[Joint House and Senate Hearing, 114 Congress]
[From the U.S. Government Publishing Office]
S. Hrg. 114-377
THE TRANSFORMATIVE IMPACT OF ROBOTS
AND AUTOMATION
=======================================================================
HEARING
before the
JOINT ECONOMIC COMMITTEE
CONGRESS OF THE UNITED STATES
ONE HUNDRED FOURTEENTH CONGRESS
SECOND SESSION
__________
MAY 25, 2016
__________
Printed for the use of the Joint Economic Committee
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JOINT ECONOMIC COMMITTEE
[Created pursuant to Sec. 5(a) of Public Law 304, 79th Congress]
SENATE HOUSE OF REPRESENTATIVES
Daniel Coats, Indiana, Chairman Patrick J. Tiberi, Ohio, Vice
Mike Lee, Utah Chairman
Tom Cotton, Arkansas Justin Amash, Michigan
Ben Sasse, Nebraska Erik Paulsen, Minnesota
Ted Cruz, Texas Richard L. Hanna, New York
Bill Cassidy, M.D., Louisiana David Schweikert, Arizona
Amy Klobuchar, Minnesota Glenn Grothman, Wisconsin
Robert P. Casey, Jr., Pennsylvania Carolyn B. Maloney, New York,
Martin Heinrich, New Mexico Ranking
Gary C. Peters, Michigan John Delaney, Maryland
Alma S. Adams, Ph.D., North
Carolina
Donald S. Beyer, Jr., Virginia
Viraj M. Mirani, Executive Director
Harry Gural, Democratic Staff Director
C O N T E N T S
----------
Opening Statements of Members
Hon. Daniel Coats, Chairman, a U.S. Senator from Indiana......... 1
Hon. Carolyn B. Maloney, Ranking Member, a U.S. Representative
from New York.................................................. 3
Witness
Dr. Andrew McAfee, Principal Research Scientist, Massachusetts
Institute of Technology, Cambridge, MA......................... 5
Mr. Adam Keiper, Fellow and Editor of The New Atlantis, Ethics
and Public Policy Center, Washington, DC....................... 7
Dr. Harry Holzer, Professor at the McCourt School of Public
Policy, Georgetown University, Washington, DC.................. 9
Submissions for the Record
Prepared statement of Hon. Daniel Coats, Chairman, a U.S. Senator
from Indiana................................................... 40
Prepared statement of Hon. Carolyn B. Maloney, Ranking Member, a
U.S. Representative from New York.............................. 40
Prepared statement of Dr. Andrew McAfee, Principal Research
Scientist, Massachusetts Institute of Technology, Cambridge, MA 42
Prepared statement of Mr. Adam Keiper, Fellow and Editor of The
New Atlantis, Ethics and Public Policy Center, Washington, DC.. 51
Prepared statement of Dr. Harry Holzer, Professor at the McCourt
School of Public Policy, Georgetown University, Washington, DC. 61
Questions for the record and responses:
Questions for the record for Dr. McAfee submitted by Senator
Amy Klobuchar.............................................. 65
Questions for the record for Dr. Holzer submitted by Senator
Amy Klobuchar.............................................. 65
Questions for the record for Mr. Adam Keiper submitted by
Senator Tom Cotton......................................... 67
THE TRANSFORMATIVE IMPACT OF ROBOTS AND AUTOMATION
----------
WEDNESDAY, MAY 25, 2016
Congress of the United States,
Joint Economic Committee,
Washington, DC.
The Committee met, pursuant to call, at 2:32 p.m. in Room
106 of the Dirksen Senate Office Building, the Honorable Daniel
Coats, Chairman, presiding.
Representatives present: Tiberi, Schweikert, Maloney,
Adams, Beyer, Paulsen and Delaney.
Senators present: Coats, Lee, Klobuchar, Casey, Peters,
Sasse, and Heinrich.
Staff present: Breann Almos, Ted Boll, Doug Branch, Whitney
Daffner, Barry Dexter, Connie Foster, Harry Gural, Colleen
Healy, Karin Hope, Matt Kaido, Jason Kanter, Christina King,
Yana Mayayeva, A. J. McKeown, Viraj Mirani, Brian Neale, Thomas
Nicholas, Brian Phillips, Ken Scudder, and Phoebe Wong.
OPENING STATEMENT OF HON. DANIEL COATS, CHAIRMAN, A U.S.
SENATOR FROM INDIANA
Chairman Coats. The Committee will come to order. Today the
Committee will examine how robots, automation, and technology
are transforming our economy. I would like to thank our
witnesses for being here, and I will be introducing the three
of you shortly.
But first I would like to draw the Committee's attention to
the gavel that I just used to start today's hearing. It looks
and functions like a typical gavel, but this gavel
(indicating), which we normally use, is crafted out of a block
of wood and carved down to--a machine will carve this down into
the form that it is. This one (indicating) started as a pile of
dust, a compound, a plastic compound. Instead of taking a block
of wood and carving down the traditional gavel, we have built
this--not me; this has been built through the 3D printing
process by the Washington, D.C., Public Library's Fabrication
Laboratory, or what they call ``The Fab Lab,'' using 3D
printing. An amazing advance in technology. Amazing.
Three-D printing works by heating up raw material, in this
case plastic, and the compound from which plastic is made, one
small layer at a time until the object is completed.
And rather than needing to mold or carve raw material as we
did in the past, we now use a--we put our file into a printer
and it creates the item according to the user's specific
expectations and specifications.
I also have with me a different 3D printed gavel that we
will use to adjourn the meeting. I will have to bang it a
little harder. But it was made by students at the Washington
Mathematics Science Technology Public Charter High School
located here in the District of Columbia. What an exciting new
world we live in where objects can be manufactured on demand,
and with such ease and specificity.
I would like to thank both institutions for their
contributions to today's hearing, which tangibly illustrate the
topic we are about to explore. I would also like to thank
Senator Lee and his staff for helping the Committee prepare for
today's hearing.
Recent technological developments have been pushing the
envelope faster and further than was expected even a decade
ago, making what was once thought of as a science fiction a
reality.
I remember the hassle of getting my children to program our
VCR. And now my cable box is capable of recording all my
favorite shows without me even asking. And meanwhile, some of
my grandchildren are probably saying, ``What was a VCR?''
The robotic machines are here. Whether it is vacuuming our
carpets or assisting in precise surgeries, robots are helping
with and performing almost every task that we can imagine. This
has led to a greater abundance of consumer products, and more
productive and creative workers.
However, as with the Industrial Revolution and previous
revolutions, this new robotic revolution clearly is
contributing to pressures arising within our changing labor
force. Even before these technological advances, America's
workforce was starting to age and businesses were beginning to
rely much more on automated labor than physical labor. Robots
are expected to hasten this trend as they fill in for humans in
both blue- and white-collar jobs.
This picture--which I am going to put up; I don't know
where it is; we were going to put up somewhere--shows a modern
assembly line and illustrates the prevalence of automation in
today's economy. Where workers used to assemble vehicles
directly by hand, now they oversee teams of precise robots that
can weld and assemble vehicles far more advanced than ever
before.
We have a number of assembly plants in Indiana. I have been
through each and every one of them over a period of my service,
dating back to 1981 in the Congress. I am used to seeing that
line filled with dozens of human beings assembling parts to the
making of an automobile or a truck, and by hand.
Now all I see is a number of robots doing that same
process. Where workers used to assemble directly by hand, they
now oversee through teams of precise robots that can weld and
assemble vehicles far more advanced than ever before.
Automation's rapid progress has also raised challenges with
certain government policies. How can we foster an environment
where innovators thrive and grow?
How can we foster a social safety net prepared for 21st
century labor markets? Do some government policies make human
workers prohibitively expensive for employers? How will current
workers adapt? And is our education system preparing our
youngest citizens for the future economy?
These are important questions, and for guidance we look
forward to hearing the views of our distinguished witnesses.
Today we will hear from Dr. Andrew McAfee, principal
research scientist and co-founder of MIT's Institute Initiative
on The Digital Economy.
We also welcome Adam Keiper--I think I am pronouncing that
correctly, Adam--fellow at the Ethics and Public Policy Center
and editor of the quarterly technology publication, The New
Atlantis.
Our final witness is Harry Holzer, professor at the McCourt
School of Public Policy at Georgetown University, and Senior
Fellow in Economic Studies at the Brookings Institution.
My thanks to all of you for providing us with your
expertise and giving us a glimpse into the possibilities of the
future.
I now would like to recognize Ranking Member Maloney for
her opening statement.
[The prepared statement of Chairman Coats appears in the
Submissions for the Record on page 40.]
OPENING STATEMENT OF HON. CAROLYN B. MALONEY, RANKING MEMBER, A
U.S. REPRESENTATIVE FROM NEW YORK
Representative Maloney. Thank you so much, Chairman Coats,
for really calling such an important and interesting and timely
hearing.
We are here today to discuss the impact of automation on
jobs and the economy and how best to harness the immense power
of technological innovation.
The United States has long been a leader in this important
area, and basic research funded by the Federal Government has
played a key role in driving innovation.
We know that automation can boost productivity, lift
aggregate demand, reduce consumer prices, and improve our
quality of life. While all of these benefits are apparent in
the long run, we also know that in the short run innovation can
displace workers, causing severe economic pain to workers whose
jobs are automated out of existence, or whose wages are reduced
dramatically.
Today's hearing is about the future. And let's face it,
automation is a difficult thing to predict. We do not know what
is going to happen, and we just don't know how fast it is going
to happen, or in which industries, or what will be the exact
consequences.
One study finds that nearly half of U.S. jobs are at risk
of being lost to automation in the next couple of decades.
Other studies show that the impacts of automation will not be
as great, or felt so soon.
Throughout history, concerns have been voiced that new
technologies would make human labor obsolete. It has not
happened. While there have been dramatic shifts in how people
have earned their livings, the quantity of jobs has increased
and the quality has improved.
Yet there are reasons to believe that this could be
different in the future. I would like to add some of my
questions to the excellent questions Senator Coats put forth:
How do we equip our workers with the tools and skills
needed to adapt to the future changes?
What should we do as policymakers to both advance
innovation and the expected productivity benefits on the one
hand, while also supporting workers adversely affected by
technological changes on the other hand?
And how can we harness this engine of prosperity while
making sure that benefits are widely shared?
I really am excited to learn more and to hear the questions
and exchange here today with our excellent witnesses. But
before I yield back my time, I would like to turn to Senator
Peters, a former colleague in the House of Representatives. We
miss you. And I would like to yield the balance of my time to
him. He is the co-founder of the bipartisan Senate Smart
Transportation Caucus.
Senator Peters has a deep interest and knowledge of
automation and its impacts in Michigan and the rest of the
United States, and I yield him the remainder of my time, and it
is always good to see you again.
[The prepared statement of Representative Maloney appears
in the Submissions for the Record on page 40.]
Senator Peters. It is good to see you, as well, Ranking
Member Maloney, and thank you for yielding your time.
As a Senator representing Michigan, I am acutely aware of
the incredible opportunities and challenges that automation
brings to our economy.
Today the American auto industry is generating connected
and automated vehicle technology and mobility solutions that
surpass really all of the innovations in that industry's
history.
These disruptions will really redefine transportation in
the United States and will result in thousands of lives being
saved. It will reduce personal insurance costs. It will reduce
congestion, and provides benefits to the environment. And these
advancements are not decades away.
In fact, in the Model Year 2017 Cadillac CTS will leave the
factory equipped with vehicle-to-vehicle technology onboard
which NTSA predicts at full penetration could reduce the number
of accidents on our roads by nearly 80 percent. And at a time
when nearly 40,000 people die on our highways every year, that
is a big deal.
As the industry moves towards a world where we have fully
autonomous driverless cars that are talking to each other, and
to infrastructure, we as policymakers have to start thinking
about how to eliminate some of the potential barriers to these
developments.
As Ranking Member Maloney mentioned, I founded the Smart
Transportation Caucus with my colleague, Senator Cory Gardner
so that we can have these discussions about automotive
cybersecurity, the future of liability, and other serious
implications for the future.
But I am pleased that here today we are talking about what
these new technologies will mean for the American workforce
when the livelihoods of so many men and women in this country
actually depend on the driving of a vehicle, whether it is a
car or a truck.
The future of mobility, innovation, and automation presents
both great opportunities as well as great challenges, and I
look forward to hearing from the witnesses.
And thank you, Chairman, for holding this very important
hearing.
Chairman Coats. Thank you, Senator. And thank you, Ranking
Member Maloney.
Let me now introduce our panel of witnesses. Andrew McAfee
is the principal research scientist at the Massachusetts
Institute of Technology, studying how digital technologies are
changing business, the economy, and society. In 2014 he co-
authored a book entitled ``The Second Machine Age: Work,
Progress, and Prosperity In Time of Brilliant Technologies.''
His work has been published in the Harvard Business Review, the
Economist, The Wall Street Journal, and The New York Times. He
holds a Bachelor's Degree in Mechanical Engineering and a
Masters in Management, and a Doctorate from Harvard Business
School. We welcome you, Dr. McAfee.
