Reuters/ Steve Marcus
What should be done to help those whose jobs are made redundant by technology?
We just got our hands on a letter to investors from Elliott Associates, the nearly $30 billion hedge fund founded by Paul Singer, and it has some suggestions.
The letter says technology offers huge promise for the developing world; however, it says the benefits are less clear for the developed world. From the note:
"It is societies which already have a lot of infrastructure in place (mainly developed countries) where technology can seem to be strongly net negative for employment. The fast-food industry is a large employer in the developed world, and cost pressures compel corporations to look to technology for solutions. The unintended effects of the recent and prospective push in the US to mandate $15 per hour minimum wages may in fact provide momentum toward replacing waiters and cooks with machines and robots. Similarly, it is not the developing countries whose job landscapes will be significantly affected by self-driving trucks and taxis in 5 to 10 years. And so on."
Elliott is far from the first to bring this topic up. We reported this weekend that the number of "middle skill" jobs in the developed world has cratered since 1990, with some lost to globalization and some lost to automation. It's something Oaktree cofounder Howard Marks and Moelis & Company chief Ken Moelis have talked about. Viktor Shvets, a strategist at Macquarie, has called it the "third industrial revolution."
Elliott's letter is interesting, however, as it makes some recommendations. The letter says (emphasis added):
"Throughout the developed world and in many parts of the developing world, technological change is a top-priority jobs issue demanding smart, creative, comprehensive responses by governments and employers (as well as workers and unions). There is no single answer, but the direction of the answers should be toward rapid-response solutions which can train, upgrade, educate and relocate workers before their skills and motivation can deteriorate."
It is not hard to find examples of areas that could benefit from this. There are plenty of single-industry towns on both sides of the Atlantic that either lost that industry or found it could be managed mostly by robots.
This feeds into politics. The pitch to these constituencies from politicians from both sides of the aisle has often been based around reopening the factories that shut down. "Train, upgrade, educate and relocate," in Elliott's language, is less catchy, but it could be an important step in helping those who feel that they've been left behind.
There are challenges of course. As Elliott notes, even if older professionals do retrain, they are often unfairly discounted by would-be employers. And embarking on reeducation and relocation later in life is a daunting task. Still, Elliott makes some good points about the need for better-organized "rapid-response solutions."
Back to the letter:
"Unfortunately, while there are a myriad of job-training programs that purport to address the problem of the unemployed, there are few programs which are focused on technological obsolescence and aimed at comprehensive and rapid-response solutions to the combined elements of skills and geography. Reforms and creativity in this realm would be important not only in aiding the workers who are affected but also in creating the impression that governments can respond to real problems with clever and timely solutions."
