For U.S. Labor Market, Automation, Immigration Bad One, Two Punch

By Joe Guzzardi
August 10, 2016
 
Jobs, jobs, jobs – no matter whether voters are tuned into Donald Trump or Hillary Clinton, both presidential candidates promise that there’ll be jobs aplenty once they’re elected.
 
The details Trump and Clinton provide are somewhat vague, however, and mention of the two key variables that make job creation tough are nonexistent: first, automation, and second, adding one million work-authorized legal immigrants and 750,000 guest workers to the labor force every year. Either of the two represents significant roadblocks to expanding the labor force, both together make the challenge nearly insurmountable.
 
On the stump, automation is as taboo a topic as immigration. Going back to the early days of the Republican and Democratic primaries, none of the combined 20-odd candidates talked about robotics and the threat they represent to human employment. To date, the effect of automation, especially on low-skill jobs, has been obvious and dramatic. According to the Manufacturers Institute, about 40 percent of U.S. manufacturers use some type of robot on their production lines. Because robots have become smarter, more efficient and more affordable, future orders have reached record levels. As robot prices decline, even smaller businesses have taken advantage. The biggest benefit robots have over humans: they can work 24 hours a day, seven days a week and don’t require health care or paid vacation.
 
The presence of robots in manufacturing creates a huge paradox. Brookings Institute research found that manufacturing employment has been in decline for three decades. Yet, factory output is near its historic high. The fallout, according to Rice University Professor of Computer Science Moshe Vardi, is that automation also has transformed other labor market sectors like the hospitality industry. Evidence shows that as robots displace American workers, economic stratification, middle class decline and the “under current of misery,” Vardi’s term, follow. Vardi predicts that automation may boot half the world’s employed out of their jobs by 2050.
 
Some say that since humans will have to design and maintain the robots, there still will be jobs. So even if Vardi’s perspective is alarmist, new immigrants, especially the low-skilled, will suffer the most as the shift to automation forges ahead.
 
Here’s what National Academy of Sciences research revealed, looking at just one demographic of recent immigrants, Central Americans. Of men 25 to 59 years of age, peak employment years, 48 percent of Central Americans have not completed high school, and 10 percent have a bachelor’s degree. In contrast, just 7 percent of American-born haven’t finished high school, and 36 percent have earned a college degree. Census Bureau data expands on the NAS findings. Since most under-educated new immigrants cannot find high-paying jobs, there’s been a dramatic increase in the U.S. low-income population since 1986 when the nation began a historically high immigration era.
 
Nothing will slow automation, but federal immigration levels are set at the discretion of Congress. Less immigration would end the downward pressure on American incomes that’s created decades of wage stagnation. The working poor would benefit from fewer immigrants competing with them for their jobs. As candidates Trump and Clinton debate immigration, they should frame their positions in terms of how much more poverty the U.S. is willing to accept, especially in a shrinking labor market.
 

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Joe Guzzardi is a Senior Writing Fellow with Californians for Population Stabilization.
Contact Joe at [email protected] and find him on Twitter @joeguzzardi19.