Adam Keiper is a Fellow at the Ethics and Public Policy
Center and the editor of The New Atlantis, a quarterly journal
about the ethical, political, social, and policy implications
of modern science and technology. He has worked on Capitol Hill
and various think tanks over his career, and he writes on
science and technology policy.
And Harry Holzer is a Professor of Public Policy at the
McCourt School at Georgetown University. He is currently an
Institute Fellow at the American Institutes for Research, a
nonresident Senior Fellow at the Brookings, a Senior Fellow at
the Urban Institute, and a Research Affiliate of The Institute
of Research on Poverty at the University of Wisconsin at
Madison. Prior to coming to Georgetown, Professor Holzer served
as Chief Economist for the U.S. Department of Labor and
Professor of Economics at Michigan State University. He
received his B.A. and Ph.D. in Economics from Harvard.
Welcome, Dr. Holzer.
With that, let me start with our witnesses, and, Dr.
McAfee, you can be first and give us a summary of your remarks.
And then we will go down the line, and then turn it over to
some other Members and work through the question process.
Dr. McAfee.
STATEMENT OF DR. ANDREW McAFEE, PRINCIPAL RESEARCH SCIENTIST,
MASSACHUSETTS INSTITUTE OF TECHNOLOGY, CAMBRIDGE, MA
Dr. McAfee. Chairman Coats, I would like to thank you, Vice
Chair Tiberi, and Ranking Member Maloney, and other Members of
the Committee, for having me here today. It is a great honor.
I want to make four points.
The first one is that the American workforce is very
clearly going through some fairly major changes. And to
illustrate that point, I would like to show a graph of the
post-war United States economy that has four lines on it.
Two of those lines relate to output. They are GDP per
capita and productivity over decades of time. And two of those
lines are about the workforce. They are about raw job creation.
And then median household income, on average. Are we creating
good jobs, or not?
And what you notice with that picture is that for several
decades, after the end of World War II, those four lines were
all going up. That's the direction that we want. And they were
all going up just about in lockstep. And then more recently we
noticed what my co-author and I call ``the great de-coupling.''
The two lines related to output have continued to go on a
pretty healthy upward trajectory, while the two lines related
to the workforce have in a sense stalled out. And, by some
measures, the median American household or family is worse off
in income terms than they were at the turn of the century.
So something is pretty clearly going on.
The second point that I would like to make is that this is
a really complicated phenomenon, but one of the forces driving
these changes is technological progress. And the way that has
been happening so far is that technology has been really good
at automating routine work. And by that, I mean both physical
work--this of an assembly line in a factory; and knowledge
work. Routine knowledge work is a payroll clerk in that same
factory. We have had technologies for decades now that have
been pretty good at automating that kind of work.
And if I could show my next picture, that is my favorite
picture of what happens as technology does its work over time.
This is a graph of total U.S. manufacturing output, again over
almost the entire post-war history. That is the blue line. And
we continue to be a manufacturing powerhouse around the world,
and manufacturing output goes up almost every nonrecession
year.
The red line is total U.S. manufacturing employment. And
that has been on a fairly steady downward trajectory. So this
graph clearly shows that we are doing more and more with fewer
and fewer workers over time in this industry. It is a
trajectory that we are starting to see in other industries, as
well.
The third point that I would like to make is, as we are
fond of saying in Indiana, we ain't seen nothing yet. And,
Senator Coats, the gavel that you showed as an illustration of
some of these amazing developments in additive manufacturing,
or 3D printing, when I look around at the technology landscape
and I see artificial intelligence systems, and deep learning,
and machine learning that can beat humans at the games that
they themselves devised, when I see autonomous cars and trucks,
when I see drones that can move in a swarm and accomplish work
together with no oversight whatsoever, I see all these forces
coming together.
And the main thing that I think is going to happen is that
these phenomena that we have already seen in the workforce,
this hollowing out of the middle class, the pressures that we
see on the average American family, who that middle class was
built on the back of routine physical and knowledge work, I
expect these phenomena to continue, and for some of these
challenges to accentuate because technological development is
not slowing down.
I believe it is speeding up. And it is eating into areas
where it has not been present before. It used to be the case
that if you wanted to listen to a person and respond to what
they wanted, you had to have a human being involved in that
work. It is just not the case anymore.
The final point that I want to make, though, is that this
is not the time for alarmism and for thinking about--for
planning for an economy that has no more jobs. That is just not
where we are yet. We are generating on the average of more than
150,000 jobs every month in the country. So we are not yet at
the point of peak jobs or peak labor.
Instead, I think we need to kind of retool, or reconfigure
some things that we are doing to meet the challenges of this
age that we are heading into. And to keep in mind for myself
what the right changes, or right policy interventions are, I
just keep humming the Old McDonald Theme Song to myself.
Because ee-I-ee-I-oh tells me a great deal about where we need
to make some changes.
And for me that means education. It means immigration
reform. It means facilitating and encouraging more
entrepreneurship. It means doubling down on our infrastructure,
which is in fairly unhealthy shape. And then finally, the
``oh'' for me is original research. It is pretty clear that
companies are great at applied research, and they tend to
under-invest in the very fundamental developments that
eventually yield things like the Internet and the iPhone to us.
Thanks very much.
[The prepared statement of Dr. McAfee appears in the
Submissions for the Record on page 42.]
Chairman Coats. Thank you, Doctor.
Mr. Keiper.
STATEMENT OF MR. ADAM KEIPER, FELLOW AND EDITOR OF THE NEW
ATLANTIS, ETHICS AND PUBLIC POLICY CENTER, WASHINGTON, DC
Mr. Keiper. Mr. Chairman, Ranking Member Maloney, and
members of the Committee, thank you for the opportunity to
participate in this important hearing on robotics and
automation.
In the years ahead, these aspects of technology may
profoundly reshape our economic and social lives. A good place
to start discussions of this sort is with a few words of
gratitude and humility. Gratitude, that is, for the many
wonders that automation, robotics, and artificial intelligence
have already made possible. They have made existing goods and
services cheaper, and helped us to create new kinds of goods
and services, contributing to our prosperity and our material
wellbeing.
And humility because of how poor is our ability to peer
into the future. There is reason to believe that major
breakthroughs in automation and robotics are right around the
corner, but we should recall that just because we can imagine
something does not mean it is actually possible; even if it is
possible, that doesn't mean it will really happen. Even if it
really does happen, that doesn't mean it will happen in quite
the way we imagined it; and even if it does come to pass in
something like the way we imagined, there are likely to be all
manner of unintended and unexpected consequences.
That said, what do we know? And what do we believe is
coming? There are two reasons today's concerns about automation
are fundamentally different from what came before.
First, the kinds of thinking that our machines are capable
of doing are changing, so that it is becoming possible to hand
off to our machines ever more of our cognitive work.
Second, we are also creating new kinds of machines that can
navigate and move about in and manipulate the physical world.
The recent blizzard of technical breakthroughs in movement,
sensing, control and, to a lesser extent, power are bringing us
for the first time into a world of autonomous mobile entities
that are neither human nor animal.
To simplify--maybe over-simplify--a vast technical and
economic literature, there are basically three scenarios for
what the next several decades hold in automation, robotics, and
AI.
In the first scenario, automation and artificial
intelligence will continue to advance, but at a pace
sufficiently slow that society and the economy can gradually
absorb the changes. The job market will evolve, but in
something like the way it has changed over the last half
century. Some kinds of jobs will disappear, but new kinds of
jobs will be created. And in many cases we will find new ways
for human beings to use and to work alongside machines.
In the second scenario, automation, robotics, and
artificial intelligence will advance very rapidly. They will
take off. In this scenario, there may be great productivity and
enormous economic growth, but jobs may disappear at a pace that
will make it difficult for the workforce to adapt without pain.
Pressures on American workers in mid-skill jobs will be
exacerbated, and there will be new pressures on workers in
high-skilled and low-skilled jobs. This scenario could involve
severe economic disruption, and perhaps social unrest and calls
for political reform.
In the third scenario, advances in these fields will
produce something utterly new, maybe something dangerous. This
is more of the sci-fi notion you've probably heard about, the
``singularity,'' ``superintelligence,'' things like that. These
are strange and radical possibilities, and it's difficult to
say much about what they might mean at a human scale.
Now a handful of policy ideas have been proposed that would
seek to let us enjoy the fruits of these technological advances
while avoiding some of the worst possible effects of
disruption.
Some of the ideas involve adapting workers to the new
economy. We hear that workers must engage in life-long
learning, and up-skilling, and they must be as flexible as
possible. Of course education and flexibility are very good
things; they can make us resilient in the face of what
economists call creative destruction. Yet we have to be careful
not to place too much of our hope in flexibility since workers
are not just workers. They are also members of families, and
members of communities. Flexibility can be easier to talk about
than to do.
Another proposal one often hears discussed is a universal
basic income guaranteed to every individual, even if he or she
does not work. This idea has both critics and supporters across
the political spectrum. It would present a profound
transformation of our economic system but, some would argue,
maybe a necessary one if we see a profound shift in the nature
of work.
Mr. Chairman, the rise of automation, robotics, and AI
raises many questions that extend far beyond the matters of
economics and employment we are discussing today--including
many legal, practical, regulatory, and moral matters, maybe
even existential matters. And I mention a few of these in my
written testimony.
I just want to end by saying another word or two about the
meaning of work. The science fiction author Arthur C. Clarke
said, some four-and-a-half decades ago, that we shouldn't worry
about people losing their jobs because of automation. We should
look forward to it. We should embrace it. ``The goal of the
future,'' he said should be full unemployment. That should be
our goal.
That notion raises deep questions about who and what we are
as human beings, and the ways in which we find purpose in our
lives. Work is not just a matter of toil, but a source of
structure, meaning, friendship, fulfillment. In the years ahead
as we contemplate the blessings and the burdens of these new
technologies, my hope is that we will strive, whenever
possible, to exercise human responsibility, to protect human
dignity, and to use our creations for the improvement of truly
human flourishing. Thank you.
[The prepared statement of Mr. Keiper appears in the
Submissions for the Record on page 51.]
Chairman Coats. Doctor, you're on. Thank you.
STATEMENT OF DR. HARRY HOLZER, PROFESSOR AT THE McCOURT SCHOOL
OF PUBLIC POLICY, GEORGETOWN UNIVERSITY, WASHINGTON, DC
Dr. Holzer. Thank you very much for having me this
afternoon. I would also like to make four points about how
technology and automation will affect the labor market, and
about appropriate policies to deal with that.
So my first point is that fears of automation and the view
that they will eliminate millions of jobs historically have
been vastly overblown. We all know about Luddites in Britain.
At various times in the U.S. we have had automation scares like
in the 1950s and 1960s. This has never, so far, turned out to
be true. There has been no aggregate job loss in the long run
associated with new technologies, even though individual
workers have often been displaced.
But my second point: Even if technology hasn't eliminated
large numbers of jobs in the aggregate, it can and has reduced
earnings among large groups of workers. In the past 35 years,
the digital revolution, globalization, and weakening
institutions like labor unions together have reduced employment
and good-paying job categories, especially for those workers
with only a high school education or less. The jobs most
effected were goods-producing jobs for men, clerical jobs for
women. But at the same time, wages and jobs have increased for
workers who either have the technical skills to deal with the
new technology like machinists, technicians, and engineers, or
who have other skills that complement the machinery. Those
skills could be analytical, or communication skills, or even
creative skills. There is a strong skill bias in the technology
that actually helps some workers and hurts others.
There is likely a capital bias, as well, that the owners of
the capital embodying the new technology profit at the expense
of workers overall.
But on the skill bias, Dr. McAfee referred to polarization.
We have had growing polarization in the labor market. Growing
top. Growing bottom. Shrinkage in the middle. But the middle is
not disappearing. And it is not going to disappear any time
soon. There is a new middle growing in sectors like health
care, IT, advanced manufacturing, parts of the service sector.
But those jobs require a lot more education and post-secondary
training than many workers in the labor market have.
The problem is that polarization is leading to stagnating
or even declining real wages right now for less educated
Americans, and especially less educated men. And the declining
real wages of less-educated men tend to, number one, reduce
their activity in the labor market. A lot of them have simply
left the labor market. And also their participation in
institutions like marriage. And I think this hurts the overall
economy, as well as their families, their children, and their
neighborhoods when this occurs. So we want to halt and reverse
that wage stagnation.
My third point: Artificial intelligence and robotics are
very hard to predict in terms of future trends. It is possible
that the breadth and the pace of labor market dislocations will
grow, as my colleagues had indicated, but let's be clear. To
date there is no evidence whatsoever that this has happened
yet.
Productivity growth in the U.S. has actually been declining
in the last 10 years. That is exactly the opposite of what you
would predict based on all the stories we have heard. The
fluidity and dynamism and churning in the labor market have
declined in the United States. Again, the opposite of what you
might have heard. Now that could turn around. That could change
in 5, and 10, or 20 years. Jobs could become more unstable, and
they could become harder to find. We just don't see it yet in
the numbers.
