Obama’s Greatest Challenge: A Jobs Policy for the Tech Age

Obama’s Greatest Challenge: A Jobs Policy for the Tech Age

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What a shame that President Obama did not use his State of the Union address to propose a new jobs policy. Not the same old tired pitch for more education (worthwhile) or a higher minimum wage (counter-productive), but rather a new demand – that all our lawmaking and policy be focused on one objective: creating jobs. 

A bold message that we the people choose jobs over welfare – more public works and less food stamps – and that not all innovation constitutes progress.  Alas, there is no progressive thinking in this progressive White House. Instead? Same old, same old.

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In recent years, President Obama has blamed George W. Bush, the financial crisis, the one percent, and a do-nothing Congress (among others) for our continued high unemployment. How odd that he has never targeted the real villain – rampant automation – for our paltry job creation. There’s a good reason for this. Once Americans understand that our sluggish job growth is here to stay, they will oppose programs like unemployment insurance which are meant to be temporary, but are proving long-lived, and also increased immigration, both critical planks in the Democrats’ platform. 

It’s a pity, because President Obama could create his much-sought legacy by embracing a new jobs-first doctrine. He could even tack back to his early promises of bipartisanship; we’re all in this fight together. He could lead the push-back against the innovations that have doomed so many to a lifetime of unemployment, of feeling useless and – eventually -- angry. We don’t have to bring back spinning wheels or the horse and buggy; but, at the margins, we should choose jobs over all else. 

For starters we could level the playing field so that all retailers – online and brick and mortar – are playing by the same rules, as Mr. Obama is fond of saying. Why? Because Internet vendors like Amazon don’t employ nearly as many people as their traditional competitors. For instance, in fiscal 2012, Macy’s racked up revenues of $27.7 billion; at fiscal year-end they employed 175,700 people. For Macy’s, revenues per employee amounted to some $158,000. Amazon posted fiscal 2012 sales of $61.1 billion with only 88,400 workers; revenues per employee amount to nearly $691,000. Which is better for the country?

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Amazon, and others selling online, have wielded a substantial price advantage over traditional retailers – in part because they were originally not required to collect sales taxes. Even today the tax requirements are loose, with only 19 states having demanded compliance. In Louisiana and Oklahoma, for instance, both of which charge over 8 percent in state and local sales taxes, Amazon is off the hook. In a competitive market place, with consumers increasingly comparing prices with the help of mobile devices, an 8 percent discount can be determinative.

During the recent holiday season, mall-based retailers overall enjoyed a 2.7 percent increase in sales, with most of the increase coming from online sales. Foot traffic in stores was off nearly 15 percent.     Amazon had a record season, with its business so much better than expected that the company was caught flat-footed and failed to deliver some packages on time – a first. On Black Friday – the most important cyber shopping day of the year, online spending accounted for 44 percent of the total, up from 41 percent the year before.

This is not good news for job seekers, and in recent weeks we have seen the impact. J.C. Penney has announced it will close some 33 stores, and let go 2,000 workers. Macy’s, too, recently announced store closings and layoffs of about 2,500 employees, and Sears just announced it will shutter its flagship store in Chicago. Other brick-and-mortar retailers are struggling.

No one means to shut down internet shopping; it would be impossible to turn this tide, and no one wants to. Who doesn’t like to shop in their PJ’s in the wee hours? Amazon has done a terrific job of exploiting a technology-driven opportunity, and should be congratulated.  But, there is no reason to give that company and other etailers a head start. Our legislators should fix this.

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There are other places where we can choose people over machines. In Oregon and New Jersey, legislators have chosen to outlaw self-service gas stations. The ruling in New Jersey dates to 1949, and was considered a safety measure. When Governor Corzine moved to change the law, voters rebelled. They like the service, and the jobs. 

These are not inconsequential decisions. Fewer and fewer working Americans are supporting a growing number of retirees and unemployed. In 1950 we had over 16 workers paying for each retiree receiving Social Security; now, we have fewer than three carrying the load, and that figure is trending down. Add in the 13 million unemployed, and people with jobs are supporting a hefty burden. This is unsustainable. In a recent speech, Larry Summers noted that the number of men between the ages of 25 to 54 who are not working has soared from one in twenty in the 1960s to about one in six today.

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Think of the job categories that barely exist today –  baggage handlers, assembly line workers, reservation managers, elevator operators, receptionists – all replaced by machines. A study from Oxford University scholars Michael Osborne and Carl Frey rank numerous other occupations which will lose jobs to machines in  coming years; consider accountants, telemarketers, real estate agents, machinists, technical writers and even commercial pilots at risk.

Profits and income have accrued to the capital pushing automation, while workers have been left behind. New Internet start-ups have created some jobs, but the trade-off is not positive. As pointed out in a recent issue of The Economist, when Instagram was sold to Facebook for $1 billion, the company had 30 million customers, but only 13 employees.

It’s time we put people first. Some consider pushing back against an inexorable rise in computer capabilities fruitless and absurd. But, the threat to jobs in our time may create unexpected upheaval, not only in the U.S. but around the world.

In a recent opinion piece on happiness in The New York Times, Arthur Brooks claims that “joblessness seems to increase the rates of divorce and suicide, and the severity of disease.”  That’s a high price to pay for “progress.”  This is a moment for enlightened leadership. Unhappily, Mr. Obama missed his cue.

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