We really, really need to think about how we are going to deal with big increases in the ranks of the under- and unemployed … and the resulting even larger disenfranchised middle class. Americans are great at reacting to a crisis. We need to get good at avoiding crises and mitigating their impact.
From a troubling article in Time (May 9/16, 2022 issue), “Middle Class, Low Hopes.” In the opinion of a Vanderbilt law professor, “The No. 1 threat to American constitutional government today is the collapse of the middle class. … Median household income has grown just 9% since 2001.” But College fees are up 64% … Healthcare Out-of-pocket costs are up 100% … etc. This results in the middle class falling behind, not saving, not able to purchase a home, living paycheck to paycheck, etc. … and real and deep resentment by Millennials & Gen X’ers of the very rich and even their own boomer parents.
Why did the middle class “collapse?” In part, perhaps in large part, because robotics, automation, and globalization (chasing cheap labor outside the US) nuked lots of good paying “blue-collar” manufacturing jobs.
Will AI increase the size of the problem? I think so. AI will likewise nuke a lot of today’s “white-collar” knowledge jobs. Everything I see predicts that AI will automate away a lot of today’s work, perhaps 20-40%. A bad thing, and inevitable.
From a 07/26/23 report from the McKinsey Global Institute, “Generative AI and the future of work in America”:
“… Without generative AI, our research estimated, automation could take over tasks accounting for 21.5 percent of the hours worked in the US economy by 2030. With it, that share has now jumped to 29.5 percent (Exhibit 3) …” Almost 30% of work hours get automated away by 2030, 6 years from now. That’s capital D disruption, first economic and then social and political.
“… As of April 2023, some ten million positions remained vacant; labor force participation had ticked up but was 0.7 percentage point below its prepandemic level. That translates into roughly 1.9 million workers who are neither employed nor actively looking for jobs. This erosion comes after an extended 20-year trend of steadily falling participation …” How in the world do almost 2 million people get by with no job? Who is subsidizing them? Or perhaps their household just doesn’t need the 2nd income?
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