Which means, number four, future automation should not be
an excuse to avoid or eliminate a sensible, moderate set of
worker supports and services to address the labor market
problems that we have already seen. And several of those
problems now exist. Therefore we need solutions on several
fronts--the most important being the skill bias of technology.
There is a range of changes we need to make in our skill-
producing institutions, especially community colleges, to
strengthen workforce services, career counseling, growing
partnerships between industry and our skill-producing sectors.
Making community colleges more responsive to the labor market
with higher accountability is important. I am a supporter of
accountability in this sense. Apprenticeships. Career technical
education and life-long learning. All of those need to be on
the table for improving skills.
I think institutions have to be protected . . . not only
the right of workers to collectively bargain, which are under
assault in various places, I believe we need to support high-
road employers who invest in the skills, high performance, and
high compensation of their workers. A lot of employers do very
well taking the low road, reducing their labor costs at any
price. They can do very well in that sense. And that might be
what hurts our productivity in the United States.
Thirdly, if the labor market becomes more unstable, we do
need to make sure that universal benefits are available and
portable. Health care, paid family leave, etc. And then
finally, we actually might need to invest in more job creation
if the place of displacement picks up and overwhelms the labor
market.
So there are lots of issues on the table, lots to discuss,
and happy to engage in that conversation afterwards. Thank you.
[The prepared statement of Dr. Holzer appears in the
Submissions for the Record on page 61.]
Chairman Coats. Dr. Holzer, thank you. I think this is a
fascinating topic here with major implications for the future
of the country and for, as you said, individuals, workers,
families, our society.
I am going to try to combine a couple of thoughts here into
one question and turn to the three of you to respond.
Dr. Holzer, it pretty much goes along the line of what you
were saying, because my question was going to be this: We have,
if you look back in history, several game changers of immense
proportions. You know, moving from an agricultural society to a
manufacturing society. And now we are moving into a new type
of--is there something different about this phase that we are
moving into that separates it from any other?
Can we base some conclusions on conventional wisdom and
research relative to what has happened over historical? Or are
we seeing something entirely new, that we really cannot totally
forecast the direction that it is going?
You raised the question, Dr. Holzer, that I would like to
have the others respond to, of the sort of a mystery of why
isn't productivity, with all this automation, with machines
working 24/7, you don't have to pay for health care, they don't
go on vacation, they don't go on holidays, tremendous increases
in the productivity, why don't we see that trend in
productivity on a much higher trend going up rather than being
fairly flat? And participation rate. Is the fact that
automation is taking over jobs contributing significantly to
our low, relatively low participation rate? And what impact is
that having on the participation rate?
So if I could start with Dr. McAfee, this is my question,
and ask each of the three of you. And, Dr. Holzer, then you can
kind of wrap up there. But what are your thoughts of the other
two witnesses regarding this?
Dr. McAfee. Chairman Coats, I think you are asking exactly
the right questions, and they are extremely difficult
questions.
To your first one, is this time different? The only honest
answer is: We don't know. And I agree with Professor Holzer,
the historical pattern would lead you to be kind of calm about
what is happening. Because we've faced big disruptions before,
and our economy grew, our labor force grew, and the American
worker was better and better off.
The reason I showed that first picture was to show that
there's something that looks fairly different in the data. When
we look at job growth, it has tapered off. When we look at
average incomes, they have been slowly declining or holding
steady for a very long period of time, well before the Great
Recession. So there seems to be something new in the data
there.
And when I look around at the kinds of technological
advances that we're seeing, I try not to get too starry-eyed
about them, but they do feel like something new under the sun
to me. My way of thinking about it is, most of our previous
technologies could only--only encroached a small amount into
the total bundle of things that a worker might go to try to
offer an employer. So we had technologies that could lift more
than we could, that could travel across distances faster, and
that could do arithmetic better than we could.
Okay, we bring a lot more to the table than that. We can
deal with ambiguous situations. We can understand human speech.
We can recognize very, very subtle patterns. That's all
fantastic.
I've seen technologies that can do all of those things, do
them at a very high level, and I think are either already or
very quickly going to achieve superhuman performance in a lot
of these areas.
To give one example, if a piece of technology is not
already the world's best medical diagnostician, I think it will
be fairly quickly. So my version--and again, we have to be very
humble and cautious about this--my take is that something
actually is different now.
Your other excellent question, why hasn't this shown up in
the productivity statistics? There's a huge debate about that.
I think two things are going on. Number one, a lot of these
science fiction advances that I've been talking about are very,
very new. They're honestly, most of them, within the past five
years. They just haven't had a chance to defuse throughout the
economy very, very broadly yet.
The other thing is, I like to keep in mind an image of two
economies. There's kind of an extraordinarily productive,
automated, technologically sophisticated one. You know, think
of Google and Apple as exemplars of that. And then think of
another economy that's very, very labor intensive and only
grows by adding more people to the mix. Think of the home
health aide as an example of that.
Basically most of the jobs we are adding are in that second
low-productivity economy, more so than was in the past. When
that is the case, we are going to observe very low productivity
growth, as we're measuring it, even though that first economy
is ticking along at a very healthy clip.
Chairman Coats. Mr. Keiper, anything you'd like to add to
that?
Mr. Keiper. I think that was a wonderful answer. I would
like to associate myself with most of that answer. I would just
add a point or two as to why there has not been more
productivity over the course of the last decade.
The Great Recession is a major cause, or a major
explanation that I think most of us would turn to. And just to
also amplify what Professor McAfee was saying, it takes time
for some of these technological advancements to be picked up
and adopted by firms in less high-tech sectors.
So you may see over the course of the next years and
decades ahead real advances in productivity in firms that are
in, forgive me, stodgier fields than you might see in Silicon
Valley.
Chairman Coats. Thank you. And, Dr. Holzer, just to wrap up
here, give us your thoughts.
Dr. Holzer. Well I think Dr. McAfee did cover most of the
relevant things. I'll just add a few things. So there could be
a time lag, as everybody suggests. Robert Solow, the great
economic analyst of technical change famously said at the end
of the 1980s, if there's all this technological change going
on, why don't we see any of it in the productivity numbers? And
of course in the 1990s you did see it, briefly.
A second possibility, though, is that the nature of the
changes will not be as dramatic as some of those we've seen
today. And the biggest proponent of this view is Robert Gordon
at Northwestern, who has written a very challenging book where
he's saying this stuff doesn't compare at all to the changes in
the late 19th century, early 20th century: electricity, the
internal combustion engine, indoor plumbing that dramatically
changed American businesses and American homes.
So he's a techno-pessimist. He just doesn't think that
these technologies will be as ground breaking. But it also
could be, as Dr. McAfee said, that a lot of the growth right
now is for services that right now can only be done by humans.
A lot of the elder care, child care kinds of work. It is
not necessarily very high skilled, but robots can't do that and
won't be able to do that. The human touch will not be there for
a long, long time. So it could be a mix of these things. We
won't know for awhile. But you asked what about the declining
labor force participation, and is it directly that the machines
are displacing workers and kicking them out of the workforce? I
don't think that's it. I think there is an intermediate step
having to do with wages.
All the forces that have reduced the wages of less-educated
workers--technology, globalization, weakening institutions--as
those wages have stagnated and declined, a lot of workers
simply don't believe it is in their interest or worth their
while to stay in the labor force. And I think that is why they
leave, and that is why dealing with stagnant wages through, or
separately from the technology, I think is our prime concern
right now.
Chairman Coats. Thank you. Thank you, witnesses, for those
answers.
Vice Chair Maloney.
Representative Maloney. Thank you so much.
Dr. McAfee, you wrote in a recent piece in The Financial
Times that the skills many people have are becoming less
valuable in the labor market because of globalization, and also
technological advances.
You wrote, and I'm quoting here, quote ``We need to figure
out how to deal with this situation. This will be one of the
most important policy arenas over the coming decade.'' End
quote. And on page 6 of your written testimony today, you note
that the Econ 101 Playbook is very clear on what has to be
done, but that it is not being followed. Could you clarify what
you mean by that? And what could we be doing in a better way in
the policy arena to both boost productivity and ensure that
more people can benefit from these new technologies? And I
would like to hear Dr. Holzer and Mr. Keiper's take on this
question, too. Thank you.
Dr. McAfee. Yes. Thank you. Let me try to address the
education first, and then broaden out to the whole Econ 101
Playbook.
As one of my colleagues says, the way we are educating
people right now--in other words, I believe it is still
dominated by rote learning, by the memorization of large
amounts of facts and the ability to regurgitate them, and the
ability to do fairly basic math and arithmetic, for example. I
have a colleague who says those are exactly the skills you need
if you're on top of a mountain with no Internet access.
[Laughter.]
Or they are exactly what we needed workers to do 50 years
ago. That is just not what we need anymore. And if it is true
that technology has been eating into that routine work, we need
to be teaching our students and our workers to be good at the
less routine stuff. What is in that category? I would say
creativity. I would say different flavors of social skills such
as negotiation, motivation, persuasion, coordination. There is
research that shows how valuable these skills still are. I
didn't learn a lot of those in school.
And then finally, just the ability to recognize a problem
and to go after that problem, which is a combination I believe
of creativity and grit. We are learning a bit, I believe, about
how to teach those in schools. Our educational system at the
primary level is still dominated by rote learning and fairly
basic quantitative skills. And I think that needs to change. I
hope it happens quite quickly.
Your broader question that I heard about the Econ 101
Playbook, for example, our infrastructure gets a grade of D+
from the Society of Civil Engineers in America. I just don't
see any reason why that needs to be the case.
The entrepreneurship in America, as Professor Holzer says,
is on a steady decline. Most measures of business dynamism are
actually heading in the wrong direction for the past decade or
so.
Figuring out why that is and reversing it I think is
critically important. When I think about the fact that a
shampooer in Tennessee needs 70 days of training before they
can start their job, it makes my head spin. So there does
appear to be a thicket of regulations and other barriers that
are getting in the way of entrepreneurship and job creation and
dynamism. And so dealing with that seems very important to me,
too.
And then finally, when you go look around Silicon Valley
and the other centers of great dynamism, I am just unbelievably
impressed by the number of foreign-born founders and workers
and extraordinary contributors out there.
So liberalizing our immigration policies and getting those
people who want to build their lives and careers into America
seems to me an incredibly straightforward thing to do. I don't
know an economist who disagrees. And yet I find our immigration
policies kind of Kafkaesk.
Representative Maloney. Dr. Holzer, I would like to bring
you into this. What are your comments on it?
Dr. Holzer. We all agree that there's a skills' problem in
America, and skills exist----
Chairman Coats. Doctor, push your [microphone] button.
Dr. Holzer. There's many different kinds of skills,
different dimensions of skills. Dr. McAfee talked about
important general skills--reasoning ability, communicative
skills, etc. Those are clearly very important. There are more
specific technical skills that matter, as well, that many of
our industries like advanced manufacturing are having trouble
finding people to do that kind of work.
So we have skill gaps on different dimensions. A big
problem is our K through 12 system. Our K-12 system doesn't
prepare a lot of workers for the kinds of technical training
that often needs to happen at community colleges. So that is an
issue.
But the whole institution of community college to me is a
funny hybrid. Historically it was a liberal arts institution, a
stepping stone to the four-year schools. And a lot of the
people there still think that way. Most of the instructors
there want to teach anthropology, not machine tooling, or not
phlebotomy, and that is an issue.
But the institution itself doesn't respond very well to
labor market forces. Institutions get the same public subsidy
no matter what their outcomes are. So their incentives to
really emphasize career development, career-building skills, I
think are limited.
And in general the training for a lot of the jobs that are
hard to fill is actually pretty expensive. Equipment, putting
equipment on college campuses, is really expensive. Instructors
in many of these areas, everything from nursing to machining,
are also expensive.
So a lot of the forces are not aligned well for an
intermediate institution like community colleges to play the
kind of role it can. We all talk a lot about apprenticeships,
work-based learning. There are other issues there about why
small- and medium-sized employers either don't have the
knowledge about that or the resources to do that effectively.
So I think on a lot of different dimensions we could do a
lot better. But it is going to take a lot of work, and it is
going to take some resources, as well.
Representative Maloney. Mr. Keiper, I loved your quote at
the end of your testimony this morning. I would like to get a
feel of how extensive are robots in our world. I know that in
medical technology they are using robots quite a bit. And
certainly Mr. Peters, Senator Peters, mentioned in the building
of cars. But what percentage, how much of it is in America? And
I welcome anyone to comment on it.
I went to China several years ago and I wanted to see their
solar plants, where I expected to see a lot of people running
around and working very hard. And what I saw were a bunch of
robots walking around with humans managing them on a computer.
You could have blown me away. I didn't know that that type of
work was there.
So where do we stand? Are we even with the world going
forward with robots? Or are others producing more robots than
we are? Where do we stand in the globalization of it? How big
is it? Is it helping? And then of course how do we protect our
workers in it?
Mr. Keiper. All wonderful questions. And some of them are
very complicated. I guess it is difficult in some ways to know
how many robots there are because different people define them
different ways.
You know, if the word ``robot'' had been around 100 years
ago--it hadn't yet been coined--we probably would talk about
early household appliances like the dishwasher as a robot. But
because it preceded, predated the coining of the word, we
didn't apply it that way. And, you know, I think there will be
a period when we talk about robotic cars, as driverless
vehicles, and then after awhile we'll just start calling them
cars.
