Read Online Aftershock: The Next Economy and America's Future by Robert B. Reich - Free Book Online
Authors: Robert B. Reich
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outsourced. But that’s not the whole story. Trade also gave Americans access to cheaper goods from around the world, and it created new markets for American exports of everything from wheat to Hollywood films. Global investors also flocked to the United States to set up firms that employed millions of Americans.
The problem was not simply the loss of good jobs to workers in foreign nations but also automation. New technologies such ascomputerized machine tools could do the same work people did at a fraction of the cost. Even factories remaining in the United States shed workers as they automated. I remember being invited to speak at the opening ceremony of a new factory that had been lured to a midwestern state by a governor who had spent millions of taxpayer dollars subsidizing the project. When I arrived, the factory was humming at full capacity. But when I went inside to see workers performing all the new jobs, I found only about a dozen people sitting at computer terminals, typing instructions to the computerized machine tools and robots that cut, drilled, and assembled various parts into finished products. Once outside again I tried to put the best face I could on the situation. I remember stumbling over my words. “This factory marks a … major … millstone, er, milestone.” I congratulated the governor and got out of there as fast as I could.
Remember bank tellers? Telephone operators? The fleets of airline workers behind counters who issued tickets? Service-station attendants? These and millions of other jobs weren’t lost to globalization; they were lost to automation. America has lost at least as many jobs to automated technology as it has to trade. Any routine job that requires the same steps to be performed over and over can potentially be done anywhere in the world by someone working for far less than an American wage,
or
it can be done by automated technology. By the late 1970s, all such jobs were on the endangered species list. By 2010, they were nearly extinct.
But contrary to popular mythology, trade and technology have not really reduced the
number
of jobs available to Americans. Take a look at the rate of unemployment over the last thirty years and you’ll see it has risen and fallen with the business cycle. Jobs were plentiful in the 1990s even though trade and automated technologies were pushing millions of workers out of their old jobs. The real problem was that the new ones they got often didn’t pay as well as the ones they lost.That largely explains why themedian wage flattened between 1980 and 2007, adjusted for inflation. Over the longer term, the problem is
pay
, not
jobs
. Surely for many Americans, the most traumatic consequence of the Great Recession has been the loss of a job. The good news is that more jobs will become available, eventually. The bad news is that many Americans who obtain these jobs will have to accept lower pay than they received before.
Meanwhile, as the pay of most workers has flattened or dropped, the pay of well-connected graduates of prestigious colleges and MBA programs—the so-called talent who reach the pinnacles of power in executive suites and on Wall Street—has soared.
The real puzzle is why so little was done in response to these forces that were conferring an increasing share of economic growth on a small group at the top and leaving most other Americans behind. With the gains from that growth, the nation could, for example, have expanded our educational system to encompass early-childhood education. It could have lent more support to affordable public universities, and created more job retraining and better and more extensive public transportation.
In addition, the nation could have given employees more bargaining power to get higher wages, especially in industries sheltered from global competition and requiring personal service—big-box retail stores, restaurants and hotel chains, and child and elder care, for instance. We could have
The problem was not simply the loss of good jobs to workers in foreign nations but also automation. New technologies such ascomputerized machine tools could do the same work people did at a fraction of the cost. Even factories remaining in the United States shed workers as they automated. I remember being invited to speak at the opening ceremony of a new factory that had been lured to a midwestern state by a governor who had spent millions of taxpayer dollars subsidizing the project. When I arrived, the factory was humming at full capacity. But when I went inside to see workers performing all the new jobs, I found only about a dozen people sitting at computer terminals, typing instructions to the computerized machine tools and robots that cut, drilled, and assembled various parts into finished products. Once outside again I tried to put the best face I could on the situation. I remember stumbling over my words. “This factory marks a … major … millstone, er, milestone.” I congratulated the governor and got out of there as fast as I could.
Remember bank tellers? Telephone operators? The fleets of airline workers behind counters who issued tickets? Service-station attendants? These and millions of other jobs weren’t lost to globalization; they were lost to automation. America has lost at least as many jobs to automated technology as it has to trade. Any routine job that requires the same steps to be performed over and over can potentially be done anywhere in the world by someone working for far less than an American wage,
or
it can be done by automated technology. By the late 1970s, all such jobs were on the endangered species list. By 2010, they were nearly extinct.
But contrary to popular mythology, trade and technology have not really reduced the
number
of jobs available to Americans. Take a look at the rate of unemployment over the last thirty years and you’ll see it has risen and fallen with the business cycle. Jobs were plentiful in the 1990s even though trade and automated technologies were pushing millions of workers out of their old jobs. The real problem was that the new ones they got often didn’t pay as well as the ones they lost.That largely explains why themedian wage flattened between 1980 and 2007, adjusted for inflation. Over the longer term, the problem is
pay
, not
jobs
. Surely for many Americans, the most traumatic consequence of the Great Recession has been the loss of a job. The good news is that more jobs will become available, eventually. The bad news is that many Americans who obtain these jobs will have to accept lower pay than they received before.
Meanwhile, as the pay of most workers has flattened or dropped, the pay of well-connected graduates of prestigious colleges and MBA programs—the so-called talent who reach the pinnacles of power in executive suites and on Wall Street—has soared.
The real puzzle is why so little was done in response to these forces that were conferring an increasing share of economic growth on a small group at the top and leaving most other Americans behind. With the gains from that growth, the nation could, for example, have expanded our educational system to encompass early-childhood education. It could have lent more support to affordable public universities, and created more job retraining and better and more extensive public transportation.
In addition, the nation could have given employees more bargaining power to get higher wages, especially in industries sheltered from global competition and requiring personal service—big-box retail stores, restaurants and hotel chains, and child and elder care, for instance. We could have
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