Wednesday, March 27, 2019

UBI or Shorter Work Time?

High-profile people in the tech industry have called for a Universal Basic Income (UBI) to support those who will be unemployed when new technology makes their jobs obsolete. It would be better to shorten work hours, so everybody can do part of the needed work. It is obviously better to let everyone have a good balance of work and free time, rather than having some people overworked and others idle.

UBI proponents seem to think our present situation is unique, but in reality, new technology has been making jobs obsolete continually since the beginning of the industrial revolution. In 1870, almost 50% of the American population was employed in agriculture, and today only 2% of our population is employed in agriculture. New agricultural technology eliminated the jobs of almost half of all Americans.

The American economy produced almost ten times as much for each hour worked in 2000 as it did in 1900 because new technology took over the work that people used to do.  Economists use the word "productivity" to refer to the amount produced during each hour worked, and we can see in this chart how rapidly productivity has grown as technology has improved.

There may be dramatic technological improvements that replace workers in the future, such as self-driving vehicles doing the jobs of drivers and voice recognition plus artificial intelligence doing the jobs of call-center workers, but they will not be any more dramatic than the agricultural technology that eliminated the jobs of half of all American workers beginning in 1970.

The difference is that agricultural workers who were replaced by machinery moved into manufacturing, and manufacturing workers who were replaced by machinery moved into services - but when service workers are replaced by artificial intelligence, what sector will they move to?

The important thing to remember is that the change will be gradual. There might be massive displacement when self-driving vehicles arrive, for example, but it is a science-fiction fantasy to think that all the jobs across the economy will suddenly disappear.

As productivity continues to gradually improve occurs, the best way to provide jobs for displaced employees is to gradually shorten work hours, to spread the needed work among everyone.
In fact, American work hours declined as productivity increased from the beginning of the industrial revolution until World War II, but as the following chart shows, work hours stopped decreasing after World War II.
Shorter work time to share the needed work, which is the most obvious response to new technology that displaces workers, has somehow moved to our conceptual blind spot. We hear far-fetched proposals for universal basic income, imagining a fully automated world that won't come for generations, and we ignore the possibility of gradually shortening work hours as productivity gradually increases, which was the norm for much of American history.

Ultimately, the time may come when technology has gone so far and work hours have become so short that we will have to provide universal basic income for those who are unemployable.  But we are no where near that time now. Americans now work the longest hours of any industrial nation; we overtook Japan in 2001.

It is plausible that these overworked Americans will back proposals that shorten work hours for everyone - including themselves.  It is not plausible that they will back proposals for a UBI that lets some people live without working at all while they continue to be overworked.