So it depends partly on terminology. But to answer what I
take you to really be getting at, robots are being adopted in
developed countries around the world, chiefly in the
manufacturing sector. The United States is by most measures
leading the world in this area, although other developed
nations are doing very well. Germany. China, in some respects.
It depends on how you measure: in raw numbers of robots, or per
capita.
I just want to say two small additional points, just to
piggyback on things that each of the other panelists mentioned.
First, something Professor Holzer mentioned about the era of
incredible invention that we saw from the mid-19th century
through the early decades of the 20th century when we saw
electrification, and lighting, and audio recording, and all
these amazing things. And by some comparisons, they got the
low-hanging fruit, and arguably it's harder to see where the
next steps are.
It reminds me of the famous line from venture capitalist
Peter Thiel. He says, ``I was promised flying cars and all I
got is these 140 characters.'' A reference to Twitter.
[Laughter.]
The point I think really is that--and it's a point Thiel
himself has made--is that we need to encourage creativity and
looking for major kinds of innovations. It is wonderful that we
are talking about driverless cars. I wonder if we couldn't
think about greater kinds of innovations and get back some of
the optimism that we had in the middle of the 20th century that
in some ways seems to have waned.
And then finally, Professor McAfee mentioned the
possibility of educators teaching creativity and grit. Can you
really teach creativity and grit? I don't know. Maybe. Maybe
not. I think teachers can certainly harm creativity and can
harm grit. And we have to at the very least do our best to
prevent that from happening.
The last thing I'll say, I read recently a biography of
Gordon Moore. He's the man who gave us Moore's Law, co-founder
and president of Intel. And, you know, really a creative man.
And he chalks up some of his success to his kind of wild,
outdoors childhood and his early love of chemistry where he was
free to just go around in his backyard and blow stuff up. I
mean, he just blew stuff up for fun. You can't really do that
today. We live in a different kind of world, a different
society. And a kid who is just blowing stuff up for fun is more
likely to get into some serious legal trouble than to grow up
to become one of the wealthiest and most important innovators
of the century.
So it is not just a matter of instilling in children
creativity and grit, it's a matter of thinking about as
parents, as communities, how to not kill those things off when
they arise naturally.
Chairman Coats. Thank you, Vice Chairman Tiberi.
Vice Chair Tiberi. Thank you, Chairman Coats, and thanks
for holding this fascinating hearing today. Great testimony
from all three of you.
Dr. McAfee, I was quite interested in your written
testimony when you comment about trade. In my home State of
Ohio opponents of trade use--or say, every single job that's
been lost is because of trade, not because of technology, or
automation, or things that you talk about in your testimony.
You mention in your written testimony that mid-wage, mid-
skill jobs like factory jobs--and my dad was a factory worker--
are not being created at the same rate as in the past because
of globalization and technological progress, which I have seen
in Ohio.
The other thing I have heard, as well, is over-regulation.
Earlier this year a CEO of a service company told me that
because of what he believed was over-regulation by the Obama
Administration that some, across industries by the way, were
going to use technology sooner than they otherwise would. He
gave me an example in the restaurant industry. My first job was
McDonald's. That job that I had in the future in America in the
restaurant industry probably will not be there for a 16-year-
old because technology was going to take that job. And he cited
the fact that over-regulation of employment in France--and he
had been to France--where now you order in many restaurants not
with a person but with a tablet. And the first person you see
is when you pick up your food.
And then I heard that a major restaurant chain in the
United States just last month, citing over-regulation, was
actually testing this pilot out in the United States. So it is
that, as well.
So we're not going backward with respect to globalization
or technology. The world continues to move ahead, whether we do
or not. Whether it is on trade. Whether it is on technology.
And as you wrote in your testimony, it has provided
unbelievable benefits to the society and to our country and to
our citizens.
Yet, as you say, people aren't feeling it. They aren't
believing it. Even though they might pay lower prices, and
might have better products, they're not associating those
benefits with what you talk about in your testimony.
And your testimony highlighted several ways that government
can lessen the negative impact of these challenges and side
effects. And I was particularly struck by your point about the
importance of encouraging entrepreneurship. It helps ensure
that we have a vibrant economic system and ecosystem that is
constantly regenerating itself.
I have seen it in my central Ohio district, creating
employment opportunities for more workers. I am the first in my
family to graduate from high school. So I don't know if you've
seen this information that was just released earlier this week
by the bipartisan Economic Innovation Group. They highlighted
some pretty interesting economic terms. The research they
released said that new business formation between 2010 and
2014, which the Obama Administration called the time of
national economic recovery, that we suffered an unprecedented
collapse compared to previous recoveries in our history.
And that, furthermore, new business formation was far more
geographically concentrated than in past recoveries in our
history. And to put it in perspective, this is an unbelievable
statistic, 20 counties in the United States--20--alone,
produced half of all net new businesses in the U.S. economy
between 2010 and 2014.
So these findings I believe underscore why it is important
to support legislation that Congressman Ron Kind worked on
together, and that's the Investing In Opportunity Act to
increase access to capital in distressed communities, and new
enterprises, and startups.
Your testimony highlighted another solution, which is the
need to decrease the over-regulation of new innovation. Can you
kind of expand on that and elaborate on the policy and
regulatory issues that are of most concern to you in relation
to entrepreneurship, and stifling entrepreneurship?
Dr. McAfee. Vice Chair Tiberi, thank you for that excellent
question because it is an area of increasing concern to me as I
look around. A couple of things.
I have already mentioned the fact that there appears to be
this increasingly dense thicket of things that an employer or a
worker has to confront before they can start something up. And
navigating your way through that becomes increasingly
difficult, and it looks like more and more people are saying
I'm just not going to bother with it.
One of my favorite phrases coming out of Silicon Valley
these days is ``permission-less innovation.'' And by that they
mean: Let me go do something out there in the world. If it is
causing harm, if there are negative consequences, we understand
that and we will deal with that. But please don't make me
submit my innovation to any kind of oversight committee or
bureaucracy, which will then tell me if I can proceed or not.
So I love that phrase. And I've become a big fan of this
notion of permission-less innovation. You mentioned the really
terrible unemployment situation in France and some other
European countries.
It strikes me in my discussions there that they do have a
less enthusiastic view of permission-less innovation. There
seems to be a greater idea that the state needs to have a role
in approving or channeling the course of innovation.
And I certainly don't think that we need to just let
innovators go willy nilly and never ever get in their way and
let them drive their driverless cars wherever they want to as
soon as they want to. That would not be prudent.
But in general, I do think the thicket is dense and getting
thicker, and I do worry about attempts or ideas that I hear
that take us away from that idea of permission-less innovation.
Chairman Coats. Thank you. Our next Senator, Senator
Klobuchar, had I known what I now know, I would have had a
robot come in here with a cake in its hand to present to you
with candles, light those candles, and we would all sing Happy
Birthday.
Senator Klobuchar. Oh, that would have been nice. Thank
you. But it is the sentiment that counts. Thank you very much.
I want to thank you and the witnesses for this important
hearing. I am really focused on the apprenticeships and
preparing our workers for this new economy, coming from a State
that already has a 3.8 percent unemployment rate. We just don't
have workers to fill some of the technological jobs involved in
manufacturing and high-tech work we're doing. And we are going
to start losing some businesses in rural Minnesota simply
because we don't have the workers.
So that, plus what you all have been talking about with
this permission-less--I just like that. It sounds kind of
exotic for the Joint Economic Committee--but with the
innovation, creates this demand.
And I wondered, I guess I would ask you, Dr. Holzer, about
this, I'm just obsessed with doing more with apprenticeships.
This country made a MOU with Switzerland, and Switzerland and
Germany are doing to get more students into that technological
field.
We have a new high school in one of our towns that is
amazing. It has tracks you can pick from. One of them is
manufacturing. All the equipment is on the first floor. We've
got companies that are coming into the schools. We've got
community colleges that are partnering because the high schools
can't get the machinery but the community colleges maybe can.
Just how do you think this should all work?
And what could the Federal Government's role be, when we
only fund about 10 percent for education. I figure it's
incentives and things like that, but why don't you address it?
Dr. Holzer. Well thank you for the question. If you don't
mind, I would use this opportunity to say what we should not
do. What we should not do is get rid of all regulation. I was
troubled by the tone of the last question.
Senator Klobuchar. Yes.
Dr. Holzer. This implication that regulation is always bad
simply is not true. It is not true in theory. It is not true in
fact. Minimum wage laws. EEO laws. Occupational Safety and
Health. Pension protection. There are a lot of market failures
out there. There are a lot of inequities.
If you do regulation badly, if you overdo it, if we had a
$15 or $20 minimum wage in this country, I would agree. If the
range in which the minimum wage is now are talked about or
possibly increases, much more modest, it won't have that
effect. So I just thought we needed some balance.
Senator Klobuchar. I appreciate that. I could tell you were
getting worked up.
Dr. Holzer. I was having a little trouble.
Senator Klobuchar. Now get worked up about my thing.
[Laughter.]
Dr. Holzer. Let's move on to your question about
apprenticeship. There are lots of wonderful examples of things
happening out there. In many ways it is hard to scale them. A
lot of what we are doing to expand apprenticeship in America,
it is often a very retail operation, employer by employer.
Senator Klobuchar. Right. Community----
Dr. Holzer. Providing incentives. And I'm not sure there's
any other way to do that, given the----
Senator Klobuchar. Well, Arne Duncan did some grants that
were effective in our sort of exurban areas where they would be
given the incentive to pair up with----
Dr. Holzer. There are. And we're seeing an expansion of
sector partnerships with community colleges. And I like the
model. I like where you have apprenticeships with employers
where at the same time the worker gets a certificate, or an
associates degree. So they get the general skill credentials as
well as the specific skills.
But it is simply hard to scale. There are biases in the
system. As I said, there's institutional problems. The
incentives aren't always aligned. And as I said earlier, if
people get to the 11th or 12th grade and they're still reading
at the 8th or 9th grade level, you know, that is an inhibitor
as well.
Senator Klobuchar. And the other thing is, having been a
prosecutor and done all these truancy work, you've got kids
dropping out that maybe if you did something while they were in
high school, where they were working somewhere, getting a one-
year degree, a two-year degree, depending on what it was, that
would be good.
Dr. Holzer. I agree.
Senator Klobuchar. You have a whole workforce you are
losing. And they can then go on to get more years of school.
Dr. Holzer. That's right. And I really believe that in
middle school American students need a lot more exposure to the
workforce. Because then they really see that this really boring
algebra class actually could be very useful for you in a whole
range of well-paying jobs. And then you are more motivated to
do it.
And high quality CTE in the high schools. Models like P.
Tech and Linked Learning, and career academies, all of those,
and there's a pretty solid evidence base on at least some of
them, they are all very promising models.
The question is always how do we scale up to replicate
those good models.
Senator Klobuchar. Yes.
Dr. Holzer. And also because the German companies are
flocking to American, the manufacturing companies. They are
astounded at what they see, but they know they can't implement
their model. It's got to be an American model and American
institutions, and that stuff----
Senator Klobuchar. Um-hmm, and also more women. We were
just talking about, Mary Barra, the CEO of General Motors, who
was an engineer and worked her way up through the company, and
is speaking out on this idea that we need more women, more
people of color, because we don't have enough people going into
these areas. And for women, especially, the factory floor is no
longer dark, dirty, and dangerous, as you've pointed out how
high-tech it is.
So I think that is a piece of this, as well.
Mr. Keiper, did you want to respond at all?
Mr. Keiper. Only one additional point. This idea of
apprenticeship as it catches on, I think it's wonderful. I
would love to see real experimentation in that area across the
states. You know, different kinds of models being adopted and
tested.
One area that the Obama Administration has said a little
bit about, but I think a lot more could be said about, is
encouraging our young people to take an interest in the trades.
For really what seems like decades in some ways----
Senator Klobuchar. And their parents aren't always
encouraging from what they've experienced.
Mr. Keiper. Right. I mean we have encouraged our young
people more and more to go into office jobs, and data
management, moving paper around, moving pixels around, and I
can't help but wonder whether some people, including some of
the people who are electing to get out of the workforce, some
of the lower-educated men that Professor Holzer was mentioning
who are having trouble finding work, whether they might not
find other sources of satisfaction if they had been encouraged
to look into plumbing, and being an electrician, and roofing,
and carpentry----
Senator Klobuchar. And whether they can trade into it now.
And we have such a need that it becomes worth having companies
finance those.
Mr. Keiper. That's right. We tend to understate, when we
nudge our children in those directions, we tend to understate
the real value of being your own boss, working in the trades,
and we tend to also forget that, you know, of all the jobs that
are going to be automated, or going to be replaced with
artificial intelligence, you're not going to have a robot doing
your roof any time soon. You're not going to have a robot
electrician in your house.
The trades, at least for the foreseeable next several
decades, are going to require the kinds of problem-solving and
dexterity that human beings can uniquely bring to bear.
