Politicians need to familiarize themselves with the new face of labor new technology has created

Too many politicians have been emphasizing employment in the area of technology and not paying enough attention to how technology has changed society and, in some ways, contributes to further divides in society. Nor are politicians demonstrating an understanding of the basic technological platform that underlies the economy and how this platform is evolving in order to produce at increasing efficiencies and higher returns on capital.

The Third Industrial Revolution described by thought drivers such as Jeremy Rifkin encompasses an integration of communications, energy, and transportation networks running on top of the internet of things. The internet of things is a digital world where it is projected in 12 years that 100 billion devices will be connected not just to the internet but to each other.  But this revolution is more than connectivity; it is about productivity and explaining the impact of greater productivity to the voter will be the tricky part for incumbent politicians and new entrants alike.

For example, the Trump Effect post the 2016 general election where markets responded positively to Mr Trump’s election was based on expected deployment of new transportation, energy, and communications infrastructure along with increased gross domestic output and incomes. The technology sector has been an overall darling of the market and politicians have been quick to tout the low hanging fruit of innovative new technology as a potential driver of economic growth.  And the numbers seem to support technology’s prominence.

American Entrepreneurship reported last March that since 2010, employment in the technology sector has expanded by 200,000 jobs annually. Approximately 11.5 million workers are employed by the tech sector, contributing $1.6 trillion to United States gross domestic product. Demand for tech workers is outstripping supply.

But even as demand for technology workers remains strong, the manufacturing sector, the one Mr Trump touts a lot on the continuous campaign stump, is seeing less hiring and ironically increased productivity. Pew Research reports that real employment in manufacturing fell from approximately 17.5 million in 1987 to 12.4 million in 2017, a decrease of 29%. During the same period, the real productivity index for manufacturing increased 81%.

Should politicians spend time providing workers a more balanced picture of the economy by educating workers on the need to pursue skillsets necessary for higher paying tech jobs? Yes, especially if they want to distinguish themselves as more trustworthy and knowledgeable about the economy than their opponent.

Properly educating the American worker (and hopefully garnering more votes as a consequence) will require politicians to explain the “productivity paradox.” In an article posted on Vox.com, Timothy B. Lee explains why the increase in innovation is apparently accompanied by a decrease in productivity. As technology innovates rapidly, progress is made in producing cheaper versions of items that have existed for decades. These items become more abundant with the savings eventually spent on more personal services items, items that are produced in slower growth industries.  Ironically, wages in these personal services areas, such as health care, child care, education, consulting, etc., trend upwards. A smaller number of producers will provide the nation’s material goods while slow growth industries take up a larger share of the national economy.

So, although productivity in manufacturing is increasing, the former factory worker will have to start looking for jobs in the slower growth areas of health, education, child care, and other personal services.  Had Republicans been frank during the 2016 campaign about the changes new technology is creating in the labor market, they would have been able to better neutralize criticisms from the left that current policies from the Trump administration are hurting the very people who voted for him. It is probably too late to make corrections to the lack of messaging on technology to avoid losses in the upcoming midterms but adjusting the narrative right after the midterm elections would be wise.

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