Innovation for Jobs

Innovation for Jobs

The Missing Middle Class Jobs In the Second Machine Age

Wade Roush, San Francisco Bureau Head of Xconomy, summarizes his impressions from the i4j Menlo Park Summit last week (This is an excerpt – click here to read the whole article in Xconomy):

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So what can individuals do to adapt to an era when skill-biased technical change is the norm? What can policymakers do to put middle-skill people back to work?

Here are some ideas, drawn partly from Cowen, Brynjolfsson, and McAfee, and partly from talks I heard at the Innovation for Jobs Summit. (The meeting was held under Chatham House rules, meaning I can’t reveal who said what.) Some of these proposals are more plausible than others, given the political realities in Washington, D.C., and in the nation’s state houses and city halls. But they’re all worth weighing, and even testing through pilot programs.

1. Get Used To It. Accept the idea that there will be a large and permanent class of unemployed people. Improve and extend public benefits to reduce the stigma and suffering of joblessness. Pay for these benefits partly through increased taxes, and partly through productivity gains from modernizing the agencies that administer benefits. (You might also call this the Nordic Solution, and it has a downside. In countries like Finland and Sweden, which have an overall tax burden in the 45-percent range, unemployment benefits are so generous that—by the admission of the countries’ own policymakers—there’s little incentive for hundreds of thousands of long-term unemployed to look for jobs.)

2. Grow Our Way Out of It. Pursue monetary, fiscal, budget, and tax policies that stimulate economic expansion. In theory, increased demand for goods and services will eventually force companies to start hiring at all levels.

3. Get On the Retraining Train. Reengineer public services to vastly improve the scope, quality, and responsiveness of job retraining programs. The U.S. Department of Labor is beginning to have some with success with career search sites like MyNextMove and the Transition Assistance Program for military veterans reentering the civilian workforce, but the advice these sites offer isn’t always tailored to the skills employers need today. In Finland, an experiment is underway to hand over some retraining programs to the private sector, which presumably understands the job market better, and would be offered financial incentives to get trainees back into the workplace.

4. Replace Old Technology Clusters with New Ones. Figure out what skills people in a given region already have, and give private industry incentives to innovate in areas that match those skills. In the Skåne region of southern Sweden, the contraction of companies like Ericsson and Sony Mobile has left many people with skills in the mobile industry out of work. At Lund University, there’s a new research institute, the Mobile and Pervasive Computing Institute, dedicated to supporting startups that are exploring the Internet of Things—the emerging network of distributed, cloud-connected devices, from thermostats to digital contact lenses. Much of the underlying technology comes directly from the mobile industry, and those companies will need experienced workers.

5. Reinvent Education. Shore up mass education by rewarding the best teachers with much higher salaries. Encourage experiments with other ways of learning, such as massive online open courses (MOOCs), and agree on a system of certificates or credentials that will help the people who’ve completed MOOCs find jobs. At the same time, make room for new ways to finance traditional higher education. Look to examples like PaveUpstart, and Michigan’s proposed pay it forward plan, which help students raise the money for college tuition in return for a percentage of their future income.

6. Outwit the Computers. Through college counseling and retraining programs, nudge future workers and job seekers toward roles that are unlikely to be disintermediated by technology: sales, marketing, finance, support, personal services, management. These are irreducibly complex jobs where the human touch matters.

7. Support Startups and Small Businesses. As the Kauffman Foundation has been arguing for years now, all net new job growth comes from startups. Yet while the overall rate of new business formation is still healthy, many startups have just one employee: the founder. The rate of formation of larger companies is actually falling, perhaps due to immigration restrictions and overly burdensome regulations. It’s time to clear these thickets, and uncork the banking system so that the operating capital small businesses need in order to hire people will be cheaper. Crowdfunding could be a help: sites like Indiegogo and Kickstarter are giving more and more ventures the ability to gauge market demand for their products even as they raise seed funding. But it’s important that the emerging regulations around equity-based crowdfunding aren’t so restrictive that they end up driving investors away. And this isn’t just about technology startups: it’s better to create 10,000 small services companies with 10 jobs each than to create one Google, which has only 44,000 employees.

8. Rethink What It Means to Have a Job. My suggestion above that we just get used to long-term unemployment was mostly facetious. There are good social and moral reasons, not just economic ones, for believing that everyone needs work: it’s one of our main sources of self-worth, dignity, and purpose. But our definition of “work” is curiously narrow. It doesn’t seem to include raising children, for example: stay-at-home moms and dads aren’t counted in the workforce and aren’t compensated for the absolutely vital work they do to give children a foundation of learning and support.

(Read the whole piece by Wade Roush here)

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