Senator Klobuchar. That's a nice way of putting it. Thank
you so much to all of you.
Mr. Keiper. Happy Birthday.
Senator Klobuchar. Thank you. It was Bob Dylan's birthday
yesterday, too. He's from Minnesota. I thought I'd add that in
for some glamour.
[Laughter.]
Chairman Coats. Thank you, Senator.
Senator Lee was instrumental in asking for this hearing to
be held. I think it is a fascinating subject, and we thank you,
Senator Lee, and your staff, for helping us pull this together.
So, you're on. We'll give you a little lenience with time
here, for your support.
Senator Lee. Thank you very much, Mr. Chairman.
I would also like to wish Senator Klobuchar a very Happy
Birthday. And later on I will be singing Happy Birthday and
I'll do my interpretive dance to it, before I'm replaced with a
robot.
[Laughter.]
Dr. McAfee, I would like to start with you. Utah has a
program that allows elementary schools to partner with certain
leaders in the high-tech industry to teach 4th, 5th, and 6th
graders basic coding skills over a 16-week period.
That this program exists is exciting. The fact that it is
exciting, and the fact that it is somewhat unique and rare
ought to be concerning to us.
You know, our schools teach people well, but they generally
follow what some might call a 20th century model to educate
people and prepare them for what has become a somewhat unique
21st century workplace.
So these educators in Utah are doing great work, innovative
work, by helping prepare students for the unique employment
skills that they will need in the future.
My question, though, is about what happens next. You know,
I think it is possible that what we think of as high-skill jobs
today could easily become tomorrow's low-skill jobs, such as in
much the same way that the high-skilled welders of yesterday,
many of whom have now been replaced at least on assembly lines
for automobiles and many other manufactured products, many of
them are now without jobs.
So software developers today could find that in many
instances their jobs have been replaced through automation.
What do you think happens when that occurs? And when we develop
technology that does our coding for us?
Dr. McAfee. Senator Lee, it is a great question. And I like
your insight that some of the jobs that we consider very safe
and very prestigious today might actually flip around because
of technological progress.
I think Mr. Keiper got it exactly right. We are not going
to automate the work of an electrician, or a plumber, or a
prime contractor any time soon. That is still a human job.
However, when I look around I see technology able to do a lot
of the work that a medical diagnostician does, that many kinds
of lawyers do, that financial advisers do.
I recently turned a lot of my assets over to what they call
a ``Robo Advisor,'' which generates a mathematically optimal
portfolio for you and manages it over time with no human
intervention whatsoever.
Senator Lee. What kind of a commission does the robot
charge?
Dr. McAfee. Less than a human does. I'll tell you that.
That's one of the reasons I did it. So I think there could be
this interesting inversion for some professions that we
consider, again, very prestigious, very safe right now. They
are going to see a lot of automation. Not in the science
fiction future, but in the next five to ten years.
Not all of them, however. You mentioned coding. And I think
teaching little kids to code is great for two reasons. One is
that that job appears to be relatively safe. We have had really
lousy luck getting computers to code themselves. Writing good
code appears to be closer to writing a novel, and all the
attempts at automatic fiction that I've seen are just laughably
bad.
So we do need a lot of digital professionals to keep making
these technologies for us. More fundamentally, though, I think
the reason it is great to teach little kids to code is because
it teaches them a style of very clear, very difficult thinking
that will serve them very well no matter what they wind up
doing with their lives.
One of the efforts that I love in that area is the First
Robotics Competition, which has spread like wildfire throughout
the country, where teams of kids, teams working together, build
an actual robot that competes against other teams' robots.
It was started by a guy named Dean Kamen, who I think is
the closest thing we have to an Edison in America these days,
who just looked around at this kind of stultifying educational
system and thought it was inappropriate for a bunch of reasons.
So he has grade school and high school kids build robots and go
at it with each other. And it's been a runaway success.
Senator Lee. That sounds exciting. It sounds like a good
reality TV program, especially if you end up doing like hand-
to-hand combat among robots.
Dr. McAfee. That happens, yes.
Senator Lee. Mr. Keiper, you talk in your testimony about
the nature of work, and the value of work both to individuals
and to society as a whole.
What do you think the innate human desire to create value
and to be valued in society and by society, what do you think
is to come of that? And how do you think that will be affected
by these changes in technology?
And in particular, as more jobs become automated, do you
think for some of the reasons I just mentioned that it would be
somewhat hazardous to adopt policies that would involve
subsidizing non-work? What would that do to that desire to
create value and to lead to new and different jobs?
Mr. Keiper. Well that's a wonderful and very complicated
set of questions. Let me deal with the last part first.
We have learned over the course of the last 70 years or so
to be very sensitive to incentives and disincentives to work.
And, you know, we saw in the major battles over welfare reform
in the 1990s huge disputes about how law might incentivize or
disincentivize work.
And as some people have begun to talk about universal
income, guaranteed basic income as a potential policy solution
to a future in which nobody has to work in some distant future
because productivity is so high all of our basic needs are
taken care of and fewer and fewer people need jobs, that's a
really, that's a really complicated idea.
Economists have been fighting about this proposal for
decades. Because if you want to create such a thing, you want
to structure it in such a way that you're not disincentivizing
work. Some of the most interesting and creative approaches to
the guaranteed income policy are approaches that structure it
in such a way that they encourage good behavior, including
involvement in the economy.
I think it's very likely that we'll hear people from both
the left and the right really start to discuss and analyze and
debate guaranteed income in the years ahead, as that happens it
is going to be important to really attend to that incentives
question that you're pointing out, the question of making sure
we're not disincentivizing work.
Because, as you say, work is--it's not just a matter of
doing something that you dislike for which you are compensated.
At its worst that's what it can--well, not its worst, it can be
even worse than that--but at its minimum, it's that. But it can
also be a source of pride, and dignity, self-definition, and
meaning and purpose in human life.
And that is sometimes a little--it sounds a little
idealistic, I know, but it is really true when you talk to
people, and we kind of stop looking just at the economic
numbers, but listen to that anecdotes, the ``anec-data,'' as
well.
Senator Lee. Thank you very much. Thank you. I see my time
has expired. I will save the rest of my questions for the
second round. Thank you.
Chairman Coats. Thank you, Senator. Congressman Schweikert.
Representative Schweikert. Thank you, Mr. Chairman.
Can I throw a hypothesis and pitch something at you?
Because I have not heard it actually discussed. There are some
articles and data sitting here in front of me basically talking
about that the entire world has a dwindling workforce. If you
actually look at the demographic curve of the entire world,
that prime productive age groups is actually on a very steep
decline worldwide.
I have other things here basically saying if you add in
energy costs, China now is a more expensive place to
manufacture than Indonesia, Thailand, Mexico, India. I am
looking at many of the charts that actually look at
productivity per hour, and many of those countries that we fret
about repeatedly here in discussion, actually their labor
productive costs per hour are exploding.
Isn't the movement towards automation our way to deal with,
first, our domestic crisis here of a decade of--and if you
actually dig into the data, it's actually partially,
substantially demographically driven, of falling productivity
or flat productivity, that if we're going to demand higher
wages for our citizens it's going to come with a marriage of
talent, labor, and automation, and the fact of the matter is
the rest of the world is starting to have a shortage of that
productive capacity?
Tell me where I'm wrong. Anyone?
Mr. Keiper. I would just jump in first to say I don't think
you are wrong. But two additional points.
One, the causal arrows go both ways. Which is to say, the
rise in automation and the increasing complexity of certain
kinds of jobs requiring more and more years of education have
something to do, according to demographers and economists, with
the changing structure of----
Representative Schweikert. Well, but much of that
demographic curve is just pure population. I mean, pure age
population.
Mr. Keiper. Sure. But age and population I mean are the
result of people marrying at certain times, having children----
Representative Schweikert. Higher income, birth rates fall.
Mr. Keiper. Exactly. And those sorts of things are related
in complicated ways to the changing nature of work. So that is
just a small amplification to what you were saying. Not a point
of criticism, but a point of agreement, if anything.
And then I would just add, to kind of further amplify what
you're saying, as the demographics change, you look at
societies that are aging rapidly, ours is aging not as rapidly
as some countries in Europe. Or, you know, we're not entirely
sure what China is going to look like. But the one-child policy
has had a profound effect on that country's demography.
Representative Schweikert. I'll make your argument. We may
have a very good idea.
Mr. Keiper. Well, in some ways we really might. And it's
not pretty. And you're going to hear increasingly, and if I'm
not mistaken I think Professor McAfee has written a bit about
this, and you're going to hear increasingly people talking
about the need to use different kind of automation, different
kinds of robotics to really work in the growing elder care
industry.
Representative Schweikert. Well we are a little off from
where I'm wanting to go and I think Dr. McAfee has actually
written on a version of this.
My two I want to pitch conceptually is, I have a
productivity problem in this country. How do I use the
demographics I'm blessed with, which is I'm aging but I'm aging
a lot slower than those I compete with, find a way to adopt
technology, and that technology may also allow my workforce to
work longer?
And I know sometimes that's a whole another side
obligation, but if I'm 70 and wish to continue to be in a
productive capacity, does technology allow me to maintain my
skill sets? And does that help me find a way to continue a
productivity curve while the demographic strain on many of
those countries I've competed with for such a long time?
I actually think there's optimism if I direct this the
right way with the proper incentives. I mean, Dr. McAfee, right
or wrong?
Dr. McAfee. Right, Representative Schweikert. I am
personally not worried about the productivity stall-out that we
are experiencing now. Because when I take the innovations that
I've looked around and seen for the past couple of years, and
project them forward for 5 or 10 years, our service industry
workers today who are not very productive doing things like
health care, I believe they're going to become much more
productive.
You mentioned this kind of slow ticking demographic time
bomb that many countries are confronting. We're confronting a
less severe version of it. The reason I think that should worry
us is not because we won't have enough people to turn out the
goods and services that our economies need. I don't think
that's the case at all.
It is because our current workers pay for our current
retirees. The social welfare system is configured that way. As
these populations gray, I believe that is going to put a lot of
strain on these different countries.
Representative Schweikert. Look, I have a fixation on it
because I thought it was very well written. In December The
Wall Street Journal did that 2050 Series, and some wonderful
graphics, some brilliant demography in it, and they make your
point. In 13\1/2\ years, Social Security is out of money. In
8\1/2\ years, Medicare is out of money. And so the underlying
theme of these sorts of discussions is: Okay, if you really
care about maintaining of these social contracts, how do we
dramatically increase productivity so we have that thing
called, oh yeah, money.
Thank you, Mr. Chairman. Yield back.
Chairman Coats. Thank you. Senator Peters.
Senator Peters. Thank you, Mr. Chairman. This has been a
fascinating hearing. I've got a number of questions, but I
thought I would start with something that I mentioned in the
opening comments, which is something I have been very involved
in being from Michigan and what is happening in the auto
industry, and the new, transformative technologies that are
coming online. In fact, folks are saying with the new
autonomous features will be more disruptive, or at least equal
to when the car first came off the assembly line. That is what
we are talking about.
But I would like to get each of your perspectives on
autonomous vehicles. What's happening in mobility, as you are
looking at the greater context of what automation is going to
do to jobs. You know, this is certainly a central piece that
all of you have mentioned in your testimony or in your
writings.
Give me your assessment of that. As policymakers, what
should we be thinking about as we are thinking about autonomous
vehicles, specifically? We'll start with Dr. McAfee.
Dr. McAfee. Senator Peters, thank you. I called in all of
my favors in 2012 and got a ride in one of Google's autonomous
cars. And at the time I felt like an astronaut. I felt like I
was having an experience that very few other people ever had,
or would get to have going forward.
Four years later, I went for a test drive in a Tesla, just
a month or so ago, and it has a completely autonomous highway
driving feature on it. So in four years that technology went
from kind of astronaut-level rare to anyone can walk off the
street and experience this.
I think that is a great example of how quickly technology
is progressing these days. And to your specific question, I
think that completely autonomous vehicles are, if they're not
feasible today, they will be very, very quickly on American
roads in traffic. Maybe not rush hour Manhattan, but certainly
across our interstates.
The main implication of that, I guess there are two: One is
that fewer lives will be lost. Safety will go up. The goods
that we ship across the country will get a lot cheaper. It will
be a great boon for the country in a lot of ways.
The challenge is I believe in a majority of U.S. States
today the single most common job is truck driver. And I don't
think that will be the case even a decade from now.
So again, preparing for that and dealing with that aspect
of this hollowing out I think is going to become an
increasingly urgent policy arena for us.
But my prescription is never to try to turn off the
autonomous car. It delivers great benefits to us. And I think
American auto manufacturers want to be in the lead on that
technology.
Senator Peters. Absolutely. Absolutely.
Dr. Holzer.
Dr. Holzer. So I agree with Dr. McAfee that the losers in
this will be motor vehicle operators, truck drivers, bus
drivers, etc. And that has been an important occupational niche
for relatively unskilled workers in America.
Senator Peters. One of the largest in fact, isn't it?
Dr. Holzer. Pardon me?
Senator Peters. It is one of the largest occupations.
