Will technologically-based structural unemployment make the Rust Belt experience globally relevant in the coming generation?
By Glenn Perusek
At Tech Central in the main branch of the Cleveland Public Library, you can experiment with three-dimensional printing (also known as “additive manufacturing”). These days it is mostly a curiosity for kids to experiment with. When I visited recently, a youngster was creating a plastic replica of glasses worn in Harry Potter.
But 3-D printers are not toys: Engineering students at Case Western Reserve University’s think[box] Institute for Collaboration and Innovation use additive manufacturing machines to develop prototypes and parts. A local firm, rp+m (Rapid Prototype and Manufacturing), based in Avon Lake, can produce parts for the aerospace industry with aluminum, stainless steel, or titanium. Automotive, industrial, and consumer applications are also possible.
Three-dimensional printing is one expression of how new technologies will fundamentally transform the economy in the coming generation. Such new technology will make manufacturing more flexible and powerful. But along with the deployment of other labor-saving technologies, three-dimensional printing promises to recast the economic and social landscape of cities throughout the developed world.Ironically, this interests urban planners and policymakers across the developed world in Cleveland’s recent experience overcoming economic dislocation. That’s because it’s likely that Rust Belt-like dislocation will become more generalized throughout North America, Europe, and the developed parts of Asia. Additive manufacturing, driverless vehicles, and the automation of education — three areas of new technology discussed below — will cause productivity to soar and, as a corollary, create a large new stratum of marginalized workers.
Since the 1980s, Cleveland has experienced profound economic dislocation. Downward pressure on employment, the loss of so-called middle class jobs and incomes, downward pressure on wages. The retreat of labor unions, bastions of the industrial working class. The hollowing out of the city. The host of consequent social problems: crumbling schools, gangs, drugs, prostitution, hopelessness. Endemic outmigration.
We now know that what we spoke of in the 1980s as “deindustrialization” was in fact a reorientation of the global division of labor. Factory closures were driven primarily by geographic relocation of industry. In search of lower-wage sites of production, manufacturing moved south of the border and overseas. A generation ago, manufactured goods consumed here came from the Rouge Plant (Ford), North Canton (Hoover), or Rochester (Kodak). Today they are more likely to come from Shenzhen province in China (Foxconn), Wolfsburg in Lower Saxony (Volkswagen), or the maquiladora zone of northern Mexico.
[blocktext align=”right”]The transformation of tomorrow will be centered upon disruptive technologies…[/blocktext]The driving force for the next generation of economic change will not be what wrenched the industrial Midwest a generation ago. No — the transformation of tomorrow will be centered upon disruptive technologies, not geographic relocation. But the consequences of the change, the creation of a huge class of precarious workers without a regular role in the economy, and the attendant social problems, will make the experience of Rust Belt cities relevant throughout the world.
Let’s look at three examples: Additive manufacturing, driverless vehicles, and MOOCs (massive open online courses) in education.
Machines that “print” products were making prototypes in the early 21st century. But already by 2012 they were also making jet engines for a subsidiary for GE Aviation. This shift from making prototypes to making parts and whole finished products is an important step. According to one analyst, the output of additive manufacturing machines was already 28 percent final products by 2012. He predicted it would be more than 80 percent by 2020.
The employment consequences will be great. “Many people will look at the factories of the future and shudder….Many will be squeaky clean — and almost deserted.” As the editors of the Economist argued in 2012:
Some carmakers already produce twice as many vehicles per employee as they did only a decade or so ago. Most jobs will not be on the factory floor but in the offices nearby…The manufacturing jobs of the future will require more skills. Many dull, repetitive tasks will become obsolete: you no longer need riveters when a product has no rivets.
True, some of the manufacturing activity that migrated to Latin America or Asia in the late 20th century may come back to the United States and other developed countries as additive manufacturing and other labor-saving productivity advances take hold. But this will be relatively jobless production, solving none of the long-term unemployment problems that globalization created in the first place. A striking example is a highly automated textile manufacturing facility in South Carolina. A mill that in 2013 produced 2.5 million pounds of yarn per week with 140 workers would have needed more than 2,000 workers to achieve that level of production in 1980.
