Working on World Order: Help Wanted for Twenty-First Century U.S. Leadership

The following is a guest post by Kyle Evanoff, research associate in international economics and U.S. foreign policy at the Council on Foreign Relations.

The robot invasion has arrived. Throughout much of the United States and the rest of the world, new technologies are disrupting labor markets by altering how jobs are structured and, in many cases, displacing human workers with cheaper and more capable machine analogues. Concurrent with the travails of globalization, this wave of automation has had and will continue to have pronounced consequences for the American political economy and, by extension, the U.S.-led world order. Although labor force readjustments are not new phenomena—past eras of rapid innovation and economic downturn have posed similar structural challenges—the precarious status of the United States as ailing global hegemon and the novelty of sophisticated machine cognition lend special profundity to this iteration of widespread economic disruption.

To help address the myriad challenges stemming from technological innovation and automation, the Council on Foreign Relations recently released an Independent Task Force report, The Work Ahead: Machines, Skills, and U.S. Leadership in the Twenty-First Century, which offers a compass for U.S. policymakers as they navigate this dense political and socioeconomic thicket. With the aim of rebuilding the links among work, opportunity, and economic security for all Americans, so as to ensure a strong domestic foundation for U.S. foreign policy and global leadership, the report offers seven major findings and an equal number of recommendations. Important takeaways include:

1. Accelerating technological change will alter labor markets and the American workforce; U.S. national security and economic competitiveness require embracing innovation while mitigating its downsides.

Rapid technological innovation is underway in fields such as artificial intelligence and robotics, with profound implications for workers and society. Machines can now recognize and respond to human speech, identify complex images, steer cars and trucks, and perform medical diagnoses, among other tasks. While more advanced capital enables greater productivity—the typical U.S. steel mill, for instance, produces five times as much steel per employee today as it did in the early 1980s—it also broadens opportunities for employers to substitute machine for human labor and for foreign actors to threaten national security. The United States, to remain competitive on the global stage and avoid ceding influence to potential economic and military rivals, will need to remain a leader in harnessing new technologies while recognizing and mitigating their risks.  

2. Strong economic growth—along with accessible, high-value educational programs—is essential to improving American wages and opportunities.

Concurrent with technological change has been the polarization of labor markets. Those in the top echelons of the U.S. wealth and income distributions have witnessed a marked divergence in their fortunes vis-à-vis those at the bottom of the economic ladder. The top quintile of American income earners, for instance, has enjoyed a 27 percent rise in real income since 1979, while those in the lowest quintile have experienced falling real incomes over the same period. Widespread automation could exacerbate these trends. Strong economic growth, then, will be necessary to increase demand for labor, limit the share of national income accruing to capital, and bolster working class wages and living standards. For workers to take advantage of the robust labor markets produced by strong economic growth, they will need access to affordable educational programs that develop skills germane to twenty-first century work.

3. Rethinking credentialing and hiring practices could expand labor force participation while making it easier for employers to fill positions and grow their organizations.

According to the U.S. Department of Labor, there are close to six million job openings in the United States. At the same time, seven million workers are unemployed and millions more are underemployed or have exited the workforce. While some of this disconnect is attributable to natural labor market frictions, much of the difference is due to unnecessary barriers to employment, such as dubious occupational licensing requirements and many employers’ unjustified fixation on educational credentials. State governments should take the lead in streamlining licensing regimes by expediting ongoing efforts to increase interstate portability and reciprocity of licenses; private sector employers can do their part by focusing on competencies rather than credentials in making hiring decisions.

4. The current social safety net is ill-suited to a fast-changing economy in which many workers are employed on a part-time, contract, or temporary basis.

Improved educational and employment opportunities, though necessary, are not in and of themselves sufficient to remedy the American middle and lower classes’ twenty-first century economic woes. The rise of a gig economy, in which workers’ ability to retain jobs is more doubtful than in past eras, has meant that employer-provided benefits, de rigueur at present, must play a smaller role relative to government programs in forming the basis of the social safety net, lest economic precariousness become a state of normalcy for ordinary citizens. As with occupational licenses, benefits should be portable, delinked from single employers and full-time work. The federal government should also work toward implementation of more effective transition assistance for displaced workers, investing greater sums in worker retraining and relocation support, as well as increasing flexibility in unemployment insurance.

THE TASK AHEAD

Much work remains to be done to improve socioeconomic mobility and living standards in the United States and to provide a strong domestic foundation for U.S. foreign policy and global leadership. The structural challenges that automation and globalization pose to the American economy are vast in scale and unamenable to quick fixes and easy solutions. Policymakers will need to respond to these challenges in a manner both proportionate to the magnitude of the issues at stake and considered in its implications for the domestic economy and world order.  

As alacritous technological change continues, a vibrant United States will be essential in orchestrating effective international cooperation. Automation could disrupt not just U.S. labor markets, but also global supply chains and paths to economic development. Innovation will also create new security threats, such as novel bioweapons and errant machine intelligence, which will require transnational efforts to address. American policymakers, then, should recognize that technological progress does not guarantee progress writ large. Concerted political effort, on the domestic and global stages, will be necessary to overcome the many challenges ahead.