Dr. Holzer. That's right. That's right. So that could be a
big change. Now it depends. The diffusion of this new
technology into use by lots of businesses, I'm not sure of the
speed of that transition. It may be very quick. But there may
be all kinds of things where the judgment of a driver is still
required.
So when I think of UPS and the skills of a UPS driver have
actually gotten pretty high in terms of being able to do all
kinds of GPS, figuring out the location of the customers, the
tracking of the products.
I don't know that driverless autonomous vehicles are going
to eliminate all those needs for that kind of work. So I can
see that in some sectors of transportation it might be very
rapid; in other sectors, more slowly.
But let's suppose it's rapid and we start having this
problem of displaced truck drivers, bus drivers, etc. What do
we do with them? We haven't talked much about that.
So to approach this, one is to try to teach them a new
skill. That's what people mean when they talk about life-long
learning, sending people back.
It's a little easier when you're talking about a welder,
which is one of the examples before. Old-fashioned welding vs.
new precision welding. You have a strong base and you just need
a little bit of tweaking.
Our success with retraining and re-educating is going to
depend a lot on the age of that bus driver or truck driver.
And, number two, on their underlying skill set. Right? So it's
easy to send a 30-year-old back to community college than a 50-
year-old. It is easier to send somebody back who actually is
pretty good at reading manuals and handling technical material
than someone who is not. So it is going to depend on that.
For people, there's going to be a lot of people for whom it
simply doesn't make sense to retool and retrain. And for those,
I frankly think the best thing we can offer them is some kind
of wage insurance. Wage insurance does incentivize people to
work, not to stay on unemployment insurance. It incentivizes
people to shift to a lower-wage job, but then the government,
the Federal Government, makes up part of the loss.
So if you have to downshift from a $20-an-hour job to a
$10-an-hour job, the government might pay half of that
difference for two or three years. Of course we'd have to fund
that, and that would require some additional resources. But
that is another way of protecting some folks who simply can't
be retooled and sent back, but others can. And I think we need
to be doing some of both to prepare for that kind of world.
Senator Peters. Thank you.
Mr. Keiper.
Mr. Keiper. Just a quick follow-on to what both of the
other panelists have mentioned. If you want to encourage and
want to take advantage of the many benefits of driverless
vehicles, I would urge you to encourage the legal and insurance
industries to continue the work that they've already begun in
sorting out questions of liability and damages, which in some
ways may present greater hurdles than the technical problems,
many of which are already solved.
Senator Peters. Well, my time is about up, but you are
absolutely right about that; that sometimes policy is a lot
slower than technology, and the technology is moving very, very
rapidly. And I would add that, in addition to some of the
insurance issues also cybersecurity is a big deal, given the
fact that it is bad enough when someone steals the money out of
your bank account; it is worse if they drive you into a wall.
So those are two other things that we have to do here as policy
makers.
Thank you to all of you. Appreciate it.
Chairman Coats. Yes. Fascinating questions. No one has yet
raised pilotless planes. I'm not sure how many of us would want
to board that plane right now. On the other hand, driverless
18-wheelers gives you pause about what's coming down the road
at you. And there's going to have to be some education with the
public here and demonstrations, I think. But I assume it is
just as easy to put people from location to location on a
pilotless plane as it is in a car. It is something to ponder as
you lie in bed at night thinking about the future.
Congressman Beyer.
Representative Beyer. Thank you, Mr. Chairman.
And I want to begin by piling on Mr. Keiper's comments
earlier about changing the education system. The Senator and
Chairman served in Germany and saw it first hand, and I did in
Switzerland, where they were taking kids at 13 and 14. In
Switzerland, literally two-thirds of the work of the children's
force and channeling them into plumbing and roofing and auto
mechanics, but also nursing, and radiology, and pharmacy
assistants. And so last I checked, the unemployment rate was
1.8 percent. And year after year they turn out enough kids at
19 for the jobs that exist. It is tough when they get to be 50
years old and they're a coal miner, but we have to try anyway.
Mr. Keiper, you wrote about universal basic income and
negative income tax, and what do you do when actually a
significant part of the population doesn't need to be employed.
And you wrote, also you said that it's been discussed favorably
for various reasons by prominent conservative and libertarian
thinkers.
Can you expand on why they would be for that? I understand
the left-leaning progressives----
Mr. Keiper. Sure. Before I get to that, let me just say,
yes, I've gone to, visited Germany and Switzerland and studied
their education system and taken an interest in it. And while I
don't think it would be perfectly applicable here, there may be
some states that might want to experiment with adapting
American education in something like that direction.
As far as the guaranteed basic income, it's something that
Hayek talked about, something that Milton Friedman spoke about
favorably, something that I think Charles Murray has written
and spoken about favorably if I'm not mistaken. I'd defer to my
economist colleagues here to say more about that. But my sense
is that folks on the conservative and libertarian side of the
spectrum see it as a couple of things.
One, it is a way to continue to encourage innovation.
And, two, it would be a--I think this is Friedman's
approach--it would be less complicated than continuing the
bureaucratic system of welfare that we had in place when he was
writing about it.
He was worried about, you know, all of the costs and
pressures caused by this complicated system of welfare that we
had in place. He thought maybe if you replaced it with
something that was simple and clean and seamless, that that
would be an improvement.
There's much more to it than that. There's all kinds of
economic modeling that, you know, my colleagues here could say
much more about I'm sure, but it's interesting. It's surprising
how you get people on the left and the right talking about this
with interest. Very little interest in the kind of moderate
middle, although I think that is likely to change in the years
ahead.
Representative Beyer. Dr. Holzer.
Dr. Holzer. So I'm going to speak as someone from the
moderate left-center position who is skeptical. I understand
that this could be necessary down the road. I am not anxious to
go there anytime soon for a couple of reasons.
Number one, we have a tax revenue problem in this country
just funding the liabilities we have in Social Security and
Medicare. And we have, politically, an issue--to get the
demagogues out--we have a massive resistance to almost any kind
of tax increase. So this would require, after we've already
paid for Social Security and Medicare and Medicaid, this would
be a massive expenditure of tax revenue on top of that. And
it's hard for me to see the American public any time in the
near future going there.
Representative Beyer. If I can interrupt you for a second,
I only have a minute-and-a-half left, I have a very specific
thing for you. Most of the new economy jobs have not lent
themselves to unionization. How should the labor movement adapt
to this new economy?
Dr. Holzer. Not very well, necessarily.
Representative Beyer. Moving forward? I struggle with the
Labor Day speeches. What do I say?
Dr. Holzer. With good reason. Some people think that the
model of unionism that we have in America was developed mid-
20th century. It was very well suited to that kind of economy,
and it is less well suited to an economy with a lot of
dynamics, and a lot of fluidity in and out of jobs, and
dramatic new competition.
So if you look at the SEIU, as one industry, they have
found niches. They have been successful unionizing hotel
workers in places like Las Vegas and LA that we might not have
anticipated. But also they take on more political roles, right?
So they work hard for candidates and for policies like a higher
minimum wage. I think we're struggling for a new institutional
model that fits the new reality of the 21st century labor
market. But in the meantime, there are some important roles to
be played for that institution. And we've seen actually, the
Communications Workers are very good at expanding the skill set
of their workers. So I think some of these unions have done a
good job of finding a new niche and a new role to play in the
21st century labor market.
Representative Beyer. Okay, thank you, Dr. Holzer. Mr.
Chairman, I yield back.
Chairman Coats. Thank you.
Senator Casey.
Senator Casey. Mr. Chairman, thank you very much. I
appreciate the testimony today and appreciate the work that
goes into your appearance today and what you've told us already
in the testimony.
I want to tell the Chairman that as we get an opportunity
once in awhile to brag about our states, Pittsburgh,
Pennsylvania, in many ways has really been at the forefront of
robotics' automation for years. Literally, not just years but
for decades. And they are into a brand new chapter.
In fact, there is a neighborhood in Pittsburgh they used to
call the so-called ``strip district,'' but now is known also by
the phrase ``robotics row.'' Just looking at some of the
companies there now, Near Earth Autonomy is one. Real Earth is
another company that performs the world's most accurate indoor
3D mapping, for example.
The Near Earth Autonomy operation has an aerial robotic
platform to analyze crop data that will help accelerate plant
breeding. So on and on with brand new technology. And that is
some of the new breakthroughs that we are seeing in a community
like Pittsburgh, which had to recover over the last several
decades from the collapse of steel and the larger manufacturing
economy going in the wrong direction, now that they've figured
out a way to invent a new future.
But I was struck by Doctor--Dr. McAfee, when your charts
tracking what's happened, the combination of what's happened to
workers and productivity at the same time. One chart that I
remember from going back about two years ago now was the
original, at least what I remember as the original version
tracking productivity and wages, similar numbers where World
War II to 1973, productivity was up 97, wages were up 91; 1973
forward, productivity still went up over I think it was 72
percent. Wages only went up 9.
So no matter what chart you use, or how you track it,
there's been a disconnect between wages and productivity.
So with that as a just kind of a basic foundation for my
one and only question, we'll start with Dr. Holzer and anyone
else who wants to weigh in:
With these advancements in technology and also with the
knowledge we have about what has happened to wages over time,
even when productivity was up, wages have been basically flat,
how do we ensure that workers get their fair share of the
benefits of these technological breakthroughs, the type of
breakthroughs we see with automation and robotics and
otherwise?
Dr. Holzer. I think first of all that that disconnect in
the chart between productivity and earnings is a complicated
one. So for instance the rise of health care costs certainly
accounts for part of that. That eats up part of it. So if you
show average compensation rather than average wages, it is not
as much of a disconnect.
If you use mean vs. median, too much earnings have gone to
the top 1 percent, sometimes because they're superstars and
they deserve it. Sometimes because we have terrible market
failures in our financial sector. So there's all kinds of
things going on.
The best thing we can do is to educate our young people in
skills that complement the new technologies, in skills that are
not made obsolete. So playing in a symphony is not going to be
outsourced or replaced by a robot. But, frankly, doing good
child care and good elder care also is not. Those tend to be
low-wage occupations, sometimes lower than they really should
be, but there's a range of skills, some technical and some
creative, in all of those kinds of occupations and skills and
we want to do a better job of educating our young people.
And then on top of the reforms in the system to try to deal
with some of those terrible market failures that have caused
too much of our income to go to the top. So I think it is that
mix. But the best bet remains skills that are adaptable over
people's life span, specific to the current job and career, but
still where they have some flexibility to retool. So it is a
mix of general and specific skills. And again, looking towards
the things that complement technology that will not be easily
replaced.
Actually in Pittsburgh the Eds & Meds----
Senator Casey. Right.
Dr. Holzer [continuing]. Interaction has been dramatically
important. And again, those are the education sector and the
health sector. Some diagnostics can be done through technology.
Many cannot. Many of the elder care for patients. And so that
is an interesting example of ways in which technology will not
wipe out everything we care about.
Senator Casey. I know I'm out of time. Mr. Keiper, Dr.
McAfee, if you want to answer in writing, or whatever the
Chairman would prefer?
Chairman Coats. No, go ahead and answer.
Dr. McAfee. Very quickly, Senator Casey. I think my
colleague's answer is excellent. Education and reskilling is
obviously crucial. The only thing I would add is, I am a huge
fan of an expansion of the Earned Income Tax Credit. Whereas,
if we have people who are trying to do the right thing and get
out there in the workforce and work at a relatively low wage
job like child care, like elder care, let's top their wage up
with a subsidy.
I actually prefer that to a substantial increase in the
minimum wage because that might have a disincentive effect on
the employers from employing that person. I would like to see
our system work so that we directly incentivize both the
employer to employ that person, and that person to get out
there and do that job via topping up their wages.
Senator Casey. Okay. Mr. Keiper, either now or in writing,
whatever is best.
Mr. Keiper. I think those were excellent answers. I guess I
would only add, if you look further out into the future, some
of the theorists who think about these things worry about the
possibility of a shift in the balance between labor and
capital. And I think that has come up. We have kind of alluded
to it a few times here today, which is to say, we can imagine a
future where the people who are the first investors and owners
of some of these more advanced automated technologies are going
to reap much more of the profit--since many machines will bring
more value than workers because there's going to be less need
for certain kinds of work. That's a possibility. It's very
complicated, and there's good reason to think if that does
happen it won't last because many of these technologies may be
democratized. They may become more affordable for more people.
It's hard to say, though.
Senator Casey. Thank you very much.
Dr. Holzer. It might be an argument for profit sharing.
Senator Casey. Okay. Thank you.
Chairman Coats. Dr. Adams.
Representative Adams. Thank you, Mr. Chairman, and Ranking
Member. Thank you for hosting today's hearing. And, gentlemen,
thank you for your testimony.
Manufacturing is an important industry in the State of
North Carolina that I represent, and it has been impacted by
automation. And while automation may increase productivity and
improvements can displace manufacturing workers, manufacturing
output has partially grown since the Recession, but we still
have a ways to go in recovering jobs that were lost, which has
been to some extent exacerbated by automation.
But I think part of helping employment in the manufacturing
industry rebound is understanding that automation and the
skilled workforce can co-exist. And as a matter of fact, I
think it is critical that they do co-exist in today's global
economy.