Analysts see 3-D printing making low-cost niche or batch production possible: Economies of scale that were a hallmark of the Fordist assembly line could give way to customization. In principle, printing-on-demand means that niche or boutique production will be able to replace standardized mass production in this century.
We have long dreamt of vehicles that pilot themselves. The 1939 World’s Fair exhibit, “Futurama,” imagined radio-controlled automobiles. The European Commission’s Prometheus, an automated driving research project, dates from the 1980s. DARPA, the Pentagon’s advanced research arm, has sponsored its Grand Challenge contest for driverless vehicles since the 1990s.
[blocktext align=”left”]Technology may finally be catching up to the vision…[/blocktext]The technology may finally be catching up to the vision: Automated driving may become a reality in the next generation. The promise of such vehicles is great: Self-driving vehicles are potentially safer and more fuel efficient. They could offer mobility to people otherwise incapable of driving (the blind; those too young for driver’s licenses). And they would make it possible to work while commuting (a mixed blessing, some might say).By 2013, Google had already logged hundreds of thousands of accident-free miles in testing autonomous vehicles on California roads. Volvo had tested self-parking cars. Audi, BMW, GM, Mercedes, and Volkswagen all had self-driving research projects underway. The idea of “truck trains,” aerodynamically efficient multiple-vehicle chains linked together electronically, was already being tested by Volvo in Spain in June 2013. Concludes John Seely Brown, once head of Xerox’s Silicon Valley research center: “We’re moving into an era where talking about things that have seemed impossible has become dramatically important….It’s an incredible moment in time. Things I would have thought were unthinkable five years ago” such as driverless vehicles are seeing the light of day.
We should be aware of how quickly the horizons of possibility have receded. At the start of the 21st century, driving vehicles in traffic was seen as a task too difficult, too fraught with random variables, to automate. Today self-driving vehicles appear not only possible, but likely. It is not fantastic to say that “a taxi driver will be a rarity in many places by the 2030s or 2040s.”
MOOCs (Massive Open Online Courses) in education
In higher education, the introduction of online courses even at elite institutions cannot but mean downward pressure on overall employment levels for faculty. The technology makes it possible to have classes with thousands upon thousands of students, for whom geographic boundaries are unimportant. Even before the advent of MOOCs (massive open online courses), the professoriate was under pressure. The rise of teaching by adjuncts and graduate assistants, narrowing the scope of teaching by “regular” tenure-track faculty, was already a well-established phenomenon before the appearance of MOOCs. College professors are a “threatened profession.” But the appearance of online and blended courses will deepen the threat.
“With prepackaged MOOCs and blended courses, faculty are ultimately not needed,” said the faculty of the philosophy department at San Jose State University, when they protested the introduction of “blended courses” that included outsourced online video components (in this case, lectures from Harvard’s Michael Sandel on justice).
[blocktext align=”right”]Higher education is an industry ripe for the introduction of cost-saving technologies…[/blocktext] Higher education is an industry ripe for the introduction of cost-saving technologies because it has grown so expensive over the course of the last couple of generations. Sober analysts foresee a period of consolidation and shakeout in higher education, with new organizational models, new entrants, and bankruptcies of many established institutions. The Harvard Business School’s Clayton Christensen, a well-respected student of disruptive technologies, goes so far as to predict that by the end of the 2020s, half of all universities may have gone out of business. Granted, some high-end institutions may be able to resist the trends. But at the very least, most universities will have significant online components — their ability to teach large numbers of students with significantly fewer faculty will exert downward pressure on employment levels in the industry.
It should be clear that what is true for higher education should be true of K-12, as well. In principle, computer technology delivering programmed content should be able to reduce the number of human teachers in primary and secondary education.
Wasn’t tomorrow wonderful?
Under the impact of the introduction of new technologies throughout the economy, productivity will soar. Unlike past situations of technological change, this coming wave will hit multiple industries simultaneously. Many categories of workers will find themselves replaced by machines. Many will not be able to find alternative employment that pays well.
