Review

            Jeremy Rifkin’s The End of Work paints an abysmal picture of the changes happening in American society and the world. He sees more and more workers losing jobs and few new jobs being created as a result of the increasing implementation of technologies in the production process. However, he holds out hope that if properly directed, these new technologies will create an opportunity to profoundly reshape society and continue progress. Before his plan for the future of American society can be properly criticized, it is important to examine the foundation for his argument, the disappearance of jobs. Looking at data and the experience of the US economy since Rifkin wrote his book, it seems ever more likely that the scenario he describes is inaccurate and uses a flawed analysis.

            Rifkin tells the story of the evolution of the US economy in a very pessimistic and misleading way. He describes the replacement of workers with automation in the manufacturing sector as a tell-tale example of what will happen to all American workers. His argument insists that as assembly line workers lose their jobs, there is no place for them and they will remain permanently unemployed or be forced to accept lower wages in service industry jobs, which also will eventually be replaced by machines. He then concludes that these market forces will drive the entire nation to unemployment as there are few new jobs created and more and more of the labor force faces replacement by automation. To be critical of his argument, we must look at what parts of his argument make sense and which are misleading. His argument that workers in manufacturing lose their jobs and new machines are used and substituted for labor is true, and it is even true that these workers are usually forced into lower paying service jobs. However, his belief that this trend will be indicative of the entire economy, a movement towards permanent unemployment for everybody, is false.

This is because increases in productivity, the result of mechanization and automation, lead to a shift in the labor force rather than a decline. This can been seen in Figure 1 (refer to page 6), where productivity accelerates after 1995, only to have unemployment fall as well. Even over the entire history since World War II (which is indicative of the history of the US), there seems to be very little correlation between productivity and unemployment. As more automation is implemented, goods become cheaper to produce and the cost of them to consumers decreases. As prices decrease, consumer purchasing power increases and all individuals in the economy are able to purchase more goods. When they purchase more goods, it stimulates production and the economy grows, replacing those jobs in the economy and creating additional jobs due to the demand for the new goods as well as production of automation technology. This has been observed in the recent productivity boom in America, where the demand for workers in high-tech industries has skyrocketed. Support for this comes from a recent New York Times advertisement for Microsoft which states, “this year, an incredible 800,000 skilled technology jobs in the United States go unfulfilled because there are not enough qualified people to fill them.” This would seem to be an unambiguously good development as new higher paying technology related jobs are created to replace assembly line work. The problems created by this are quite different from those Rifkin suggests should arise from automation. Rifkin’s scenario would envision that very few of these new high paying jobs would be created and there would be a need to cushion the entire workforce from the brutality of the market. Instead what we see is a need to improve our educational system to better train workers for the increased demands of the market for employees to fill high paying job positions. This interpretation is supported by the views offered by the majority of the economics community and espoused by Paul Krugman, a professor at Princeton University and a columnist for the New York Times.

            Paul Krugman offers an opposing view of these developments from Rifkin’s interpretation, which is more positive and looks at the broader macroeconomy as opposed to the limitations put on Rifkin by examining the issue on a more personal scale. Krugman uses an analysis based on a model of the entire economy as opposed to Rifkin’s analysis of individual firms. It would seem easy to overlook the broader picture as Rifkin does.

Much of this misperception can be blamed on the media’s portrayal of the economic effects of automation on the workforce. The media sensationalizes the closing of factories and job losses at the hands of corporations, while paying very little attention to the positive news that is the creation of jobs by new technology. Rifkin cites a survey by the New York Times which states “two out of every five American workers expressed worry that they might be laid off, required to work reduced hours, or be forced to take pay cuts.” (13) Rifkin ignores the fact that this worry might be produced by the media which tells workers that layoffs have happened throughout the country and that it could be anybody next. This media portrayal could also be the reason that wages remained stagnant until very recently; the fear is likely unjustified.

This survey also brings up an argument that has been raised by many in recent years: that even as the unemployment rate falls to historic lows, there is a smaller number of hours worked because people work part-time when they would prefer to be working full time. This argument was particularly true during the 1980s, when productivity also happened to be at historic lows, but fails to hold together in our current productivity boom. In October 2000, the number of workers who are employed in part-time jobs because they could not find full-time employment is 973,000, which is lowest figure in the past 25 years and down from highs of over 3 million in 1992, according to the Bureau of Labor Statistics. Therefore, looking at empirical data it seems likely that increases in hours worked in the economy is positively correlated to growth in productivity, the opposite of Rifkin’s argument.

Consequently, the only issue that remains in Rifkin’s argument as true is his assertion that displaced workers from technology usually have to accept lower wages in service industries since their skills acquired in manufacturing do not match those required in their new occupations. Rifkin cites a study that says “most of the workers who lost their jobs because of ‘technology improvements’ remained unemployed for an extended period, and when they did find work, it was generally at a lower wage level.” (18) This is a serious issue which needs to be addressed. The only answer to this problem is that the government be held responsible for retraining workers for new careers. Rifkin remains skeptical even of this, further supporting the idea that he is an extremist visionary, stating that “even if re-education and retraining on a mass scale were implemented, not enough high-tech jobs will be available in the automated economy of the twenty-first century to absorb the vast numbers of dislocated workers.” (37) Since we have observed an economy that has created these high-tech jobs, we should proceed with retraining.

Other possible solutions to these problems include a greater redistribution of wealth through the tax system of the US government and better education programs to fill the gap between the skills of the workforce and the skills demanded by the labor market. However, both of these solutions presuppose the maintained strength of the market economy and capitalism. Looking at the trends of the empirical data, with special emphasis on the past five years, this seems to be the most reasonable and logical assumption. With productivity at 5.3% and unemployment at 3.9%, the economy looks the strongest it has been in at least 25 years. How we manage this prosperity and the social programs put into place to help ease the shift in jobs from manufacturing to service and knowledge based production will determine the populations perceptions when there is a downturn in the economy. It will be important in the future for the public to be better educated on economic issues such as this so they can decide for themselves which arguments make sense and not fall victim to the misperceptions propounded by anti-globalization and anti-technology forces. Rifkin perhaps rang the most true when he said, “whether a utopian or dystopian future awaits us depends, to a great measure on how the productivity gains of the Information Age are distributed.” Progress should move forward, but on how we react to that progress with positive and equally progressive social policy will hinge the future of America, capitalism, and society.

Figure 1: The Relationship between Productivity and Unemployment Historically

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