Dr. Holzer, we have seen growth in the manufacturing sector
in terms of output over the last several decades, with the
exception of contractions within the industry that took place
during the Recession. In contrast, employment in the
manufacturing sector has declined, partially attributable to
the growth of automation.
So what role do you think automation played in the previous
decline in U.S. manufacturing employment in the early 2000s?
And how can we ensure that job growth and automation are
working in tandem as our markets continue to evolve
technologically? That is for Dr. Holzer.
Dr. Holzer. So there's different kinds of manufacturing.
There's high-end advanced manufacturing which we've focused a
lot on today. And then there's the apparel sector and some of
the nondurable, which are less technologically advanced, but in
fact those are relatively low-wage jobs, although important to
a state like North Carolina in many cases.
So I think, I think imports from China in the early 2000s
devastated nondurable manufacturing. That had nothing to do
with the business cycle, just the massive growth of China
producing reasonably high quality products for very low wages,
and our nondurable sector simply couldn't compete with that.
And that is going to happen sometimes. Nondurable
manufacturing is just not a sector where I think Americans can
concentrate. And again, they are increasingly becoming lower-
wage jobs anyway.
In durable manufacturing, it's a very different story.
China has not played nearly as much of a role in durable and
advanced manufacturing. And some companies that have actually
gone to China sometimes have insourced back into America
because--and in fact that's why so many German Companies are
here. I know in North Carolina hundreds of manufacturers from
Germany have entered North Carolina because of the advantages
of low taxes, low regulation, proximity to consumers, all make
the United States competitive in a lot of advanced
manufacturing industries.
There the big problem is the skills. And do enough American
workers--in North Carolina, as you know, when Siemens built
their gas turbine engine plant, I think about five or six years
ago, they refused to build the plant until they had worked out
the skills' problem with some of the UNC, with Piedmont
Community College and UNC, which indicates that the skills
problem is crucial for the innovation to continue, and it is
also crucial for the workers to share in the benefits of that.
So it goes back to the issue of how do we make sure that
our young people have those technical skills to be able to be
complements with that machinery. It has to start early in the K
through 12 system. I think high-quality career and technical
education can be a very important part of this. Not old-
fashioned voc ed to attract minority kids away from college;
high-quality career education. Exposing young people to
technical skills and employ building skills much earlier.
We need to make sure that those jobs can be widely shared
and the benefits distributed widely. And for folks who can't do
that, the Earned Income Tax Credit is extremely important, as
is wage insurance, as are very moderate increases in the
minimum wage.
Representative Adams. Okay. That was going to be my follow-
up question to you. You've answered it.
But let me ask about tax credits and how important you
think they are in terms of also workforce training incentives,
and increasing productivity and innovation. How are these
things going to be important, do you think?
Dr. Holzer. You mean tax credits, for instance, for
employers?
Representative Adams. Yes.
Dr. Holzer. Um, we don't have strong evidence on that right
now. I think South Carolina is a state which is paying
employers a $1,000 tax credit for every new apprentice they
take on. I don't know if that's going to work or not. It is an
interesting model. What we need here is a lot of
experimentation and a lot of evaluation to see what the impacts
are.
So tax credits could play an important role to try to help
and incentivize. There are a lot of employers who do very well
in what we call the low road system. A combination of tax
credits and technical assistance might convince more of them to
upgrade their skill content in their automation.
Representative Adams. Thank you, sir. My time is up. Mr.
Chair, I yield back.
Chairman Coats. I am going to turn to Congressman Beyer
again. He would like to start a second round. And then, given
the schedule issue I have, I am turning over the gavel made by
the students at the Washington Science Tech's Charter School to
my colleague, Senator Lee. I know he has some other questions
he would like to ask. So I am happy to turn that over to him.
He was instrumental in helping to put all this together, so I
hand you the 3D designed gavel, and manufactured gavel, as
well, if that doesn't work, here's the old-faithful wood carved
gavel. And you've got the Chair. Do whatever you want to do.
Such power we're handing over to you.
[Laughter.]
Mr. Beyer.
Representative Beyer. Thank you, Mr. Chairman, and your
excellency. I said two questions.
Dr. McAfee, there was a lot of discussion today about the
slow rate of increase in labor productivity. And you did
mention earlier that that is controversial, all the measurement
techniques. And I just look at my life, and the lives of people
around me, and email, how much we get done per day.
I mean I think we communicate five or 10 times as much as I
did 20 years ago. Twitter, and the fact that we know what
happened in the news 30 seconds ago, as long as we stay on top
of it. Telework, which is exploding, at least through the
Metropolitan Washington Area.
And it's a terrible thing to say as an employer, but people
always work harder at home. You know, the 24/7, on Saturdays,
and Sunday nights. Or, medicine. The fact that you can get
blood tests in 20 minutes, or 15 minutes, or an X-ray a minute
later, or--my brother just got a new hip and went home that
afternoon. Or even Amazon, where you order the book in the
morning and it shows up that afternoon courtesy of the U.S.
Postal Service.
How do we make, as an economist how do you think about how
we make real progress in measuring what the difference in
productivity actually is?
Dr. McAfee. That is an extremely tough question, sir,
because as you are pointing out, you gave some wonderful
examples. None of them show up in the productivity statistics.
Representative Beyer. Right, right.
Dr. McAfee. They are invisible. But they are clearly
increasing our welfare. As you point out, they are increasing
our health, which might be the most important thing of all.
They are increasing the convenience that we enjoy in our lives,
and they are not visible in our classic economic statistics.
These are some of the reasons why I am actually not that
bothered about the labor productivity slowdown as we're
measuring it, because that was never intended to be a welfare
measure. It is not a measure of how well we are doing as an
individual or as a society overall.
Some of my colleagues are trying to work on correcting
those measurement errors and coming up with more comprehensive
ways to think about the betterment that technology brings to
us. So stay tuned for those.
I just want to repeat a point that I made earlier, though,
which is even with all those problems, I am pretty confident
that over the next five to 10 years labor productivity, even as
poorly as we're measuring it, is going to go up a great deal
because the technologies that I've seen over the past couple of
years I believe are going to diffuse pretty rapidly throughout
the economy and improve some of these industries like health
care.
Representative Beyer. I find just the Cloud, itself. You
know, a little family business. We're going to save a million
dollars this year by moving from processors in-house to the
Clouds.
Dr. McAfee. And that is a really good example, because the
Cloud is actually shrinking GDP. The Cloud is actually
shrinking some software companies' revenues. As a result, the
way we're measuring GDP, and therefore the way we're measuring
productivity, will show a decrease. And that was the Cloud
making your business and lots of other ones better off.
Absolutely it is. It has been a huge, huge advance.
Representative Beyer. Dr. Holzer.
Dr. Holzer. I have a slightly different take on this. And I
have disagreed with my two colleagues remarkably little all
afternoon, which has been very nice.
This bias that GDP mismeasures, it doesn't measure quality
changes, for instance. That bias has always been there. It's
not clear that the bias is getting worse.
There was actually a recent paper from the San Francisco
Federal Reserve Bank trying to measure that that shows, if
anything, that bias has not gotten worse and does not account
for the productivity slowdown.
So I am a little less sanguine about that. And I don't
think people's earnings--and there's a lot of reasons why,
separate from the bias issue, why productivity might not be
rising. There's an economist at Princeton named William Baumol.
He was the inventor of what's called Baumol's Disease where he
said in some parts of the service sector, like the symphony,
you can't raise productivity. It doesn't matter how great the
robots are. And he sees those sectors expanding, that there are
certain kinds of tours that productivity just isn't going to
grow, and they've been an expanding part of the economy.
That is a problem to the extent that without that
productivity growth wages are going to stagnate as well. The
other possibility is that, I am troubled by the gap between
profitability and productivity.
It is a conundrum we have. We have very high profitability
in the U.S. economy right now. And that's fine. I'm not against
profits. But while productivity is stagnant, that's a puzzling
contrast.
And one of the arguments is that companies have found a lot
of ways to make money using very few workers, outsourcing,
offshoring, turning their workers into independent contractors
where they're responsible for benefits. There's a lot of that
where the incentives are not necessarily to improve
productivity and output. It's to minimize labor costs at any
price.
So I am a little more troubled by the productivity trend.
And maybe it will turn around. Maybe it will be just like the
1990s. Maybe we're at the cusp of another Solow moment when
productivity is going to take off. But I just think there's,
separate from the measurement bias, other incentive problems
holding back productivity growth and therefore earnings'
growth.
Representative Beyer. Thank you. Mr. Chairman, might I beg
one last question?
Senator Lee [presiding]. Sure.
Representative Beyer. Mr. Keiper, Elon Musk, Stephen
Hawking, and others have warned us about emergent properties,
consciousness coming out of all the AI stuff. Do you have any
concern about that, any worries for us as policymakers? Think
Terminator.
[Laughter.]
Mr. Keiper. These are interesting questions, radical
possibilities. And at the moment they don't rise to the level
of anything that anyone on this Committee ought to be concerned
about.
They are things, however, that folks in the technology
fields, futurists, and academics should and are thinking about.
And I think just for that subject, I would just leave it at
that.
Representative Beyer. Thank you very much. Mr. Chairman, I
yield back.
Dr. McAfee. Could I add one word to that? Because I get
asked this question all the time, and I asked this of the
artificial intelligence researchers who I get to interact with,
and I heard a great response from one of them. He said:
Worrying about the singularity or the summoning of the
demon because of artificial intelligence is like worrying about
over-population on Mars.
Representative Beyer. We're working on that, too.
[Laughter.]
Senator Lee. I worry about that a lot. But after reading
the book ``The Martian'' and then seeing the movie, you know,
I'm less concerned than I used to be.
I want to thank all of you for being here today. This has
been a very informative hearing. As the hearing is evidence, we
live in an era of rapid and dramatically transformative
technological change.
Within the past 20 years, the Internet has catalyzed a
global, social, and economic revolution, one that has affected
almost everyone all over the world. We have gone from bag
phones in our cars, phones that are big to phones that fit in a
bag, phones that are the size of a cinder block to phones that
are tiny, in just a few years. And now we have not only phones
but super computers in our pockets.
The incredible science that is being used to make self-
driving cars a reality and robots that can walk on two legs
while maintaining balance, and lift heavy objects, is also
creating pretty massive and largely understandable fear of the
unknown.
As former Secretary of Defense Donald Rumsfeld once
famously said: There are known knowns, known unknowns, and
there are also unknown unknowns. He had quite a way with words,
still does. It is those unknown unknowns that cause serious
uncertainty and sometimes lead to fears about the future.
That is why we held this hearing today, was to explore
those unknowns, particularly the unknown unknowns. The value of
this technology to the world economy and to our domestic
economy is of course enormous. The impact of this technology
will go far beyond the bottom lines of businesses, though.
It is and it will continue to have an impact on the nature
of work and, by extension, the ways in which we live and define
our lives. But it will also impact our society more broadly,
and our social safety net, as some individuals see their jobs
becoming automated. Even, and especially those, who don't ever
see their jobs as the type that could become automated.
If you ask most people if they are likely to be replaced by
robots, most people are probably going to say no. A much higher
percentage of them are actually likely to see their jobs
replaced, perhaps within their lifetimes.
The American economy has been utterly transformed in the
decades since we first created most of what we think of as our
first safety net. That is not just welfare programs, but also
our education system, and our health care system. In that time,
Washington has not kept up. And now as these disruptions are
accelerating, policy is falling much further behind and the
American people are paying a price for Washington's systemic
and chronic policy paralysis.
The nature of work is changing, but the nature of human
beings is not. Work, vocation, service, providing, is at the
nature and is at the core of human happiness. It is a source of
meaning and dignity and community, and that goes for all of us,
not just for people with college degrees, and with skills that
put us into an elite category.
The American people have been resilient, and they have been
more than patient, but they are competing in a 21st century
economy while relying on a fraying 20th century safety net.
None of us has all the answers. And I think that is the point.
We need a safety net policy, or a set of policies, that are as
flexible and nimble and diverse and as adaptable to
technological change as our society and economy are becoming.
And this is something that is going to need the insights of
both parties to get it right--and not just both parties, but
the insights of the brightest minds in our country. And for
that reason, we have been very grateful to have you here to
provide that.
As we have discussed today, we cannot ignore the broader
impact automation will have on our society and the policy
changes that Congress should be considering as the nature of
work continues to change, as it has been for centuries, but as
it appears to be doing on an accelerated basis.
Again, thank you for coming. Thank you for your
participation and your insight today. And in closing out the
hearing I would be remiss if I didn't remind everyone that the
gavel I am using to close out the hearing, this blue gavel, was
made by the good students at Washington Math and Science Tech
Public High School.
Thank you, very much. We will stand adjourned.
(Whereupon, at 4:25 o'clock p.m., Wednesday, May 25, 2016,
the hearing was adjourned.)
SUBMISSIONS FOR THE RECORD
Prepared Statement of Hon. Daniel Coats, Chairman, Joint Economic
Committee
Today the Committee will examine how robots, automation, and
technology are transforming our economy. I'd like to thank our
witnesses for being here, and I will be introducing them shortly.
