Amidst a wave of low unemployment and economic growth, the American worker faces unprecedented levels of economic insecurity.
40% of Americans can’t survive a financial shock of $400, and the absence of strong welfare systems in many states, combined with expensive healthcare and education make these kinds of shocks all the more likely. Americans suffer from a severe lack of bargaining power in the workplace: in 2016 just 10% of American workers were union members, compared to 24% in the UK and more than 50% in Nordic countries.
It is therefore unsurprising that the future of work has become a leading issue in the Democratic primary.
The Green New Deal and the future of work
Donald Trump’s 2016 campaign was centred largely around the plight of the American worker, promising to bring back coal production and manufacturing in America’s heartlands.
For Democrats, the defeat of Hilary Clinton and the movement away from a neoliberal orthodoxy has opened the field to more radical solutions. The shake-up of the existing consensus in American politics has been enabled by the growth of Silicon Valley, even though tech firms are not necessarily ‘progressive’ themselves.
Alexandria Ocasio-Cortez, despite being too young to run in 2020, has already been touted for a bid in 2024 and will be the key endorsement in the upcoming primary. Her flagship policy – the Green New Deal – promises a total overhaul of the American economy. Massive work programmes would be introduced to tackle the emerging threat of climate change, simultaneously solving the twin issues of economic insecurity and environmental disaster. This has gone down as expected amongst Republicans: vitriolic opposition supported by dodgy statistics and hyperbole.
Would a ‘robot tax’ reduce the impact of automation on workers?
One policy in the Green New Deal is a ‘robot tax’, a tax on machines replacing humans in the workplace.
Democratic hopeful Pete Buttigieg, an outsider in a field of outsiders, makes a strong case for it. Employers pay social security for their staff, who must also pay income taxes at federal and state levels. The magic of automation, from an employer’s perspective, is that all these costs evaporate. The US tax system currently grants a subsidy to organisations for automating people out of jobs.
There are obvious difficulties in implementing a robot tax. Notably how do we define what a robot is? And how would the rate of tax would be decided?
Automating people out of work is not a simple case of replacing them with electronic replicas. If a firm invests in new machinery which ups the productivity of its workforce without laying anyone off, will it have to pay up?
Better enforcement of existing tax law or higher corporation taxes may have a similar effect without the potential to discourage firms from investing in new technology.
So far, the US government has been sluggish in going after tax-avoiding tech companies, in part to keep them internationally competitive. Clamping down on firms like Amazon – which paid no federal tax last year – could provide the necessary revenue to transform the welfare system. Elizabeth Warren wants to go one step further and break up the tech giants altogether.
Universal Basic Income in the 2020 primary
Perhaps the most radical idea coming out of the Democratic primaries is Andrew Yang’s ‘freedom dividend’, a form of Universal Basic Income (UBI).
The RSA has been campaigning for UBI for some time, and is currently looking at piloting the idea with the Scottish government. Yang has proposed a straightforward programme of UBI: $1000 a month to everyone, no strings attached. Combined with his highly active twitter presence and meme potential, Yang’s odds have surged in the last month.
The ‘freedom dividend’ is a deft evasion of the accusations of utopianism that are often levelled at UBI. Yang has couched the idea in two great American traditions: liberty and capital.
He has been especially careful to avoid framing this as a left-wing policy: his website calls it “capitalism with a floor that people cannot fall beneath”, and cites the support of neoliberal economists Milton Friedman and Friedrich Hayek. It remains to be seen if Yang’s radical centrism will pay off, or whether he risks alienating the younger left-wing of the Democrat party.
The future of work and Democrats’ move to the left
Amidst this sea of new, left-field candidates it is often easy to overlook the fact that Bernie Sanders, has been pushing similar issues for some time.
While perhaps lacking some of the novelty of some of his younger competitors, his proposal of a $15 minimum wage and increasing the power of unions made waves in 2016. Sanders still commands a significant lead among younger Democrats and I think that he still remains the candidate to beat. Buttgeig, Yang and Ocasio-Cortez can be grateful to Bernie for paving the way for a more progressive Democratic party.
That these ideas are being tabled seriously is cause for optimism. The narrative around the Future of Work in the US has begun to shift. Pete Buttigieg in particular seems well versed in these issues: “What’s at stake in a job is identity”.
As recent RSA research has pointed out, a future of work which benefits all will not simply be a matter of preventing job losses by automation.
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