Past Issues of Government Technology

Jeremy Rifkin

"There will never be enough jobs in the knowledge sector of America or any country to accommodate the millions and millions of people let go in the traditional industrial sectors, blue- and white-collar manufacturing and service." -- Jeremy Rifkin on information technology and the end of wage labor.

by / April 30, 1997 0

Jeremy Rifkin is the author of 13 books on the impact of technological changes on the economy, workforce, society and the environment. His most recent book, "The End of Work: Technology, Jobs and Your Future," is the result of a three-year study of changing conditions and the nature of work in the Information Age. His books have been translated into 15 languages and are used in hundreds of colleges and graduate schools around the world. He has also lectured and been a resident scholar at more than 300 universities in some 10 countries over the past 25 years. He has been influential is shaping public policy in the United States and around the world, and he is founder and president of the Foundation on Economic Trends located in Washington, D.C. Rifkin was interviewed by Government Technology Editor-at-Large Blake Harris.
GT: A great many people around the world, including heads of state, are paying a great deal of attention to what you are saying on the issue of work and unemployment in the Information Age. Yet America, the country on which much of your analysis seems to be based, is one country where unemployment appears to be on the decrease.

Rifkin: The president was re-elected and he said, "I created a million good new jobs. Follow my lead into the 21st century. We are building the bridge for the next generation." But as I travel across the United States, the number one issue on the minds of every family is: "Will there be a place for me? Will my labor be valued in this new global economy? What about my children in the next century?" Half the American people did not vote in this current election, the lowest voter turnout since 1924. Perhaps it is because the two major political parties in America have steadfastly ignored the number one issue on the minds of voters -- jobs.

The president says we have 5.4 percent unemployment, but that doesn't tell the whole story. It doesn't tell about the millions and millions of American workers who have given up. They have stopped looking. If you give up, if you stop looking, you are not counted. We call them "the missing men." They are almost all men -- six million, no longer working and not counted as unemployed.

In addition, these statistics do not tell about the millions of American workers who had full-time jobs before the last recession, but who are now on what I call "just in time" employment. They are temporary, they are leased workers. They are on outsource and contract work. They are freelancing. If you work a few hours a month, you are considered employed. When you add up the real unemployment figures in the United States, they hover at 13.5 percent of the adult work force -- comparable to Germany.

The U.S. Census Bureau report has just put out the income distribution figure for our country and we have the greatest disparity in income distribution in the U.S. since 1945. We are second to last of all countries in the industrial world on income distribution. Twenty-four percent of our youngsters are below the poverty level, the worst country in the industrial world, with the exception of Russia. Is this the bridge to the 21st century?

GT: In your recent book, "The End of Work," you suggest that high unemployment -- much higher levels than we currently face -- will be a direct result of new technologies. Can you briefly explain the case you make?

Rifkin: We are on the cusp of a great transition in the nature of commerce and work. We are moving out of the Industrial Age and into the Information Age. Sophisticated computers, telecommunication technology, robots and other intelligent machines are replacing traditional job categories.

If you are a secretary or file clerk, if you work in the mail room, if you are on the factory floor, if you are garden-variety middle management, if you are a bank teller or librarian, if you are in wholesale or retail, the chances are your job will not be here five years from now.

The best way to understand the enormity of this shift taking place is to look at agriculture at the turn of the last century. We were a nation of farmers just 100 years ago. Now, less that two-and-a-half percent of our population is on the farm. We have sophisticated technology producing the output. We can feed the world with a fraction of the work force we needed 100 years ago.

Now we are seeing a comparable technological revolution sweep through the industrial sectors, manufacturing and the service industries. When I was a young man studying economics in the 1960s, the U.S. was a blue-collar nation. We were a nation of factory workers. A third of our workers were on the factory floor. Today, we've cut that to 17 percent and we are still the number one manufacturing power in the world. We are simply doing it with less people and more intelligent technology. U.S. Steel, the quintessential company of the Industrial Age, had 120,000 employees producing steel in 1980. Today, U.S.S. has only 20,000 workers. But those 20,000 workers are producing more steel than 120,000 workers did 16 years ago.

Peter Drucker estimates that only 12 percent of U.S. workers will be on the factory floor 10 years from now. We will still be number one in manufacturing. By the year 2020, we will see the virtual elimination of the blue-collar factory worker from world history. Less than 2 percent of the global workforce will still be in what we call traditional mass assembly line work. We already have workerless factories.

GT: One of the chief concerns today in America is the migration of manufacturing jobs to countries where labor costs are much cheaper. Yet you suggest that even this is a temporary situation.