But first, I would like to draw the Committee's attention to the
gavel I just used to start today's hearing. It looks and functions just
like a typical gavel, but it was not made from a block of wood. In
fact, it was created just down the street at the Washington, D.C.,
Public Library's Fabrication Laboratory, or '`Fab Lab,'' using 3D
printing.
3D printing works by heating up raw material, in this case plastic,
and ``printing'' one small layer at a time until the object is
completed. Rather than needing to mold or carve raw material as in the
past, now we can simply upload a file to a printer and it will create
the item according to the user's exact specifications.
I also have with me a different 3D-printed gavel that we will use
to adjourn this hearing. It was made by students at the Washington
Mathematics Science Technology Public Charter High School, also located
in the District of Columbia. What an exciting new world we live in,
where objects can be manufactured on demand with such ease and
specificity.
I would like to thank both institutions for their contributions to
today's hearing, which tangibly illustrate the topic we are about to
explore. I would also like to thank Senator Lee and his staff for
helping the Committee prepare for today's hearing.
Recent technological developments have been pushing the envelope
faster and further than was expected even a decade ago, making what was
once thought of as science fiction a reality. I remember the hassle of
getting my children to program our VCR. Now my cable box is capable of
recording all my favorite shows, without me even asking. Meanwhile some
of my grandchildren are probably asking, ``What is a VCR?''
The robotic machines are here. Whether it is vacuuming our carpets
or assisting in precise surgeries, robots are helping with and
performing almost any task we can imagine. This has led to a greater
abundance of consumer products, and more productive and creative
workers.
However, as with the Industrial Revolution, this new robot
revolution clearly is contributing to pressures arising within our
changing labor force. Even before these technological advances,
America's workforce was starting to age and businesses were beginning
to rely much more on automated labor than physical labor. Robots are
expected to hasten this trend as they fill in for humans in both blue-
and white-collar jobs.
This picture of a modern assembly line illustrates the prevalence
of automation in today's economy. Where workers used to assemble
vehicles directly by hand, now they oversee teams of precise robots
that can weld and assemble vehicles far more advanced than ever before.
Automation's rapid progress has also raised challenges with certain
government policies. How can we foster an environment where innovators
thrive and grow? Is our social safety net prepared for a 21st century
labor market? Do some government policies make human workers
prohibitively expensive for employers? How will current workers adapt?
And is our education system preparing our youngest citizens for the
future economy?
These are important questions. For guidance, we look forward to
hearing the views of our distinguished witnesses.
Today we will hear from Dr. Andrew McAfee, principal research
scientist and co-founder of MIT's Institute Initiative on the Digital
Economy. We also welcome Adam Keiper, fellow at the Ethics and Public
Policy Center and editor of the quarterly technology publication The
New Atlantis. Our final witness is Harry Holzer, professor at the
McCourt School of Public Policy at Georgetown University and a Senior
Fellow in Economic Studies at the Brookings Institution.
My thanks to all of you for providing us with your expertise and
giving us a glimpse into the possibilities of the future.
__________
Prepared Statement of Carolyn B. Maloney, Ranking Democrat, Joint
Economic Committee
Thank you so much Chairman Coats for calling such an important and
interesting and timely hearing. We are here today to discuss the impact
of automation on jobs and the economy and how best to harness the
immense power of technological innovation.
The United States has long been a leader in this important area.
And basic research funded by the federal government has played a key
role in driving innovation.
We know that automation can boost productivity, lift aggregate
demand, reduce consumer prices and improve our quality of life.
While all of these benefits are apparent in the long run, we also
know that in the short run innovation can displace workers, causing
severe economic pain to workers whose jobs are automated out of
existence or whose wages are reduced dramatically.
Today's hearing is about the future. And let's face it: automation
is a difficult thing to predict. We know it's going to happen. We just
don't know how fast it's going to happen, or in which industries or
what will be the exact consequences.
One study finds that nearly half of U.S. jobs are at risk of being
lost to automation in the next couple of decades.
Other studies show that the impacts of automation will not be as
great or felt so soon.
Throughout history, concerns have been voiced that new technologies
would make human labor obsolete. It has not happened. While there have
been dramatic shifts in how people have earned their livings, the
quantity of jobs has increased and the quality has improved.
Yet, there are reasons to believe that this could be different in
the future.
I'd like to add some of my questions to the excellent questions
Senator Coats put forward.
How do we equip our workers with the tools and skills
needed to adapt to the future changes?
What should we do as policymakers to both advance
innovation and the expected productivity benefits on the one hand while
also supporting workers adversely affected by technological changes on
the other hand?
And how can we harness this engine of prosperity while
making sure that benefits are widely shared?
I really am excited to learn more and to hear the questions and
exchange here today with our excellent witnesses.
But before I yield back my time, I'd like to turn to Senator
Peters, a former colleague in the House of Representatives, we miss
you. And I'd like to yield the balance of my time to him. He is the co-
founder of the bipartisan Senate Smart Transportation Caucus. Senator
Peters has a deep interest and knowledge of automation and its impacts
in Michigan and the rest of the United States.
I yield him the remainder of my time, and it's always good to see
you again.
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Questions for the Record for Dr. McAfee Submitted by Senator Amy
Klobuchar
immigration reform and the economy
Dr. McAfee, in your testimony, you stated that many of the world's
most talented people want to come to the U.S. and build lives and
careers, but our policies are often too restrictive.
Immigrants have been part of our nation's greatest achievements.
Seventy-three of the Fortune 500 companies were founded by immigrants
and even more were founded by immigrants or their children, including
3M, Best Buy, and Mosaic in Minnesota.
How can comprehensive immigration reform benefit the U.S.
economy?
How can immigration reform help make the U.S. more
competitive globally?
immigration reform and innovation
Dr. McAfee, we know that immigration reform will also help spur
innovation. Over 25 percent of all U.S. Nobel laureates were foreign-
born. And as noted in this year's Economic Report of the President,
one-quarter of all U.S. technology and engineering companies started
between 1995 and 2005 were founded by immigrants.
What policies should be implemented to make sure that the
U.S. is attracting and retaining the world's talent?
infrastructure investment
Dr. McAfee, in your testimony, you discussed the importance of
sensible public spending on infrastructure and how fixing our crumbling
roads and bridges would help increase our productivity growth.
Infrastructure from our ports, bridges and roads and water
treatment facilities, and making sure that we have safer trains and
efficient air travel is essential to the U.S. economy. Infrastructure
serves as the foundation to support our country's economic global
competitiveness and connects communities and people.
A well-maintained, efficient transportation system is essential to
the future economic competitiveness of the U.S.
I was one of the first Senators to support the FAST Act which
authorizes significant levels of investment of $306 billion in the
nation's transportation infrastructure with Minnesota receiving more
than $4 billion over the next five years. These funds will be used for
our highways, bridges, rail and mass transit.
Please discuss how investments in infrastructure support
the middle class and keep the U.S. competitive.
What other policies would you recommend to make sure that
we have a 21st infrastructure and Internet?
__________
Questions for the Record for Dr. Holzer Submitted by Senator Amy
Klobuchar
immigration reform and innovation
Dr. Holzer, we know that immigration reform will also help spur
innovation. Over 25 percent of all U.S. Nobel laureates were foreign-
born. And as noted in this year's Economic Report of the President,
one-quarter of all U.S. technology and engineering companies started
between 1995 and 2005 were founded by immigrants.
What policies should be implemented to make sure that the
U.S. is attracting and retaining the world's talent?
infrastructure investment
Dr. Holzer, in your testimony, you discussed the importance of
sensible public spending on infrastructure and how fixing our crumbling
roads and bridges would help increase our productivity growth.
Infrastructure from our ports, bridges and roads and water
treatment facilities, and making sure that we have safer trains and
efficient air travel is essential to the U.S. economy. Infrastructure
serves as the foundation to support our country's economic global
competitiveness and connects communities and people.
A well-maintained, efficient transportation system is essential to
the future economic competitiveness of the U.S.
I was one of the first Senators to support the FAST Act which
authorizes significant levels of investment of $306 billion in the
nation's transportation infrastructure with Minnesota receiving more
than $4 billion over the next five years. These funds will be used for
our highways, bridges, rail and mass transit.
Please discuss how investments in infrastructure support
the middle class and keep the U.S. competitive.
What other policies would you recommend to make sure that
we have a 21st century infrastructure and Internet?
1. What policies should be implemented to make sure that the U.S.
is attracting and retaining the world's talent?
There is no question that attracting and retaining highly-educated
foreign workers, particularly in STEM fields, contributes to
innovation, job creation, and productivity/earnings growth in the
U.S.\1\
---------------------------------------------------------------------------
\1\ Hunt and Gauthier-Loiselle (2010) indicate that a 1-percentage
point increase in the immigrant college graduates' population share
raises patent production in the U.S. by 9-18 percent. Giovanni Peri et
al. (2014) also show a 1-percentage point increase in the foreign STEM
share of a city's employment increases the wages of native college
graduates by 7-8 percent and of native non-college employees by 3-4
percent.
---------------------------------------------------------------------------
To encourage more foreign-born STEM workers to enter and remain in
the U.S., we should:
Reform the H1B program--Current admissions of foreign
STEM workers for temporary employment under the H1B program are capped
at 65,000 per year, which is too low. I support raising the cap and the
entry fee for employers, perhaps using a lottery process to determine
both. The fees generated could be spent on increasing the education of
native-born STEM workers in the U.S., particularly among minority
populations. I would also make it easier for such workers to change
employers in the U.S., though this might reduce the extent to which
employers value the program; and I would make it easier for them to
apply for permanent residence here.
Adopt a Merit Point System for Annual Immigration--This
idea was part of the Senate's Immigration Reform proposals in 2013.
Instead of immigration being based primarily on family unification,
adoption of a merit point system would make it easier for highly
educated immigrants to obtain permanent residence status in the U.S.
Exempt Highly Educated Foreign STEM Workers from Caps on
Employment-Based Immigration--This idea was also contained in the
reform proposals of the Senate bill.
2. Please discuss how investment in infrastructure support the
middle class and keep the U.S. competitive.
Maintaining high productivity growth in the U.S. is a necessary
condition for growth in our living standards, particularly for the
middle class. A lengthy literature by economics researchers shows that
infrastructure spending contributes to productivity growth in the
U.S.\2\ Given the declines in infrastructure spending in the U.S. in
recent decades, as well as the decline in our productivity growth over
the past decade (Baily and Bosworth, 2015), it seems like the economic
returns to infrastructure spending right now would be very high.
---------------------------------------------------------------------------
\2\ See Berndt and Hansson (1991), Nadiri and Mamuneas (1994); and
Holtz-Eakin and Lovely (1996).
---------------------------------------------------------------------------
An important additional positive effect of infrastructure spending
in the short- to medium-term would be the creation of many more good-
paying jobs for high school graduates in the U.S., particularly among
men and in construction. Middle-skill and middle-wage employment has
fallen in the U.S. in the past few decades, particularly for men
without postsecondary education (Autor, 2010, 2015; Holzer, 2015).
Construction employment has declined in the U.S. since the beginning of
the housing crisis in 2006; it has recently recovered partially but not
fully.\3\ Expansion of infrastructure development would boost the
availability of such employment. With many Baby Boomer construction
workers soon retiring, such an expansion would require us to train a
new generation of such workers, which would be of great benefit to
young men who are currently leaving the U.S. labor force in droves
because of their weak earnings prospects. Expansion of apprenticeship
opportunities in the construction trades would be particularly helpful
here.
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\3\ According to the U.S. Bureau of Labor Statistics, construction
employment in the U.S. peaked at 7.7 million in 2006. It declined to
5.5 million in 2010 and has since recovered to only 6.6 million. Thus,
only half of the construction jobs lost in the Great Recession have
returned to date.
3. What other policies would you recommend to make sure that we
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have a 21st century infrastructure and Internet?
While the issue of how to fund such infrastructure growth remains
hotly debated, a recent report from the bipartisan Congressional Budget
Office (2016) offers clues about how to make sure infrastructure
spending is efficiently implemented. And, while Internet policy is
generally outside of my realm of expertise, some recent reports from
the Progressive Policy Institute on this issue seem persuasive.\4\ Of
course, ensuring that U.S. workers, at both the sub-BA and BA levels,
maintain their computer skills is critical to ensuring that the
benefits of the Internet are widely shared with U.S. workers.\5\
---------------------------------------------------------------------------
\4\ See Mandel (2016).
\5\ See Atkinson (2016).
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__________
Questions for the Record for Mr. Adam Keiper Submitted by Senator Tom
Cotton
There are some war fighting functions that machines can
carry out more quickly and accurately than humans (such as targeting or
engaging threats defensively). Other actions are not as easily
automated (determining combatants or proportionality in combat). As
technology advances, how should we create regulations about what
decisions humans must make in warfare, and operations that machines
should not do?
As machines increasingly have a place on the battlefield,
how do we grapple with the rates of PTSD among those operators removed
from direct combat? How do robotics and automation increase or decrease
the ethical complexity of warfare?
[Mr. Keiper's response was not received before the hearing was
printed.]
[all]