. If people had dignity and security, perhaps they could walk away from low-end jobs unless the employer offered fair pay and good working conditions. They would not have to accept such jobs just to survive. There is conservative appeal to this idea as well: it would replace many government programs, especially if it was simple and had no needs testing. If people had basic income (for security and dignity), had access to health insurance (regardless of their employment situation), and could get any level of education (without going into debt), then we would curb poverty and enable the workforce to thrive in the twenty-first century. People, if standing on a solid foundation, might be able to take part in “free, voluntary exchange to mutual benefit” (Ayn Rand) as libertarians and others so want.

Maybe these predictions are overly optimistic (many authors also write about a future that is a dystopia), but if you believe that the result will largely depend on the choices we make, then I see no reason not to hold out hope and fight for the better outcome. An essay in the Weekly Sift discusses how Nate Silver made the interesting observation that the printing press led to the enlightenment, but only after 300 years of polarization and war. Silver says that when initially faced with information overload that we “engage with it selectively, picking out the parts we like and ignoring the remainder, making allies with those who have made the same choices and enemies of the rest.” Silver goes on to draw a parallel to the rise of the internet, observing that the information overload has led to polarization in our time. As the digital revolution unfolds, I am hopeful that the outcome will be another period of enlightenment. I am also hopeful that, like the pace of technology, the pace of history will be much faster this time. There will be plenty of time to think about what the world, and the economy, will look like beyond 2025. I will, however, close this series by considering just the transition period.

Timeline to 2025

Let me show, as a context, how computers will advance. You likely use a device with a microprocessor based on 22 nanometer technology; the first such microprocessor came out in 2011. Intel plans to ship 14 nanometer technology in laptops in 2014. Looking to the future, new 10 nanometer technology will emerge, and perhaps another generation (7 nanometer technology) by the end of the decade. In my last post, I described how exponential growth is slow for a long time, and then explodes. Also, earlier in this series, I mentioned how my personal computer today was 60,000 times faster than the IBM PC AT I used years ago for robotics research. Using that as a baseline, I’ll outline how computer technology might advance.

  • Current PC (22 nanometer technology): 60,000 times faster than IBM PC AT
  • 2014 (14 nanometer technology): 120,000 times faster
  • 2016 (10 nanometer technology): 240,000 times faster
  • 2018 (7 nanometer technology): 480,000 times faster
  • 2020 (tentative, alternate technology): 960,000 times faster
  • 2022 (tentative, alternate technology): 1,920,000 times faster
  • 2024 (tentative, alternate technology): 3,840,000 times faster

The dates are approximate, the doubling factor is inexact, and alternative technologies are still in the laboratory. Nevertheless, the macro trend is clear: digital technology is going to explode in terms of computational power. With this timeline in mind, I’ll outline the coming years.

2013 – 2016: The MIT Sloan Management Review recently published a study asserting that embracing digital technology is a strategic imperative for companies — “adopt new technologies effectively or face competitive obsolescence.” Over three-quarters of the participants saw the transformation as urgent, but many also complained about “innovation fatigue” given the number of changes they’ve recently been through. The pace of change, however, is speeding up, and the group most energized about taking on the challenge is the younger generation.

Perhaps rapid changes will create opportunities for start-ups with disruptive technologies and products. IT spending, which exceeds $3 Trillion worldwide, will stay focused around cloud, mobile, social, big data and analytics. New platforms for application development continue to emerge: IBM recently announced the Watson Ecosystem, based upon the computer that won at Jeopardy, to “spur innovation and fuel a new ecosystem of entrepreneurial software app providers.” As of 2012, the internet switched to a new protocol, setting the stage for an emerging “internet of things.” Soon, you’ll be shopping for a smart watch, and robots will do work in new places, such as farms and mining operations. Young people are creating their own digital brand, and they’re networking not just with LinkedIn, but also with new communities, such as FounderDating and MeetUp. The Boston New Technology Meetup Group has a product showcase once a month, where entrepreneurs demonstrate emerging products. Meetings are often held at hack/reduce, which is a non-profit that collaborates with government, corporations, and universities to “help Boston create the talent and the technologies that will shape our future in a big data-driven economy.” They give interested people access to “a large-scale compute cluster, hands-on workshops, and a physical space in the heart of Kendall Square.”

Start up companies will prosper for many years during the digital revolution; many will launch with close to zero capital investment. Just a few mouse clicks can provision servers in the cloud, which can then be used on a pay-as-you-go basis. All companies will enjoy a world-wide audience: just a few employees will be able to reach thousands of customers. Facebook and Twitter were the beginning, but the benefits will extend beyond high technology to anyone with a unique product or skill to offer. My niece is an artist who is able to sell her products to a worldwide audience using the web and social media. Opportunities will continue for people at the highest level of skill, especially those that combine academic, social, managerial, and leadership talents.

Overall, however, expect problems with the economy to continue. Collaboration in high technology represents the bright side of the sharing economy. A recent article in the New York Times describes an emerging trend toward sharing “activities as diverse as car-pooling, ride-sharing, opening one’s home to strangers via Web-based services like Couchsurfing or Airbnb, sharing office space and working in community gardens and food co-ops.” These services, while innovative, are a tactic people are using to support their livelihood and cope with the loss of jobs in the U.S. At the other end of the spectrum are people who survive by doing odd jobs, borrowing money, and going back to school at 60 years old. I expect the number of “at risk” people, as defined in an earlier post, to rise. As mid-skill jobs become obsolete, and these workers shift to low-skill jobs, citizens will demand an increase to the minimum wage. Some will argue against this change, saying that it will accelerate the shift to automation. The truth is that automation is coming regardless of government policies. California has a bill to raise the minimum wage by 2016; other legislation will emerge at both the state and federal level. The dark side of the story is that not everyone will benefit: inequality will continue to rise. The productivity and wealth created by our digital economy will depend less and less on labor.  The economic trends I described in earlier posts will continue.

