Mass Unemployment
Eileen Murray
Former co-CEO Bridgewater Associates

I think the next pandemic that’s coming is the displacement of the workforce [that’s] not being trained to participate in the economy. Dealing with that will take a lot more than a vaccine. The unskilled worker is the next pandemic.

Let me just step back. First of all, I think that it’s pretty clear if you have high degrees of unemployment, there are basic economic impacts that are not good for the nation. It puts an incredible strain on the economy. It usually only gets addressed through higher taxes on a smaller and smaller tax base. It increases the gaps between the haves and have-nots, which historically has caused more social unrest if it goes on for a period of time. We saw high levels of unemployment like in the Depression create hopelessness and despair in individuals, in families, and their communities.

I think [unemployment] happens as quickly as automation displaces people from work without concurrently retraining them and retooling them for other types of work. Does that make sense?

Look at the amount of money the U.S. spends on education per capita, and look at where it places in terms of education among developed countries. There’s a mismatch there. Throughout history, education has proven to be the vaccine for poverty and for the gaps between the haves and have-nots.

What I’m seeing is a growing gap between the haves and have-nots. The rich are getting richer, the poor are getting poorer, and we’re losing the middle class. To the extent that you have rising unemployment, you have people who can buy fewer goods and services, and you also have a need for the government to increase the tax base, including corporate taxes. The better way is for business, government, and educators to get together and say, a) “Do we all agree there’s a looming problem ahead of us?” and b) “What are the things that we can jointly do to start working on that problem?”

I’ve been talking about the issue for the last 10 years. McKinsey did a 2013 study and found that up to $9 trillion in global wage cost can be eliminated by automating a wide range of knowledge-intensive tasks such as analyzing customer credit ratings and providing financial advice. That’s 2013. I don’t know what the numbers would be today. There was also a study by the Oxford Martin program on technology and employment: Only 0.5% of the U.S. workforce is employed in industries [associated with new technologies] today that didn’t exist at the turn of the century. And it’s not just that these people aren’t a significant part of these new industries—it might be the nature of the industry—but we need to find ways of getting people more involved and better trained. And I don’t mean just college training. It might be training in different types of work such as working on rebuilding infrastructure. I think it’s a function of government, education, and business getting together.

In other words, this problem isn’t going to be solved by a vaccine. It’s not going to be solved by more military force or more security. It’s not going to be solved by those kind of things that happen more quickly. It’s going to be solved by retraining or retooling.

“When you take away from people the hope to realize their potential, that is the epitome of despair”

Let me give you an example. Companies may have to put up capital for future litigation costs. They might have to put up capital for certain regulatory things, so should regulators give companies that retrain their people a break vs. companies that don’t retrain and retool?
There’s been a lot of college graduates. And a lot of them didn’t find jobs. Did we produce more college graduates than the economy needed? But I also know that we don’t have enough electricians; we don’t have enough plumbers. Are there other skills beyond a four-year college diploma or an MBA that could be alternative ways of training or developing people for the future economy?

I don’t think companies will keep unproductive people around for very long. Here’s what I think is hopeless: If you tell someone this is your life for the next 40 years, and you’ll be doing the same thing over and over again, when you take away from people the hope to realize their potential, that is the epitome of despair.

Is this the best we can do societally? Is this the world we’re going to leave for our children?