Just when many workers were still feeling the brunt of international trade on their livelihood, the oncoming digital disruption is putting additional pressure on their earnings and job security, threatening to push worker into even more vulnerable situations. And speaking of bad timing, the COVID-19 pandemic rages on around the world, adding to the burden of ordinary citizens as large parts of the economy remain closed. The future of work and workers seems particularly bleak this time round.
In the fourth episode of the Future of Work webinar series of the Institute for New Economic Thinking, Brad DeLong of University of California, Berkeley, Rana Foroohar of the Financial Times, and Damon Silvers of the AFL-CIO were joined by journalist David Sirota in a discussion that focuses on the fate of workers during this time of rapid changes.
The first observation made by the panelists is one of disconnect in the economy — the disconnect between value creation and employment expansion, between labor productivity and wage growth, and most recently, between economic activities and physical locations that is particularly characteristic of the pandemic economy. Assets such as data, content, patents or human capital were gaining in value compared to machines, factories or office space already before COVID-19. As businesses adjust to the new reality and undergo digital transformation, the ascent of such intangible assets is set to gather pace and could define the economic recovery and beyond. These developments could spell trouble for ordinary workers, as they make a jobless recovery more likely in the coming years.
The macroeconomic environment and policies matter a great deal for the welfare of workers too, as they directly impact companies’ hiring decisions and investment choices related to labor. When macroeconomic policies are geared towards achieving full employment and drawing more people into the labor force, wages are likely to rise and opportunities abundant. Rising income means more demand for goods and services, creating a virtuous circle in the economy. Whereas in the absence of accommodating policies, or imbalanced policy mix as is the case now, not only is the unemployment rate higher and wage gains slower, entire groups of gig economy and platform workers — people that power the digital economy — are left to fend for themselves. It does not help that current social protections from employers or government are woefully inadequate. This certainly calls for increased fiscal support to the economy during COVID and sustained expansionary policies afterwards.
There are ways in which modern digital technologies differ meaningfully from technologies of the past. As pointed out in the seminal book Information Rules: A Strategic Guide to the Network Economy, from digitized information to infrastructure, from information production to intellectual property rules that govern it, the information and network economy sets itself apart from the world of machines and factories. However, this does not mean the current form of our economy and our interaction with it is an inevitability. Digital technologies are as likely to be the locus of decentralization and empowerment — as perhaps they were in the early days of Silicon Valley — as they are to be locus of centralization and control, like today’s digital giants and surveillance tools make them appear. With economic might that dwarf entire nations, technology firms now have the power to bend competition, tax, and labor laws to their favor. The need for effective bargaining by unions and organization of labor power to counter the concentrating and displacing trends by some of today’s biggest employers is greater than ever before.
Where are future jobs likely to grow? How can we achieve meaningful integration between humans and technology while avoiding a jobless future? Are these nations that have cracked the digital code in making technology work for all? These questions are made more urgent this year, as the pandemic greatly increases the number of people whose livelihood depends on how we coexist with technology in the future. We will continue investigating these issues in the future episodes of this series.