The Future of Work | Economic and Social Policies for the Digital Era

moderated by Steve Clemons with Dani Rodrik, Pavlina Tcherneva and Laura Tyson

Jan 26, 2021 | 11:30 – 12:30 Download .ics

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Given the mounting need to create good jobs, effect structural change, and transform the economy, what should policy priorities be in the digital era? Is there a role for industrial policy? What new policy options do we need to achieve inclusive prosperity?

Unleashed by the digital revolution and hyper-charged by the COVID-19 pandemic, today’s technologies are playing increasingly defining roles in our economies and societies. While many exalt the virtues and promises of technologies, there’s no guarantee that everyone, in fact even the majority, could stand to benefit. Sustainable and inclusive development in the digital era requires a rethinking of our policy tools and instruments.

In the tenth and final episode of the Future of Work webinar series organized by the Institute for New Economic Thinking, Dani Rodrik of Harvard University, Pavlina Tcherneva of Bard College, and Laura Tyson of University of California, Berkeley, were joined by Steve Clemons from The Hill in a discussion on what appropriate economic and social policies for the digital era really look like.

Whether they are international trade, technological change, or global pandemic, the economic shocks happen within the existing conditions of the labor market. In the U.S., recent trends, characterized by slow wage gains, shrinking middle class, and polarization of employment growth, have not been friendly to ordinary workers. The decades-long “deinstitutionalization” of the labor market—weakening labor unions and erosion of job safety and protection—have left workers particularly vulnerable in a changing environment. While service job gains are making up for the loss in manufacturing employment in a broad shift of the economy, the newly created jobs are mostly precarious, low-wage, and lack union coverage. Across the world, the brunt of the COVID pandemic has fallen on small businesses with weaker balance sheets and workers at the lower end of income distribution. While some countries in Europe have prioritized keeping workers at their job, millions in the US were laid off and still unemployed, adding to the uncertainty in labor markets even after the virus is brought under control.

While the impact of digital technology in the economy is set to continue, there’s nothing predetermined about its course. Contrary to common beliefs, these technologies are not “exogeneous” forces that fall onto our laps, but are inherently developed and deployed by technologists and entrepreneurs, influenced by our policies, incentives, and social norms. Human societies have a substantially degree of control in how we coexist with technologies and to what ends they are used. Recently, there are worrying signs that these technologies have been applied in ways that make increasing demand on higher skills and replace routine human work. Competition on costs, tax system that favor use of capital, and a fascination with automation have all made labor-replacing technologies the dominant trend. While education, training, and skill upgrade are integral measures to keep workers in the game, making technologies work better for the current labor force is also essential. In a world where having sufficient good jobs remains the paramount challenge, correcting the automation bias of modern technologies and disseminating productivity gains from a handful of firms to the broad public need to be the main focus for policymakers.

To ensure a just transition in times of rapid economic changes and major social challenges, a government job guarantee is contemplated as a piece of the puzzle. This is particularly the case as the climate crisis and global pandemics loom largely and a green recovery calls for stepped-up actions for the government. A job guarantee, while not a panacea to labor market woes as technology tends to shift the structure of employment, not causing unemployment per se, should remain a complement to the private sector job creation to maintain full employment. Additionally it could help address the powerlessness of workers in the face of innovation that often pits technologies against human jobs. It would also set wage and benefit standards in a market that keeps short-changing workers. At a time of substantial “slackness” in the labor market, federal job guarantee would help combat long-term joblessness, revitalize local communities, and created jobs in environmental, care, and other service sectors where the private sector alone will likely undersupply.

By now, the Future of Work series has explored the scope of the digital disruption, investigated the nature of modern technologies, previewed the likely trends in the future of work, and discussed policy options for the digital age. Central to this discussion is to ensure technology empowers, augments, rewards, and respects the majority, not the few, and to shifts the odds towards a future that works for all. Future series will continue to shed light on this topic.

Speakers

Meet the leaders and scholars whose new thinking guides our work. View all speakers

  • Dani Rodrik

    Professor of International Political Economy, Harvard John F. Kennedy School of Government

    President-Elect, International Economic Association

  • Pavlina R. Tcherneva

    Chair, Department of Economics, Bard College

    Associate Professor of Economics, Bard College

  • Laura Tyson

    Distinguished Professor of the Graduate School , Haas School of Business at the University of California, Berkeley

  • Steve Clemons

    Editor-at-Large, The Hill