Rifkin: Let me give you an example of how quickly this may change. The two cheap labor markets responsible for growth in Mexico, Central America and Asia are textile and electronic component production. Each have traditionally been labor-intensive employment centers. Today, German engineers are perfecting the automation of sewing, and we are quickly moving to automated electronic component production.

The cheapest, most exploited worker in the Third World will not be as cheap as the technology coming online to replace them. I work with Fortune 1000 companies, and we are now talking about engineering so cheap, with so little margin, that we give the technology away as a platform and begin to sell a relationship with the client instead. What is going to happen in Mexico and India, Pakistan, Singapore, Malaysia and China in less than five years when the cheapest worker there cannot compete with the technology to replace them? And what happens to our export market? To export, there has to be purchasing power. For purchasing power, there has to be mass employment.

GT: So, as you see it, the fundamental problem is that technology will continue to eliminate jobs, not just in America, but internationally?

Rifkin: Well, if this was the only shift taking place -- manufacturing -- that would be a tumultuous upheaval. But there is more. In the past it was long assumed that if you lose a job in manufacturing, you could be retrained for a job in white-collar service industries. But just look at what is happening in the banking industry, the finance industry, the insurance industry, the wholesale and retail sectors. All major white-collar industries are deconstructing. They are eliminating layer after layer of management and infrastructure. The goal is to create a whole new type of organization. We call it a virtual organization -- it actually more resembles a network than it does
a spatial design. The new companies are fast, quick, flexible. They are made up of a small entrepreneurial elite -- a core professional and technical staff and a "just in time" workforce. In network organization, the key is to be as flexible and transitory as the markets, the production and the "just in time" technologies.

So in manufacturing, we are headed toward workerless factories. In the service industries, we are headed toward virtual companies or small networks. In the past, when one sector has mechanized, a new sector has emerged just in time to absorb the dislocated labor. That was the history of the Industrial Revolution.

When agriculture mechanized, a lot of farmers were displaced, but they found jobs in Henry Ford's auto plant. When manufacturing began to mechanize in the '50s and '60s, a lot of dislocated workers could be retrained for white-collar work. Now all three traditional sectors are moving into the Information Age, and yes, we do have a new sector for employment emerging -- the knowledge sector. This is the essential employment sector of the Information Age technology revolution -- the engineers, the scientists, the highly skilled technicians, the educators, the writers, the producers, the consultants and the professionals. And many government leaders I speak with are hoping that we will create as many new jobs in this sector as jobs eliminated in the traditional sectors, while we make the shift from the Industrial to Information Age. For the sake of argument, let's assume we can retrain and educate a whole generation for knowledge-sector work. The chances are likely that there will never be enough jobs in the knowledge sector of America or any country to accommodate the millions and millions of people let go in the traditional industrial sectors, blue- and white-collar manufacturing and service. The reason is, what separates the Industrial from the Information Age is that the Industrial Age used mass human labor to produce the goods and services of the economy. That is its signature.

The Information Age, by contrast, relies on small, elite workforces, highly paid, highly skilled, accompanied by increasingly sophisticated intelligent technology. Already we need the best engineers, but we get unemployed, garden-variety engineers because of computer-aided design. These are breathtaking technologies. The Industrial Age ended slave labor. The Information Age is going to end mass wage labor. I believe that is the historical divide we find ourselves on.

GT: If this is the scenario that actually faces us, the future would seem to be very grim.

Rifkin: Let me share with you three statistics. The International Labor Organization put out its unemployment figure this year. There are a billion people on this planet unemployed and underemployed this year. That's the best that the Industrial Age could do. We are now in the sunset years of this great economic revolution. Does anyone for a moment believe that the Information Age will do better as we move to elite work forces? Yes, we are going to create jobs at the top -- a lot of new jobs, but they will never be mass labor. You will never see thousands of factory workers coming out of the factory at Genentech or Microsoft. It is
elite labor.

The second statistic is a chilling one. The 356 richest people on this planet today -- their combined wealth equals the bottom 40 percent of humanity, two-and-a-half billion people.

The third and final statistic, 75 percent of the jobs in this global economy are what we call simple, repetitive tasks -- so simple that they are already potentially replaceable with existing intelligent technology. And we have only begun to move into this revolution.

This technology revolution is a double-edged sword. It could lead to a grim future or it could lead to a renaissance. Right now, it looks grim. We are seeing the polarization of every community and country into two tiers. The top 20 percent of the workforce in every country is doing pretty well. Those are the information workers, part of the global village. The bottom 80 percent of the work force in every country is the industrial work force, the middle management to the factory floor, and they are slowly being marginalized out of the new economy -- lower wages against rising productivity, more "just in time" employment or unemployment.

