This story reflects the views of this author, but not necessarily the editorial position of Fast Company.
The just-passed Republican tax plan favors corporations and the rich over the middle class and poor, and Americans seem to realize it, with polling data showing the American public is against it by a 2-1 margin. This unpopular tax plan is awash with corporate giveaways, and not only embodies a pressing danger for working people now, but pushes us closer to a time where many people may struggle to find jobs at all. That’s because instead of putting people to work, it incentivizes businesses to invest in the future of automation.
Tax policy will now make it easier and cheaper to invest in software, automation, and robots, rather than all of us. Before, capital investments had to be depreciated over a series of years, but now businesses can write them off right away. Imagine a warehouse owner in Southern California is faced with increased demand and must hire to meet those needs. They now face a choice to immediately buy a tax-advantaged robot or instead hire a human to make sure they can ship out more kitchen sinks and ramen noodles. With the tax plan in place, it shifts the balance and makes it a much easier choice to invest in a new robot that can slide goods across the floor. Should a business that does not want to pay a competitive wage to attract employees be incentivized to do so by the government through tax policy?
Work is changing rapidly and current trends portend further shifts in what we do and how we do it. This is the time for policies that are supportive of the future of work: a time of greater automation, more contract work, and limitless opportunity all mixed together. Rather than think about what we can do to support people–with the rise in gig economy workers, the transition away from driving jobs as autonomous cars and trucks come online, or even how we prepare employees to be more flexible and develop soft skills–the tax plan doubles down on the past.
The human that could potentially fill the role needs to be hired and trained, but the new tax plan does not incentivize employers to invest in worker training. The robot, on the other hand, does not need a great deal of training, just minimal programming, and business owners do not have to make the same investments in human capital or pay for payroll taxes and benefits. A system that was meant for the future of work would at the very least be neutral in its approach to capital and labor investments.
This ultimately raises a very real question of how and whether the government should pick winners and losers in business, and there are a lot of good economic reasons to say that the government should not. But, I do think that the question of whether the government should pick winners and losers when it comes to humans versus robots has a very different answer–people overwhelmingly think the government should make that choice and make it on their behalf. Seventy-two percent of people express worry that automation will take jobs and a whopping 85% of Americans favor limiting machines to dangerous or unhealthy positions, according to a recent survey from Pew Research.
By all means, nuance is necessary and this is not a clear-cut issue where we should automatically choose not to invest in capital equipment writ large. Businesses do need to invest in equipment in order to grow and ultimately hire people. However, not all capital equipment is the same—a baker needs an oven and a factory needs a forklift—there are investments that clearly need to be made.
As a society, we need to make real choices about the future we want. New technology drives greater innovation, which drives economic growth, and ultimately can uplift people. We should invest in the latest technology, the newest software, and even robots that can end the drudgery of the day to day and help usher in new jobs that we have never even thought of yet. But, it must be a deliberate process to get there: investments have to be made so that displaced workers have new areas to grow into and a strengthened safety net must be ready for that transition.
The future of work will rely on strengthening the social safety net, not weakening it. Needed investments become ever harder to make as the country goes deeper into debt to pay for this outsized tax plan. Already, we have heard rumblings about cuts to the existing social welfare system by Republican leaders in light of the budget crunch the tax plan puts us in. When it comes to choices we may need to make in the coming years, it will now be harder to pay for an expansion of the Earned Income Tax Credit, health care, portable benefits, or even to start experimenting with something like universal basic income when the money is already spent.
But, the thing is we can have automation and worker protections. Germany has made great investments in automation technology and robotics in recent years yet still has a high standard of living and full employment. The country has eight robots per thousand workers—four times as many as the US—but has not experienced the overall impact on wage stagnation observed here. Through deliberate policy choices surrounding unionization, worker training, and other support systems, they have embraced technological shifts while preparing workers for the future of work.
Here in the United States, city leaders across the country are making these kinds of choices too. In cities, we are investing in people with forward-leaning policies–sometimes old ideas made new–like apprenticeships and paid leave, as well as newer tools like creating maker spaces and developing pathways to the jobs of the future. Without strong partnerships between the federal government and cities that put people before profit, this unpopular tax plan misses the mark on the future of work.
The new tax law does not solve the problems we have, rather it exasperates the problems to come. When is the last time you heard a politician say that we are going to help bring robots online to replace human workers? Never—but those are the types of choices we are collectively making with this type of policy. This new tax plan favors robots over people.
Brooks Rainwater is the senior executive and director of the National League of Cities‘ Center for City Solutions.