There are a couple of stories this morning about automation and robotics that make a similar point about the impact they will have on the country.

Axios notes that “the last wave of technological disruption — the IT revolution of the 1980s — created new jobs, but the bulk of the job and wage gains were on the high and low ends of the labor market. Scores of middle-wage, middle-skill jobs in manufacturing, largely in the middle of the country, were automated away or sent abroad.

“Now, the new wave of automation and AI is projected to hit high- and low-paying jobs in addition to middle-income jobs, says Marina Gorbis, executive director of the Institute for the Future.”

In fact, there are estimates that “a quarter of all jobs across the U.S. have (a) high chance of being wiped out by automation. The five states with the highest share of at-risk jobs are Indiana (29%), Kentucky (29%), South Dakota (28%), Arkansas (28%), and Iowa (28%).” This doesn’t just have economic implications, Axios argues: “As middle- and low-wage jobs in the American heartland disintegrate further, the national anger and polarization fueled by an urban–rural divide will only deepen.”

Michael Chui of the McKinsey Global Institute expresses this as an opportunity: “The big challenge we're looking at in the next few years is not mass unemployment but mass redeployment.”

The Axios story says that “to absorb the coming disruption, the government and corporations will have to take charge of reskilling and upskilling huge swaths of displaced workers. The bottom line: The cost of reskilling the 1.4 million people who are displaced will be close to $34 billion, according to the World Economic Forum.”

Meanwhile, the Washington Post has a story about how, as robotics and automation and technologies such as AI become more sophisticated and responsive, they are likely to have an enormous impact when the next recession rolls around (as it inevitably will, because it always does).

The Post writes that “robots’ infiltration of the workforce doesn’t happen gradually, at the pace of technology. It happens in surges, when companies are given strong incentives to tackle the difficult task of automation.

“Typically, those incentives occur during recessions. Employers slash payrolls going into a downturn and, out of necessity, turn to software or machinery to take over the tasks once performed by their laid-off workers as business begins to recover.
As uncertainty soars, a shutdown drags on, and consumer confidence sputters, economists increasingly predict a recession this year or next. Whenever this long economic expansion ends, the robots will be ready.”

Here’s a scary passage from the Post story:

“Middle-income work has evaporated in recent decades. Americans are now divided between the high-paid employees who design machines, the low-paid workers who sweeps up after it, or the even lower-paid service workers who serves fast-casual sandwiches to the other two.

“In an upcoming paper from Review of Economics and Statistics, economists Nir Jaimovich of the University of Zurich and Henry Siu of the University of British Columbia found that 88 percent of job loss in routine occupations occurs within 12 months of a recession. In the 1990-1991, 2001 and 2008-2009 recessions, routine jobs accounted for ‘essentially all’ of the jobs lost. They regained almost no ground during the subsequent recoveries.”

KC's View: It seems to me that any nuanced discussion of what the economy looks like going forward has to consider these possibilities - that when the economy starts to move into decline and businesses do what they always do - look for ways to get more efficient - they’re suddenly going to be eliminating jobs and getting rid of people, many of them in America’s heartland. Those are people who won’t just be able to spend at retail stores like they used to, which is going to have a cascading effect on the economy. Companies are going to go out of business, there will be further consolidation at all levels, and the American dream may end up looking more like a nightmare.

Though, not necessarily. To my mind, there has to be some sort of sophisticated public-private partnership that focuses on how to deal with these changes in an effective way … and that means re-education, re-training, and re-skilling, all of which is going to require enormous investment in the future, because these people are the societal infrastructure of our future.

Or, we can just ignore all this disruption, and be washed away in the deadly currents of intransigent and unforgiving realities.