So yes, one might see this as a grim future. I choose to see this as one of the great opportunities for the human race. We are on the cusp of a technology so profound that it could free up hundreds of millions of human beings from toil in the marketplace. This could be a great renaissance for our children, but we haven't even begun to ask the tough questions to turn this from a grim future to a great leap forward from the 20th century.

What are those questions? One, what do we do with the millions of people, especially young people around this world, who will be needed less or not at all in an increasingly automated global economy? That is a straightforward question that ought to be on the public agenda in the U.S. and in every country. Two, how do we begin a serious, sober public debate on how best to share the vast potential productivity gains of this technology revolution so it benefits everyone in society and still keeps our corporations competitive in the domestic and global markets? Those are the two tough questions that ought to be in the public arena.

GT: One solution you have proposed, and actually have been discussing with government and business leaders in several countries, is reducing the workweek, thereby creating more jobs.

Rifkin: There are many ways this could be done other than ways I have suggested. Those countries that are pre-emptive and begin to systematically reduce the workweek and provide the appropriate government incentives to keep their companies competitive will be ahead of the herd. Because we will move to a shorter workweek, I tell you, it's coming. If it comes too late for countries, they are going to suffer in the process of transition. Productivity gains have to be shared or we risk social upheaval.

The debate over a shorter workweek has started in Italy, France, Germany and Spain. But even with a shorter workweek, we have got problems. We still will have millions of people who will not be needed in the marketplace, especially young people coming out of the schools. We are going to be able to produce the goods and services of this global economy in the next century with a fraction of the workforce we use now, just like in agriculture. Yes, we will create new opportunities, new goods and services, but they will be manufactured in new, workerless factories and marketed with virtual companies. We are going to create jobs at the top and jobs at the bottom, but possibly there is an opportunity to create jobs outside the market.

Maybe there is some life beyond the market. The problem we have now is we are stuck in the old political paradigm. We think of politics and solutions to jobs either coming from the marketplace or from government. What I'm saying is that neither set, alone or together, can deal with the enormity of this great historical change in world history. The marketplace is moving from local, domestic markets to the global. And it is even moving from geography to the electromagnetic spectrum. Primary commerce is going to be on the spectrum, not on geography. That is secondary commerce for the next century. And the market's moving from mass to elite labor forces. It can't provide for all your young people. Government at every level is paring down. Government is not going to be the employer of last resort, either.

So what do we do with all the young people coming out of all the schools in America? We break the political paradigm -- just break it and think of America not as two sectors, market and government, but as three sectors. Once we understand that virtually every country in the world, with the exception of communist countries, has three sectors, it opens up a fresh new debate on the social contract, rethinking work and creating a vision or a mission for this new technology revolution.

We can think of society as a three-legged stool. The first leg is the market sector. It creates market jobs and market capital. The second leg is the government. It creates public jobs and public capital. The third leg is the civil society, the third sector. It creates social capital in both paid and volunteer work. Every organization, affiliation and institution in this great country that is not a corporation in the marketplace and is not a government institution falls into the third sector. You have thousands and thousands of such institutions -- fraternal organizations, service groups, advocacy organizations, art, culture, sports organizations, church and secular organizations, neighbor and community organizations.

GT: So you see that it is this type of organization that can take up the slack and provide new employment?

Rifkin: Don't just think of it as an employment pool. We call this the third sector, but it is kind of misnamed. It is the primary sector. We have forgotten our history. When we moved West on our frontier, we first established community. We first established social capital. We first established social exchange. This has been the history of every community in history. You first establish community, social capital, and then social exchange. And only when that is in place can you have market relation and government. This is the primary sector throughout all of history. The government and market sector are derivative of the civil society. It has been the primary sector throughout all of history. We understood this when the Soviet Union collapsed. It is quite interesting. I don't know how many businesses rushed into Eastern Europe and Russia, but many businesses did. Almost every one of them failed. And now in hindsight we found out the reason they failed is that the Communists had systematically eliminated the civil sector. So after the collapse, there wasn't enough social capital in place, enough social trust developed, enough of that rich infrastructure of social capital there so you could have a stable market or a representative government. Here's the rule of thumb: The weaker the civil society, the more unstable the market and the more undemocratic the government. The stronger the civil society, the stronger the market and the more democratic the government.

