Sustain Social Security under the Impact of Automation and a Shrinking Job Market

Social Security and Retirement

The Dallas Morning News article on Oct. 14, 2010, “Employers embracing automation to cut costs, red tape“, mentions the impact of automation to job lost. Automatic machines do not need health insurance; neither do they need bonus, merit increase, and retirement benefit. They are capable of helping workers with their jobs or even replacing workers. