Dust Bowl migrants in the 1930s, in search of a better life

Earlier this year I read The Grapes of Wrath (TGoW) by John Steinbeck for the first time. The novel captures the endurance of the human spirit and struggle for survival in the bleakest of circumstances. Something that surprised me, however, was the story’s resonance with many of the technological advancements and threats that we face today.

Most people know TGoW as the story of the Joad family during the 1930s dust bowl, a term referring to the time and place where drought and depression wreaked havoc on the great plains, and in particular the Oklahoma and Texas pan handles. But it is about much more than one family — it is about the power of technology and markets to disrupt lives, even when those changes are for the greater good.

The early chapters of the book describe the mechanization and consolidation of small farms that were taken over by large corporations that could afford gas-powered tractors to work the land. As the demand for farm labor dwindled, families were forced to sell their land and find other ways to support themselves. For many families, the lure of jobs and cheap land in California led them to migrate westward, packing up their belongings and embarking on a journey into the unknown. An estimated 2.5 million people migrated from the plains to the western states in the 1930s.

Back to the present

Around the same time that I read TGoW, I read this article about an Uber driver that committed suicide because he could no longer make a living as a full time driver in New York City. While researching this article, I was shocked to find that another taxi driver committed suicide in March, and another in May, making it 5 such suicides in 5 months. The arrival of ride-hailing apps, while delivering a boon for consumers across the city, had cratered prices for personal transport and led to a collapse in the value of taxi medallions, saddling their owners with debts they can never pay back, on a depreciating asset. Taxi drivers that invested up to $1.3M in a medallion (the record price set in 2014) have been left in an untenable position: victims caught between two generations of transportation technology.

These tragic stories made me think of the next wave of workers that will be displaced by technology — the next “dust bowl” generation — and the disruption it will cause to society, even if those changes are in the interest of the greater good: more efficient markets, lower prices, and better products. Were these drivers the canaries in the coal mine of an automated economy that will be implemented en masse over the next 5–15 years? I thought of the 3.5M professional truck drivers, the 4M administrative assistants, and the 3.8M fast food industry employees. Where will they “migrate” when their jobs are replaced with technology? What will they do next? How will society react?

Before you label me a Luddite, I am no stranger to the fact that new technologies disrupt industries and obviate jobs in every generation, and this “creative destruction” (as described by Schumpeter) is a necessary evil in technological progress. As we see from the examples above, this does not make the transition easy.

The difference today versus the technological transitions of that past is the time that we will have to react.

With the press of a button

There has been ample coverage of the collapse of US manufacturing sector over the last 20 years. US manufacturing has lost 5M jobs since 2000 (6M were lost from 2000 to 2009, with a slight recovery afterwards), driven more by globalization (specifically the rise of China) than by a technological sea change. This loss in jobs decimated regions and industries that once provided reliable full time jobs for generations. As devastating as this was, now imagine a change of at least twice that magnitude that happens in half the time. This is the threat that we face some time the next 20 years.

Adoption rates of new technologies are getting faster because they can take advantage of existing infrastructures. This has never been more true than it is today. The next generation of commercial technologies, while in many cases hardware-enabled (largely through sensors), will be driven by software, such as driver-less cars, robotics, or narrow AIs that can perform human tasks in defined (but ever-growing) areas. Because these new technologies are implemented via software, they can in many cases be implemented more rapidly than technologies of previous generations.

The adoptions curves are getting steeper

Early-20th-century-generation technologies took anywhere from 25–50 years or more to reach 60% adoption rates in the Un ited States (e.g., telephone, electricity, radio, cars). In most cases, this is because new infrastructure(s) had to be built to support them, and mass manufacturing techniques had not been perfected.

Recent technologies took ~15–20 years to reach 60% adoption rates (e.g., cellphones, internet, VCRs, computers). Not featured in the graph above are the secondary technologies such as robotics, automation, and next-gen media and communications that are essentially advanced-software-enabled amalgams of existing hardware technologies such as LCD screens, mobile processors, wireless communications, and high density memory. How are these intelligent technologies manifesting themselves today?

Today, companies are working on retrofitting trucks to be driverless for less than $30K. What happens when an entire fleet of trucks are converted? There are 3.5M professional truck drivers in the US.

Today you can buy x.ai to be a virtual scheduling assistant. What happens when a large company fires all of its personal assistants? There are 4M personal assistants in the US.

Today, most supermarkets have a self checkout lane. What happens when this inevitably expands into mass-market retail? There are 3.4M cashiers in the US.

Today, you can order a hamburger at a touchscreen kiosk. What happens when a large fast food chain rolls out these kiosks to all their stores, and begins rolling out robotic cooking technology that is already being developed by numerous startups. There are 3.8M fast food employees in the US.

None of the above technologies requires new infrastructure (roads, cables, wireless, new types of factories) to be built. In all cases they can be done with sensors, LCD screens, and basic robotics, running on today’s electrical, communication, and cloud computing networks.

Let me assure you again that I am no Luddite. Even if we accept the premise that workers have feared losing their jobs to technology for 200 years, yet there is always more work to do on the other side of the transition, that does not solve for the transition. Because of the speed of the next transition, it won’t be solved by 1) retraining the unemployed 2) relocating workers to places with more jobs opportunities, or 3) older workers simply retiring.

The 1930’s dust bowl was the confluence of an economic depression, drought conditions, and a new wave of farming technology. When and if the next recession begins (as it must), it may coincide with the maturation of these new industrial technologies, and if it doesn’t happen in the next recession, it will happen in the next one. If so, we may face a perfect storm: corporations, faced with declining profits, will hasten the adoption of new technologies that can reduce their labor costs.

Our worst fears

If unemployment in select verticals — drivers, assistants, cashiers, fast food — drops by 10M in 10 years, the societal risk is greater than generalized unemployment, because these unemployed workers will be more unified, with no expectation of getting their job back when the economy improves, and with no place to turn. They will demand assistance, and we must find a way to give it to them, or risk social unrest.

What might we see?

A rapid rise in unemployment, concentrated in a handful of job categories. Unlike the collapse of manufacturing, the impact will be geographically dispersed. A chronically under/unemployed population will create a new structural increase in costs for unemployment benefits and government-provided health insurance. The rise of politicians that are willing to blame immigrants, foreign nations, or just about anything other than the actual changes in technology. A populist or xenophobic surge that can’t follow through on its promises must turn to more wrongheaded solutions in the form of ultra-nationalism and protectionism. This is already happening. Reactionary regulation on automation technologies — e.g. taxes on automation software, robots, or companies that use them. The targets of these taxes would be nearly impossible to define (How would you define 1 vs multiple robots? Do you implement special tax on automation technology? What constitutes an automation technology?), and serve only to make US industry less competitive. Backlash against companies that are the first to build or implement automation technologies en masse, from former employees and from the public, especially if those companies are consumer-facing, such as fast food chains. Will people picket the first fast food restaurant that is fully automated, or the first mega-Unicorn startup built on job automation?

An Ounce of Prevention

This brings us back to beginning. How do we avoid another “dust bowl” — a rudderless generation of workers lost between two industrial eras? Much has already been written on this topic, and I will attempt to recap and add some additional thoughts:

A congressional commission to study the effects of labor obviation and potential solutions — for an issue that will be upon us in within 5 years, we have heard very little from our government in the way of understanding or solutioning. The greatest economists, businesspeople, and technologists must come together to understand what we are facing and how we can soften the blow without a major disruption to the economy and more importantly, society. New laws that facilitate a more efficient labor market and skilled workforce — tax credits or deductions for relocating for work, or education in technical or design fields. Education tax benefits should be targeted to skills that are future-proof. These laws won’t stop the painful transition, but they can soften it. Real minimum wages for gig economy workers — consider this a bridge to a fully automated economy. An often ignored fact of increasing scale and efficient markets is that fact that they result in perfect competition and the commodification of goods being traded, and if you are a gig economy worker, you become the commodity. Ride hailing apps don’t have minimum wages for their drivers, but they should. The era of being completely hands-off for the internet economy should come to an end. Basic income — this has been covered many times over, but broadly speaking, basic income distributes a flat amount of money to all citizens, with little to no means test, thereby redistributing money while avoiding the administration costs of traditional welfare programs and giving while offering everyone a minimum level of subsistence. This would counter the ever-increasing concentration of wealth driven by globalization and winner-take-all digital industries.

We are in an era when more than ever, the pace of innovation exceeds the pace of comprehension, reaction, and legislation. This is not about banning the robots, or “burning the looms” as the Luddites did, but nor should we stick our heads in the sand and pretend that this transition will be fine, just like the ones before us. The reality is, they weren’t “fine” for the people that lived through them. Just as we would prepare for any storm, we need to be ready for this. These safety nets must be in place before the worst is upon us, or we risk having a “dust bowl” of our own, 100 years after the original.