We are going to be able to free up millions of young people all over the world from the marketplace. What's their option? There are only two options left: the outlaw society and the civil society. There is a lot of work available in the outlaw society. The antidote to that is to begin to come together again and reconfigure the civil society for the 21st century. You are going to pay taxes one way or another. You are either going to pay taxes for prisons and a fortress society or you are going to pay taxes for the renewal of social capital and community. You will not escape. There is no gated community that is secure enough. In our country it costs $30,000 a year to keep one person in prison. That's the minimum. And when you are in prison, you have no purchasing power and you don't pay taxes. This is not a good investment. Far better to be pre-emptive with our young people, because, believe me, they will take by force what is denied them if there is no opportunity. Far better to be pre-emptive. Provide the education, and then let young people compete for jobs in some of the thousands of nonprofit organizations. If they land a job, the city or state or federal government ought to be able to provide an income voucher for a decent wage so that a young man or woman can create social capital in their community.

There is another aspect to this. I grew up believing that the high-status jobs were professional jobs -- to be an architect, engineer, lawyer, doctor, business person. The irony is that much of this professional work is going to be reducible to zeros and ones in the next century. A lot of this work is going to be done by parallel computing capability. On the other hand, the contributions to society that we put on the bottom of the society in this century, out of the marketplace, in the third sector -- this work is too complicated for the technology of the Information Age. An example is a daycare center. I don't mean warehousing. I mean a teacher with a daycare center responsible for stewarding the minds of 30 youngsters.

A man or woman stewarding a daycare center, responsible for 30 young minds, is dealing with something so profoundly complicated, there is not a technology in the 21st century that can handle the task. What we may see is a switch in status. What we call high-status, machines are going to do in the next century. It is the skills in the third sector that require intimate participation in social capital -- these are the most intellectually challenging and emotionally difficult skills. If you think I'm kidding, take one week off and operate a daycare center.

Every school I know of in the United States is preparing the children for a market in cyberspace and I think they should. Your children need to know the language of the Information Age. But educators in my country are now saying we may be doing the children a disservice if we only prepare them for the marketplace. We are not going to need all of them. We don't want to set them up for disillusionment. We already have college graduates in our colleges coming out with all the degrees you need for the knowledge sector and they are having to dummy down their resume because there is not enough opportunity in some of these high-tech areas. What do you think it is going to be like 10 or 15 years from now? All over the United States, schools are beginning to work with students to model programs in the community. They learn by serving in nonprofit organizations -- an animal cruelty shelter, an environmental group, a senior nursing home. Millions of young people in less than five years will be doing this in our country. And now the educators are saying, let's rethink the whole curriculum. Why don't we prepare our children so they understand not only the marketplace history and government history, but let's also prepare them to understand the 200-year tradition of the third sector, the social group, the wellspring, the values that create a caring people.

GT: So in essence, you are suggesting that government has a role to play in fostering a stronger third sector so this can not only employ many more people in the next century, but also help to renew the foundations of our society in the Information Age?

Rifkin: It will take more than government. We need a vision and a mission for this technology revolution worthy of the century our children are inheriting. We need to ask the business leadership in every country to come to the table, to begin discussing this full transition of the nature of work, to sit down and collaborate with labor and government and community to create a seamless web of relationship between all these sectors and get down to the task of exploring how we share some of the vast potential revenue gains of this new technology revolution. Very few business people I have talked with have disagreed with my diagnosis. When I ask businesses -- small, medium and large -- do you see more and more workers in the picture, or fewer and fewer, almost every business person I work with says as they become more successful, they see fewer workers in the picture.

I do think we are on the cusp of a new era. And I think we owe it to ourselves and our children to perhaps have this debate now rather than later, because I think if we don't, the voices of anger will be so loud five or 10 years from now we won't be able to have this kind of intelligent conversation at the center of life in each country.

GT: But you are, in essence, also suggesting that government should be paying for people to work in the third sector.

Rifkin: What I'm suggesting is that we need to see all three legs of this stool as reciprocal even if they are sometimes adversarial to each other. What makes a strong society is a streamlined democratic government, a very effective market economy and a very strong civil society. The market is the juice, the government is the regulator, and the civil society is the social glue. Each leg of that stool has to be proportional and reciprocal to the other. I've made various suggestions, but beyond these, here is the bottom line: Are we willing to tax a small portion of the vast revenue stream in this Information Age economy and make it available for income so that surplus can be used, not for prisons, but for providing training and jobs in the civil society?

People say they are paying too much in taxes. Well, I recently spent a few hours with the President of Finland. The average person in Finland pays 48 percent income tax. So I suggested he take just 5 percent of that existing revenue stream and use it for income vouchers to begin to prepare young people for decent work in the social economy. That 5 percent alone could go a long way in providing a vision and a mission -- a new sense of vitality for your economy.

So there are many ways to provide, but the question is, do we have the will and the resolve? My wife, who is a journalist and tends to be more cynical, tells me it is going to move toward collapse and crisis before anyone responds. I pray for our children's generation that it doesn't have to get to that.

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Blake Harris Editor