Recently, Robert Charette penned a blog post on IEEE Spectrum titled “The STEM Crisis is a Myth.” However, Mr. Charette’s argument is based on flawed analysis and faulty assumptions. America does face a STEM shortage in key industries and if we do not enact reforms to address this we will continue to fall behind our global competitors.
Could a Fed Under Larry Summers Worsen America’s Investment Drought?
The question of who will replace outgoing Federal Reserve Chairman Ben Bernanke is important, not simply because the Fed plays a central role in monetary policy and banking system oversight, but because of policymakers’ reliance on the chair as a sage voice on broader economic policy.
Robots Are Not the Enemy
The notion that technology, automation and productivity lead to fewer jobs and higher unemployment is simply wrong. There is no logical relationship between job growth and productivity. From a macro perspective, a nation could have high productivity but if they also have a declining workforce, the employment rate will rise. Or, in a micro example, if a firm uses the profits gained from higher productivity to hire more workers, employment will also increase.
Are Robots Taking Our Jobs, or Making Them?
With U.S. unemployment remaining stubbornly above 7 percent and job growth anemic, many have latched on to a compelling explanation: “the robots are taking our jobs.” In other words, a “neo-Luddite” narrative has taken hold. According to this line of thinking, high productivity driven by increasingly powerful IT-enabled machines is the cause of U.S. labor market problems, and accelerating technological change will only make those problems worse. There’s only one flaw in this narrative: it is completely wrong and not supported by data, scholarly evidence or logic. This report analyzes the “robots are killing our jobs” arguments, shows how they are constructed on faulty analysis, examines the extensive economic literature on the relationship between employment and productivity, and explains the logic of how higher productivity leads to more jobs. We show that more technology benefits not just the economy overall, but workers: more and better technology is essential to U.S. competitiveness and higher living standards. The claim that increased productivity eliminates jobs is misguided speculation.
Technology does not Eliminate Jobs, it Creates Them
Virtually all the scholarly economic research on the question of jobs and productivity finds that higher productivity does not lead to fewer jobs. Higher productivity makes products or services cheaper and consumers then are able to use those savings to buy other goods and services, helping create jobs. In many cases the cause of stagnant growth is too little, not too much, technology and automation, which makes industries less competitive in global markets, leading to job loss, less spending and investment, and a vicious cycle of stagnation.