It isn’t difficult to imagine a world with many fewer manufacturing workers, drivers, and teachers. But this is the tip of the iceberg: new technology should also be able to automate many other functions in the service economy, as well.Mobile computing has the potential to transform every aspect of retail sales; one estimate suggests that in the developed world 40-70 percent of retail transactions may be electronic by 2025. Instead of shopping at department stores and malls, online shopping with deliveries to residences will become much more common. Those deliveries will likely be fulfilled by increasingly sophisticated robots (working with relatively fewer human warehouse workers) and executed by fleets of driverless vehicles. The demand for retail workers will decline.
Similarly, the automation of knowledge work has already practically eliminated the need for typists and telephone operators, major employment categories a generation ago. Clerks, bookkeepers, and secretaries will continue to be under pressure. But it is also possible to foresee the automation of many functions of even higher-skilled knowledge workers. Already the advent of automated document review has cut into the demand for attorneys. Some analysts foresee a time when “digital physicians” may take over functions now performed by human medical professionals. Tools to enhance the productivity of engineers could dramatically reduce demand for skilled human workers in this field, as well.
The city of tomorrow will be divided between three great classes: At the top will thrive the 1/10th of one percent, those who own and control the big companies of the new economy. Next, a stratum of smaller entrepreneurs, managers and vital workers whose skills fit them to the new economy (computer programmers, obviously), along with the lucky few who are relatively unaffected by disruptive technologies (skilled construction workers perhaps, or those who provide personal services). But below these comparatively secure classes will swell the ranks of the under- and unemployed. Those left behind by the new economy, precarious workers who eke out a living working temporary jobs or very low wage jobs or who slip through a fraying social safety net will become — well, it is difficult to predict precisely. But it is not unreasonable to think that thirty to fifty percent of the population, and perhaps more, will be in this situation.
[blocktext align=”left”]Many categories of workers will find themselves replaced by machines.[/blocktext]The social problems that go along with widespread economic marginalization will be multiplied. This is why the recent experience of Rust Belt cities like Cleveland will be of much broader relevance in the coming generation.
Cleveland is in the process of engineering a post-industrial turnaround of downtown. A host of thriving restaurants clustered around major sports stadiums, the casino and Playhouse Square have begun to revitalize what was long a dormant central district. A handful of bohemian outposts, such as Ohio City around the West Side Market or Gordon Square farther out Detroit Avenue, are instances of urban revival in the midst of massive downward economic pressure.
As the effects of work-destroying new technology are felt across the developed world, this experience will be relevant to more and more cities.
Two hundred years ago, the English scholar Malthus famously predicted that population would outrun the food supply. The Malthusian nightmare never panned out. New ways of producing food made it possible to keep pace with population increases.
The argument here, a technological Malthusianism, may prove equally chimerical. It is certainly possible that some time in the next twenty-five years, the economy will hit upon new ways to employ the millions of workers who will be displaced by computer-based technology.
Are Malthusian conclusions about the new, disruptive technology warranted?
In the past, it seems, universal industrial transitions could be exceedingly difficult for a single generation of workers. But once a transition was made, plenty of jobs were created in the new economy. For instance, the transition from agricultural to industrial economy could be achieved within the space of little more than a generation.
But tomorrow will be different. There are three reasons to think that the coming transition will not create enough jobs for the population.
First, disruptive technologies are affecting many economic sectors simultaneously.
Second, a socially optimal outcome to productivity improvement is ruled out, at least for the foreseeable future. When, in the early 1930s, Keynes, the great 20th-century theorist of the mixed economy, looked ahead 100 years, he could foresee a time when productivity improvements could result in an ideal situation where everyone could work fifteen hours per week. But spreading out the benefits of technological improvement that way requires social and political forces that can challenge those who would control the benefits more narrowly. Fifteen hours per week at a living wage today seems like an utter pipe dream precisely because there are no political groupings or labor organizations strong enough to enforce such a demand.
