The United States has made a major policy shift under the Trump Administration. Touting catch phrases such as “Made in the USA” and “Buy American and Hire America,” the pro-jobs agenda is being implemented across government agencies. Business confidence has led to quick, unexpected rises in employment and declining unemployment rates.
But deregulation and cheerleading will need to turn into more substantial economic realities if America is to regain its lost manufacturing sector. Pres. Trump may quickly discover that policy and arm-bending can only do so much. Many of the threats to an emerging workforce may already be on American soil.
The Rise of AI
By the year 2021, robots are expected to displace about 6 percent of the workforce. That figure is higher than the unemployment mark for February 2017. One of the problems with AI-oriented technology is that it creeps into our lives in seemingly fun little ways.
For example, this holiday season saw a boom in Echo sales and Alexa has integrated herself squarely into our lives. Carmakers have started merging her friendly voice into our driving time and the tiny AI bot can turn on the lights, regulate home temperature, provide direction, and even turn on your sprinklers. That type of far-reaching AI-like technology is likely to eliminate jobs in industries such as customer service. The kindly Alexa and similar technologies has the capability of sending America’s 2.5 million customer service representatives to the unemployment lines.
The second major challenge AI robotics will pose to the American jobs market will likely be transportation. Although the recent WikiLeaks “Vault 7” about the CIA hacking into autonomous cars put the scare into consumers, self-driving vehicles appear to be the wave of the future. There are about 250,000 taxi drivers and chauffeurs that could be displaced.
Freelance work such as Ubers could also lose driving as an income source. If the country makes a successful transition to driving automation, truck drivers could be next on the chopping block. These are generally good paying jobs and the fast-growing industry accounts for more than 3.2 million jobs.
Although the United States’ push to restore prosperity and a thriving economy hinges on bringing back a vital manufacturing sector, rival countries such as China are moving in the opposite jobs direction. Foxconn, a feeder company for Apple and Samsung, managed to cut its workforce by more than 50 percent by introducing robots. Slashing human labor from 110,000 to 50,000 people in one company can dramatically reduce manufacturing costs in the long run.
Some economists believe that robots will reduce the workforce by 35 percent in the next 20 years. A former McDonald’s executive weighed the cost benefits of automation by saying it’s cheaper to spend $35,000 on a robotic limb than pay someone $15 per hour to bag fries. Obviously, the rise of the machines could displace humans from major portions of the workforce.
Immigration Threat to American Workforce
- Each administration has viewed the effect of illegal immigration on the workforce differently. Pres. George W. Bush favored good relations with Mexico, work visas and saw people who came across the southwest border as a manual-labor asset, particularly in agriculture. Pres. Obama tended to dismiss regulating immigration even as the number of immigrants headed north of 13 million nationwide. The law and order Trump Administration has implemented a tough-on-immigrants policy and sees expelling people as a positive for the employment of American citizens. In the first two months, border crossings waned and reports of people in the country illegally leaving for Canada are on the rise. Here are some basic facts about illegal immigration.
- Population: By the end of 2014, there were more than 11 million unauthorized immigrants in the U.S. and an estimated 13 million during 2016. They comprised about 3.5 percent of the total population.
- Workforce: More than 8 million unauthorized immigrants were employed in 2014. They made up approximately 5 percent of the workforce.
- Mexican Origin: People from Mexico comprise more than half of all unauthorized immigrants.
The impact of illegal immigration on employment can be calculated by doing simple math. If the unemployment rate ranges between 4-5 percent, or between 7-8 million people, then removing 8 million illegal immigrants from the workforce would create an employee shortage. At least theoretically, there would be more jobs that people in the workforce or actively looking for work. The result would force employers to compete for workers. In terms of free market economics, a labor shortage would drive up hourly wages in many sectors. If the United States is successful in revitalizing its manufacturing sector and continues the trend of curtailing illegal immigration, the possibility of increased work visas seems likely. In other words, a reduced immigrant population and regulated policy would return the country to the Pres. Bush-era thinking that immigrants brought a positive benefit to the American workforce.
Millennials in the Workforce
It may come as a surprise, but Millennials now make up the largest generation in the workforce. By 2030, they are expected to comprise almost 75 percent of the jobs market. Given the stereotypes that have been associated with this swath of the population, those numbers may be a bit frightening. Conservatives label left-leaning Millennials “snowflakes” because of their sensitive social policy views. Veteran workers see them as slackers because of the group’s work philosophy. Of course, these are generalizations. But, labels stick. Here are some of the broad strokes about what we know about Millennials.
- Entrepreneurial: Millennials are less likely to stick with a job if they don’t feel personal growth. Ultimately, they prefer to start businesses to have more control over their lives.
- Don’t Tell Me What To Do: Millennials are far less likely to tough out a job under conditions they don’t like. Many will leave a position because of the employer. Basically, they want a coach helping them grow, not a boss telling them what to do.
- Job Flexibility: Millennials prefer jobs that meld into their personal lives. The rise of consumer companies such as Uber are reflections of the Millennial mindset. Approximately 3 million people work from home and more than 60 percent of Millennials see this as favorable.
In many ways, Millennials are being judged through a similar lens as Gen X and Baby Boomers before them. Baby Boomers were associated with the counter-culture and Hippie movements of the 1960s and 1970s. In their early employment years, they were also seen as slackers. Similarly, Generation X took on the persona of the “Lost Generation.” They were a kind of middle child stuck between changing economies and ideas. As we can see, both groups made tremendous contributions and created the emerging markets and technology we enjoy today.
While some see Millennials through the same type of hopeless lens, the seeds of their thinking are already changing the economic landscape. Individualization and personal economies such as Uber, YouTubing, small farming and sole proprietorships are likely to expand as they take control of the labor force through population.
With illegal immigration being rolled back and Millennials altering the future of employment thinking, AI appears to be the primary concern for reduced employment. It’s an issue Millennials will wrestle with going forward as Boomers and Gen X exit the workforce.