Ashley Nunes studies transportation safety and regulatory policy at MIT's Center for Transportation & Logistics
800 million. That's how many jobs could soon be lost to automation. The professions most at risk? Telemarketers, cashiers and paralegals, all of whom perform tasks considered repetitive, routine and predictable. That's the type of work machines fare well at. Machines also don't tire, don't falter and most importantly, don't demand a salary.
While this prospect may thrill employers, it makes politicians nervous. Rising unemployment can cause social unrest ultimately toppling governments. Widespread automation is particularly problematic for Canada where over 40 per cent of workers could see their jobs handed over to machines.
Ottawa's response thus far? To, in the words of the Prime Minister, "help more unemployed Canadians get the training they need to get a good well-paying job." Put simply, Justin Trudeau wants workers to learn new skills. That's the right sentiment. Technology kills jobs but it also creates new ones. That workers prepare for second careers is only prudent.
Mr. Trudeau's idea isn't new. Former president Barack Obama allocated millions towards similar efforts in the U.S. So did French President Emmanuel Macron. But this approach offers only partial relief. That's because technology is transforming the labour market in a more profound way. It's not just killing jobs. It's changing the nature of jobs that survive in ways that could have dire economic consequences.
Take London's black cabs. An icon of the British capital, some 20,000 of them weave through the city daily. Driving one isn't easy. Getting a licence means passing the Knowledge, a gruelling exam that entails memorizing thousands of street names, landmarks and routes. Passing the Knowledge was key to earning a living as a London city cab driver – at least it was, that is, until Uber came along.
Drivers for the ride-hailing giant have never taken the Knowledge. They don't need to. Uber's mobile app – displayed on a driver's smartphone – provides turn-by-turn instructions on where to pick riders up and where to drop them off. Street names, landmarks and routes are all laid out in meticulous detail.
The Uber app also shows drivers the nearest gas station along a route, the price of gas at that station and, for good measure, the closest public restroom. Put simply, when it comes to ferrying riders around, the app – not the driver – does the heavy lifting.
Therein lies the problem. The app purges the need for knowledge of London's streets: knowledge that riders have historically paid a premium for. The result? A lower qualification standard for would-be cab drivers; one that ultimately drives down wages. Why? Because if a job is simple, anyone can do it. And if anyone can do it, why pay top dollar?
Someone who lacks street savvy but can still – thanks to a mobile app – get you there on time, every time. Do you really need a knowledgeable but costly cabbie driving you up the River Thames? Or would you prefer someone who is paid (and subsequently charges) considerably less? Uber's success suggests the latter and understandably so. In the era of smartphones, satellite navigation and precision tracking, memorizing maps is, as The Economist notes, "an increasingly odd use of the human brain."
Yet flexing less mental muscle – courtesy of technology – comes at a price. High-paying jobs, long tied to using brains over brawn, become less high paying. Why? Because as the market demands fewer skills, workers with anything extra become less valuable. It's an economic reality reflected across industries.
It's also one that spells trouble for Ottawa. The federal budget – which supports multibillion-dollar defence, health and education programs – relies heavily on collecting tax revenue. When wages fall, revenue falls. Lower wages also means less spending which leads to sluggish sales. And this all culminates in fragile economic growth.
Averting this scenario demands fresh ideas; ideas that go beyond merely retraining workers for second careers. If Uber's rise shows one thing, it's this. It's not a matter of if technology will force wages to fall. It's a matter of when.