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Commentary: Why I (still) back Obamacare

by on November 11, 2013 10:20 AM

At the recent New York Times forum in Singapore, Eleonora Sharef, a co-founder of HireArt, was explaining what new skills employers were seeking from job applicants, but she really got the audience’s attention when she mentioned that her search firm was recently told by one employer that it wouldn’t look at any applicant for a marketing job who didn’t have at least 2,000 Twitter followers — and the more the better. She didn’t disclose the name of the firm, but she told me that it wasn’t Twitter.

At a meeting with students at Fudan University in Shanghai a few days earlier, I was struck by how anxious some of the Chinese students were about the question: “Am I going to have a job?” If you’re a software engineer in China, you’ll do fine, also a factory worker — but a plain-old college grad? The Times reported this year that in China today “among people in their early 20s, those with a college degree were four times as likely to be unemployed as those with only an elementary school education.”

Stories like these explain why I really hope that Obamacare succeeds. Say what?

Here’s the logic: The Cold War era I grew up in was a world of insulated walls, both geopolitical and economic, so the pace of change was slower — you could work for the same company for 30 years — and because bosses had fewer alternatives, unions had greater leverage. The result was a middle class built on something called a high-wage or a decent-wage medium-skilled job and the benefits that went with it.

The proliferation of such jobs meant that many people could lead a middle-class lifestyle — with less education and more security — because they didn’t have to compete so directly with either a computer or a machine that could do their jobs faster and better (by far the biggest source of job churn) or against an Indian or Chinese who would do their jobs cheaper. And by a middle-class lifestyle, I don’t mean just scraping by. I mean having status: enough money to buy a house, enjoy some leisure and offer your kids the opportunity to do better than you.

But thanks to the merger of globalization and the IT revolution that has unfolded over the last two decades — which is rapidly and radically transforming how knowledge and information are generated, disseminated and collaborated on to create value — “the high-wage, medium-skilled job is over,” says Stefanie Sanford, the chief of global policy and advocacy for the College Board. The only high-wage jobs that will support the kind of middle-class lifestyle of old will be high-skilled ones, requiring a commitment to rigorous education, adaptability and innovation, she added.

But will even this prescription for creating enough jobs with decent middle-class incomes suffice, asks James Manyika, who leads research on economic and technology trends at the McKinsey Global Institute. While these prescriptions are certainly correct, notes Manyika, they “may not be enough to solve for the scale and nature of the problem.” The pace of technologically driven productivity growth, he said, suggests that we may not need as many workers to drive equivalent levels of output and GDP.

As the MIT economists Erik Brynjolfsson and Andrew McAfee show in their book “Race Against the Machine,” for the last two centuries productivity, median income and employment all rose together. No longer. Now we have record productivity, wealth and innovation, yet median incomes are falling, inequality is rising, and high unemployment remains persistent.

To be sure, notes Manyika, a similar thing happened when we introduced technology to agriculture. We did not need as many people to produce food, so everybody shifted to manufacturing. As the same thing happened there, many people shifted to services.

But now, adds Manyika, “a growing share of high-paying services and knowledge work is also falling prey to technology.” And while new companies like Twitter are exciting, they do not employ people with high-paying jobs in large numbers. The economy and the service sector will still offer large numbers of jobs, but many simply may not sustain a true middle-class lifestyle.

As a result, argues Manyika, how we think about employment to sustain a middle-class lifestyle may need to expand “to include a broader set of possibilities for generating income” compared with the traditional job with benefits and a well-grooved career path. To be in the middle class, you may need to consider not only high-skilled jobs, “but also more nontraditional forms of work,” explained Manyika. Work itself may have to be thought of as a form of entrepreneurship, where you draw on all kinds of assets and skills to generate income.

This could mean leveraging your skills through Task Rabbit, or your car through Uber, or your spare bedroom through AirBnB to add up to a middle-class income.

In the end, this transition we’re going through could prove more exciting than people think, but right now asking large numbers of people to go from being an employee to a work entrepreneur feels scary and uncertain. Having a national health care safety net under the vast majority of Americans — to ease and enable people to make this transition — is both morally right and in the interest of everyone who wants a stable society.



Thomas Friedman writes a column for the New York Times.
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