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Businesses Are Adopting Automation Fast Because of the Pandemic

As automation accelerates the displacement of American workers, new solutions must be crafted that afford workers agency and allow them to purposefully adjust.

Chess

The Bottom Line.

In corporate America, it is always about the bottom line. 

This is a blessing as well as a curse. Capitalism’s profit-centered nature ensures that businesses always have a goal to work towards, keeping the economy moving and dynamic. However, it also requires corporations to see all other objectives, from social good to worker welfare, as secondary. Corporate executives are paid and recognized based on their financial accomplishments. 

The pandemic transformed daily life, suddenly sending our economy from face-to-face to cyberspace. Employing workers became more expensive – at-home work required software subscriptions, and in-person work necessitated sanitation and PPE investments. As a result, corporate executives had to embrace innovation to stay afloat, even if it meant leaving workers behind.

Although national productivity grew in lockstep with jobs and wages throughout much of the 20th century, this trend has failed to continue since the 1980s, a phenomenon known as the Great Decoupling. While economic productivity has surged, employment and wages have stagnated as it has become more profitable to buy a high-tech machine once than to pay workers salary and benefits every year.

The pandemic turned automation from an option into a necessity. An international survey commissioned by software robotics company UiPath in May 2020 found that 48% of business leaders were already planning to increase their Robotic Process Automation (RPA) spending. Orders for robots were up 20% in the first quarter of 2020 compared to the Q1 2019. All in all, we are experiencing a move toward hyper-automation, and Gartner predicts that by 2024, this will allow organizations to reduce their operating costs by a whopping 30%. 

Unfortunately, “lowering operating costs” is often business-speak for reducing the amount of money spent on paying workers. 

The precise pace at which automation will sweep through our economy is not certain, but it has already begun and will accelerate quickly. Automation is a major reason that the U.S. economy has lost over 4 million manufacturing jobs since 2000, and exponential technological growth endangers jobs in many other sectors as well. McKinsey Global Institute’s findings should spur policymakers into action; they predict that “half of today’s work activities could be automated by 2055.”

What is clear is that workers will be forced to adapt to maintain a minimum standard of living. When any industry is hit with layoffs, or job openings for a specialization stop appearing, the only option for the unemployed is to re-evaluate their skills and determine a different path forward for income. Unemployment Insurance can help laid-off workers survive as they search for new jobs, but it wasn’t created to address today’s rapidly evolving economy. Today’s workers often must educate and retrain themselves for completely new types of jobs when their former industries stop hiring or even cease to exist.

This is where a basic income for every American with no strings attached becomes a life-saver. That small cushion isn’t enough to live on, but it does provide stability in a very unstable labor market, allowing workers to find their footing. 

Stability Enables a Purpose-Driven Path Forward

Job transitions are highly consequential periods of time for workers.

They represent a crossroads during which each decision made could powerfully influence the worker and her family’s future. These periods must be as stress-free as possible so that workers can devote mental energy to thoughtful next steps that ensure a stable future. American workers want to contribute, to earn a solid income and minimize the likelihood of encountering the same situation again. If they are forced to make immediate compromises like taking a lower paying position to keep the lights on, it is likely they will be unemployed again and possibly for longer periods. 

An economy where everyone has so little they must jump to the first job they hear of may be good for unemployment statistics, but does little to improve the well-being of our citizens or the financial solvency of our nation.

Often, the largest barrier to calculated decision-making is financial insecurity.The data clearly shows that humans are much worse at making decisions while burdened by financial stress. A 2013 study from Princeton analyzing New Jersey shoppers found that concerns about money translated into “a drop in cognitive function similar to a 13-point dip in IQ, or the loss of an entire night’s sleep.”

In 2014, Harvard published a report called “Freeing up Intelligence” that came to a similar conclusion. Researchers performed a series of cognitive tests on Indian farmers who make all their yearly income selling crops during the Summer, but are strapped for cash each Spring. Farmers were found to exhibit the equivalent of a 9-10 point IQ increase during their Summers of abundance, as opposed to their Springs of scarcity.

UBI provides enough financial security to allow workers to make well-thought-out decisions for their families without the downsides of our current social safety net. Existing means-tested welfare programs require citizens to repeatedly justify their need for government support, which often leads them to internalize personal inadequacies that are rooted in a lack of funds not a lack of character. Plus, some benefits rarely reach the full population they are intended to serve. For example, Pew Research found in March 2020 that only 29% of unemployed Americans actually received Unemployment Insurance. 

A minimum basic income for every person has the opposite effect and is much easier to implement; no calculations or paperwork necessary as every citizen receives the same amount of money every month. A small amount during difficult times can be a lifesaver. During productive employment, it buffers savings. 

The fact is that the robots are coming, and more jobs will be eliminated and consolidated than created from this automation. This is most widely experienced by hands-on trades such as manufacturing and transportation. But the jobs of white collar professionals will eventually be displaced by automation as well. Capitalism is fueled by a relentless push for progress and an endless desire to increase efficiencies. Universal basic income turns the inevitable into a transformation opportunity for every worker versus a potentially debilitating setback. 

As humans, it is our job to protect ourselves as we grow, advance our quality of life and adapt to our changing environments. The best protection and advancement I can imagine is a Universal Basic Income.