Third, the geographic universality of the transformation means that relocation will be relatively unavailable as a worker strategy. Early in the 20th century, industrialism was a magnet, attracting workers from the countryside to industrial cities. At the end of the 20th century, as the industrial economy of the upper Midwest was decimated, there were economic boom cities in the south and southwest. Relocation was possible. But the labor-saving technologies of tomorrow will affect the Atlantas and Phoenixes of the world as much as the Clevelands and Buffalos.
[blocktext align=”right”]The economy of the future, by 2040 or so, will be characterized by relatively workerless factories, driverless transportation systems, and teacherless schools.[/blocktext]The economy of the future, by 2040 or so, will be characterized by relatively workerless factories, driverless transportation systems, and teacherless schools. Shopping malls will still exist, but primarily as showcases for goods that most consumers will purchase online. Many fewer workers will be needed in this new retail economy. In the stark utopia of tomorrow, most workers will be permanently marginalized.
Now, granted, there are counter-tendencies that could vitiate this outcome. Most importantly, if wages remain low enough, firms will not have strong incentives to substitute machines for human labor. The form of economic marginalization is different — low-wage employment instead of long-term unemployment — but the social consequences would for the most part be the same. Second, for some firms (and therefore for some urban areas), access to new global markets may keep employment levels up. But this would not constitute a general solution to the problem of worker marginalization. As the most likely candidate for new consumer and industrial markets is East Asia, why would domestic producers there not seek to dominate them? Third, a major exogenous shock, such as a great war that could “reset” the economy by destroying productive capacity, could lead to an extended period of rebuilding. Barring such developments, it is quite possible that the challenging social phenomena that characterized the Rust Belt over the past generation will spread out to cities throughout the developed world.
Best case scenario? It may prove a boon for Rust Belt urban planners, who can act as consultants to the managers of cities everywhere.
Born in Akron, writer Glenn Perusek studied at Kent State (BA) and the University of Chicago (PhD). He has worked for many years conducting and teaching strategic research for workers, international unions and community-based organizations.
 “Additive manufacturing is growing apace in China,” Economist, April 27, 2013, at http://www.economist.com/news/science-and-technology/21576626-additive-manufacturing-growing-apace-china-new-brick-great-wall (accessed Aug. 29, 2013).
 “Additive manufacturing: Print me a jet engine,” Economist, November 22, 2012, at http://www.economist.com/blogs/schumpeter/2012/11/additive-manufacturing (acc. August 28, 2013).
 “Additive manufacturing: Making things with a 3D printer changes the rules of manufacturing,” Economist, April 21, 2012. Dutch fashion designer Iris van Herpen was already producing 3D designs for the catwalks.
 “The digitization of manufacturing will transform the way goods are made—and change the politics of jobs too,” Economist, April 21, 2012.
 “Digitization of manufacturing.”
 Paul Markillie, “A third industrial revolution,” Economist, April 21, 2012.
 Stephanie Clifford, “U.S. textile plants return, with floors largely empty of people,” New York Times, September 20, 2013.
 “Digitization of manufacturing.”
 “…automated driving, once considered science fiction, is rapidly becoming a reality, underscoring how computers are becoming an ever more important part of cars’ technology.” Chris Bryant, “Race is on to develop self-driving cars,” Financial Times, March 22, 2013.
 “Driverless cars: One day every car may come with an invisible chauffeur,” Economist, April 20, 2013, at http://www.economist.com/news/special-report/21576224-one-day-every-car-may-come-invisible-chauffeur-look-no-hands (acc. Aug. 26, 2013).
 “Imagining the industry’s future: The road to 2033,” Economist, April 20, 2013; “Driverless automobiles: The car that parks itself,” Economist, June 29, 2013.
 John Oram, “Governor Brown Signs California Driverless Car Law at Google HQ,” at http://www.brightsideofnews.com/news/2012/9/27/governor-brown-signs-california-driverless-car-law-at-google-hq-.aspx (acc. Aug. 26, 2013).
 Brown quoted in Richard Waters, “Technology: Vanity or visionary?” Financial Times, August 13, 2013. See also John Markoff, “Google cars drive themselves, in traffic,” New York Times, October 10, 2010, at http://www.nytimes.com/2010/10/10/science/10google.html?pagewanted=2&_r=0 (acc. Aug. 26, 2013).
