The rise of global populism and anti-immigration sentiments, coupled with the perpetual rising trend of automation and robotics has stoked the fear fires of job security. Many stories perpetuate erroneous stereotypes and falsehoods. The news reports and blog articles come in various flavors, but in a nutshell the stories state the U.S. is hemorrhaging jobs due to the thieves of illegal immigration and heartless robotics. The job displacement theory is built upon the idea that these two sources of labor (immigrants & robots) are cheaper and more productive than traditional blue collar and white collar American workers.
Although these logical beliefs make for great soundbites, and may sell subscriptions and advertising, unfortunately the substance behind the assertions holds little water. Let’s take a look at the facts. In the most recent April jobs report, nonfarm payrolls employment increased by 211,000 jobs, according to the U.S. Bureau of Labor Statistics. Since early 2009 the unemployment rate has plummeted from 10.0% down to a historically low level of 4.4%. Over the similar timeframe, the economy has added over 15,000,000 new jobs. Does this sound like an environment in which immigrants and robots are killing all American jobs?
Sounds like a bunch of phoney-baloney, if you ask me. Just look at the employed person chart below, which shows a rising employment trend over the last seven decades, with the exception of some brief recessionary periods.
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As I point out in a previous article (see Rise of the Robots), from the beginning of the United States, the share of the largest segment of the economy (agriculture) dropped by more than 98%, yet the standard of living and output in the agriculture sector have still exploded. There may not have been robots two and a half centuries ago, but technology and automation were alive and well, just as they are today. Although there were no self-driving cars, no internet, no biotech drugs, and no mobile phones, there were technological advances like the cotton gin, plow, scythe, chemical fertilizers, tractors, combine harvesters, and genetically engineered seeds over time.
And while there most certainly were farmers who regrettably were displaced by these technologies, there were massive new industries fostered by the industrial revolution, which redeployed labor to new burgeoning industries like manufacturing, aerospace, transportation, semiconductors, medicine, and many more.
While it may be difficult to fathom what industries will replace the workers displaced by self-service kiosks at restaurants, airports, and retail stores, famed economist Milton Friedman summed it up best when he stated:
“Human wants & needs are infinite, and so there will always be new industries, there will always be new professions.”
As globalization and technology continue permeating through society, it is true, the importance of education becomes more critical. Billions of people around the globe in developing markets, along with automation technology, will be stealing lower-paying American jobs that require repetitive processes. Educating our workforce up the value-add food chain is imperative.
The bottom-line is that integration of technology and automation will improve the standard of living for the masses. Sure, immigration will displace some workers, but if legislative policy can be designed to cherry-pick (attract) the cream of the skilled foreign crop (and retrain displaced workers), skilled immigrants will keep on innovating and creating higher valued jobs. Just consider a recent study that shows 51% of U.S. billion-dollar startups were founded by immigrants.
The populist drum may continue to pound against immigration, and horror stories of job-stealing robots may abound, however the truth cannot be erased. Over the long-run, the fallacies behind populism and automation will be uncovered. The benefits and truths surrounding highly skilled immigrants and robots will be realized, as these dynamics dramatically improve the standard of living and productivity of our great economy.