2017 / 2020: The digital revolution will continue, but other areas will come to the forefront as well, especially genetics, nanotechnology and robotics. Silicon technology will peak during this period or soon after. Cloud computing platforms will become a commodity. You’ll be able to “print” three dimensional objects, such as replacement parts and small toys, inexpensively. IBM predicts that by 2017, machines will mimic all five human senses with technology. Memory implants will be possible. You will be able to “feel” the texture of objects by touching the screen on your phone. Your phone will also be able to “smell” the environment, perhaps detecting that you are sick, and adjust to the context of your environment based on listening to background noise. By the way, a paper-thin device may replace your phone or tablet computer. Nearly half of internet traffic will originate from non-PC devices, such as TVs, handsets and others; the number of devices on the internet will be triple the worldwide population. Analysts predict that we will be living in the “digital universe.” The number of servers worldwide (virtual and physical) will have grown by an order of magnitude. Language barriers will be more or less gone due to machine translation.

2021 – 2025: Computational power will likely continue to increase according to Moore’s law using three-dimensional circuits or another technological innovation. We will foresee the day when computers will match the human brain in terms of computations per second, which could come as early as 2025. In the very long term, IBM researchers have a vision that “by 2060, a one petaflop computer that would fill half a football field today, will fit on your desktop.” Narrow artificial intelligence (or weak AI) will continue evolving at an increasing pace. Note that everything I’ve discussed so far depends only on specialized machine intelligence. None of these trends imply that machines will pass the Turing test (show intelligence indistinguishable from that of a human). Someday, however, this may become a possibility that cannot be discounted. Regardless, robots will become ubiquitous at work and at home.

Crossing the Bridge

For many years, the debate about the impact of technology on the economy will continue to rage. The usual suspects will dig into established positions. On one side, people, such as Scott Winship of the Bookings Institution, will argue that robots do not cause unemployment and that people who say such things are suffering from “Technophobia.” I disagree. I welcome the coming digital revolution and agree that technology promises to bring great benefits to society.  For this to happen, however, society needs to understand and manage the changing dynamics of the economy. We can’t solve the problem by simply saying that government needs to get out-of-the-way, so that the free market can solve all ills. There is no law of physics that says rising productivity must bring rising wages and more jobs. This was true in the past, but the pattern may not hold true in the future. On the other side, people will argue that government can solve issues by updating policies for money, labor, and trade. We may, however, find such changes insufficient. We’re entering a new era where the fundamental nature of work will change. A fresh view about the economy needs to emerge. I don’t know exactly what this new economy will look like, but I do believe that the solution will need cooperation between business and government.

A bright spot is Massive Open Online Education (MOOCS). The number of available classes will continue growing at a phenomenal rate. Advanced education will become ubiquitous, and often freely available, though debate will continue about the relative benefits of online vs. classroom education. This is the good news. The bad news is that advanced education will not guarantee success. Some jobs, once held by highly educated workers, will become vulnerable. All knowledge worker jobs will eventually come under wage pressure from offshore resources or automation. People that remain open-minded and nimble will have an advantage. Despite these changes, I would make it a priority to offer advanced education to as many people as possible.
Here are some thoughts about staying employed until the scientists and economists figure all this out.

  • Take advantage of the low-cost of entry to start a digital business.
  • Prefer jobs that are less likely to be automated in the near future. Last week I mentioned a detailed study that reviewed over 700 occupations and predicted which would be affected by automation. Examples of occupations that are relatively safe are management, science, education and health care. In brief, people oriented jobs are harder to automate than routine jobs (labor or knowledge worker).
  • If you are not the academic type, consider a trade.  It will be some time before robots take jobs as plumbers or electricians.
  • Networking has always been important, but it will be even more so in the future. Because of automatic screening of applications, it will be increasingly hard to find a job without a personal connection.
  • Volunteer in your community. You may not always be employed, but you will always have something to offer. We’re going to need to help each other during these transition years.

Let me close by saying that I will follow-up on this series in a few ways.  First, I’ll continue to track the at risk labor force (and improve my methods). Second, I’ll read new books as they come out, such as the January release of the upcoming book Second Machine Age. This conversation is going to heat up in the coming years, so I’m sure that my views and opinions will evolve as I learn more. Third, I’ll give an update after the 2014 MIT Sloan CIO Symposium. I am very fortunate to have recently joined the team that is planning this event. I expect to have many interesting conversations that will give me a lot to write about.

To stay employed, find a passion and stick with it.  Leadership and creativity will set you apart. Don’t be afraid to study the arts because there will be many people and machines that can do purely technical work.

4 thoughts on “Working till 2025: Crossing the Bridge

  1. Pingback: Working till 2025: Crossing the Bridge | 3mart

  2. Pingback: Krugman: The Case for Techno-optimism | Commentary by Allan

  3. Pingback: Considering “The Second Machine Age” | Commentary by Allan

  4. Pingback: New blue collar jobs and an unconditional basic income experiment in India | Commentary by Allan

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