 “The onrushing wave,” Economist, January 18, 2014, p. 26.
 “Online courses are transforming higher education, creating new opportunities for the best and huge problems for the rest,” Economist, December 22, 2012, at http://www.economist.com/news/international/21568738-online-courses-are-transforming-higher-education-creating-new-opportunities-best (acc. Aug. 19, 2013); Clay Shirky, “Your massively open offline college is broken,” The Awl, February 7, 2013, at http://www.theawl.com/2013/02/how-to-save-college (acc. April 20, 2014): At Pepperdine, a high quality institution, it is now possible to do coursework for a doctorate taking 85 percent of courses online.
 “Online college courses: Outsourcing education,” Economist, May 27, 2013, at http://www.economist.com/blogs/democracyinamerica/2013/05/online-college-courses (acc. May 27, 2013).
 Clayton Christensen, Michael Horn and Curtis Johnson, Disrupting Class (New York: McGraw Hill, 2011). See http://www.claytonchristensen.com/; “Online college courses: Outsourcing education,” Economist, May 27, 2013, at http://www.economist.com/blogs/democracyinamerica/2013/05/online-college-courses (acc. May 27, 2013).
 On MOOCs, see also Michael Horn and Clayton Christensen, “Where are MOOCs really going?” Wired, February 20, 2013, at http://www.wired.com/2013/02/beyond-the-mooc-buzz-where-are-they-going-really/ (acc. April 21, 2014).
 “The Future of Online Learning,” Financial Times, January 11, 2015, at http://www.ft.com/cms/s/2/f8a03bbe-9802-11e4-b4be-00144feabdc0.html#axzz3OoEJOt9w (acc. January 13, 2015); Sam Atkeson, “EdX Enters K-12 Arena with High School Level MOOCs, Education Week, September 12, 2014, at http://blogs.edweek.org/edweek/DigitalEducation/2014/09/edx_enters_k-12_arena_with_hig.html (acc. January 11, 2015).
 “The future of work: There’s an app for that,” Economist, January 3, 2015, pp. 17-20. Martin Ford, long a Silicon Valley computer engineer, deserves credit for his early and consistent focus on the potential for widespread structural unemployment arising from the computer automation of jobs across the economy. See The Lights in the Tunnel: Automation, Accelerating Technology and the Economy of the Future (Acculant Publishing, 2009) and his website, http://www.thelightsinthetunnel.com/. In 2015 he will release The Rise of the Robots: Technology and the Threat of a Jobless Future (New York: Basic Books, 2015). The solid work of MIT’s Erik Brynjolfsson and Andrew McAfee should also be consulted. See Erik Brynjolfsson and Andrew McAfee, Race Against the Machine: How the Digital Revolution is Accelerating Innovation, Driving Productivity, and Irreversibly Transforming Employment and the Economy (Digital Frontier Press, 2011) and The Second Machine Age: Work, Progress, and Prosperity in a Time of Brilliant Technologies (New York: Norton, 2014).
 McKinsey Global Institute, Disruptive Technologies: Advances that will transform life, business, and the global economy, May 2013, at http://www.mckinsey.com/insights/business_technology/disruptive_technologies (acc. October 11, 2013), p. 43.
 John Maynard Keynes, “Economic possibilities for our grandchildren” (1930), in Essays in Persuasion (New York: Norton, 1963), pp. 358-73, and at http://www.econ.yale.edu/smith/econ116a/keynes1.pdf (acc. October 15, 2013).
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Interesting take on a rather scary trend/prediction. What jobs might be created in the short term to absorb this labor. My friend says greening the economy will create jobs, but I don’t see a lot of urgency there. After the creatives open up peak coffee house, what other personal service opportunities besides questionable casual jobs like Uber will there be?
One issue to explore in conjunction with this thesis is the impact of aging demographics in Western Europe, China, Japan and S. Korea resulting in a lower ratio of productive workers/population and the need for increasing services to assist the aging population. Will this be enough to offset the impact of the changes in productivity, and what mechanisms will develop to allow workers and others to participate in the benefits of increased productivity.