TL;DR – It depends…
After seeing their wages decline over the decades, the white middle class in USA voted for Donald Trump in droves. They believed that Trump as President would ensure that jobs remain in America. They were convinced that Trump as President would put in place a form of economic protectionism where white middle class Americans wouldn’t have to compete against “other” people. But they may be in for a rude shock.
Trump has picked Andrew Puzder, CEO of Hardee’s and Carl’s Jr., as the next Labour Secretary.
Puzder is against raising the minimum wage for workers in USA. He is a strong proponent of automation. So with him in charge of labour policies, would middle class Americans start losing their jobs to machines instead of “other” people? Wouldn’t that mean that Trump will end up destroying jobs instead?
No doubt, automation will destroy jobs. But at the same time, it will create many more opportunities and create much value. And humanity has had many precedence of how technologies doing that. Most recently, it was the invention of the steam engine.
The invention of the steam engine completely changed the way work was done. It destroyed many traditional jobs. It changed the way we lived. But most would argue that the invention of the steam engine greatly improved our quality of life. The steam engine made possible new jobs that created greater value.
And that would be the case with automation. The challenge will be how we adapt to the disruption that it brings. We can fight the change. But that would be a lost cause. The trend of businesses adopting automation cannot be stopped, let alone reversed. It helps businesses cut costs, increase productivity, thus increasing overall competitiveness and profitability. Why would any business be against any of that?
What can be done to meet the challenges of automation?
An example of a company that is automating to drive costs down is Carrier. Yes, they have decided not to move their production from Indianapolis to Mexico. But that doesn’t mean they aren’t going to let go of some of their staff. Greg Hayes, CEO of United Technology, the company that owns Carrier, said:
“we’re gonna make up $16 million investment in that factory in Indianapolis to automate to drive the cost down so that we can continue to be competitive. Now is it as cheap as moving to Mexico with lower cost labor? No. But we will make that plant competitive just because we’ll make the capital investments there. But what that ultimately means is there will be fewer jobs”
A seemingly brutal fact there.
Does that mean that workers in USA have no hope? That they are condemned to losing their jobs and thus their means to a decent income and dignified life? Of course not. Because the jobs that are being lost to automation aren’t the jobs that create much value anyway. In fact, they aren’t jobs that people find attractive in the long term.
So, United Technology is cutting jobs in some areas so that they can focus on creating high paying, good quality jobs in other areas. This includes the 8,000 jobs in Pratt and Whitney (an aerospace manufacturer owned by United Technology).
But in order for workers to fit into these jobs, they need to be properly trained. As Hayes explained:
“I would tell you the key here is not to be trained for the job today. Our focus is how do you train people for the jobs of tomorrow?”
That’s why United Technology has a scholarship programme that has allowed 45,000 of their staff to upgrade their skills. Over the last 20 years, they’ve spent USD1.2 billion to educate and train their own workers. Hayes emphasized:
“And the whole idea is to improve your own marketability. Improve your own skills. Because the skills that you have today are not the skills that are gonna get you through tomorrow.”
It’s great that United Technology has decided to be proactive in helping to educate and train their workers. But we cannot expect all companies to do so. That’s why the government, very often, has to step in.
Educate, train, upgrade
So whether Trump’s pick of Puzder as the Labour Secretary ends up destroying jobs in USA depends on what he actually does. Does he come up with programmes to help those displaced by automation skill up so that, as a whole, the labour force in the country is able to create more value? And then will he put in measures to ensure that the labour force gets a fair share of that increased value they created? If he’s able to do all those, then workers in USA would be better off.
Incidentally, those are exactly the things that the Singapore government and Labour Movement are trying to do –
How to help people, whether they are employed or unemployed today, be prepared for the jobs of tomorrow.
Exactly what Hayes, a CEO of a large MNC, says is important to do. So perhaps our “paper generals” know what they are doing after all.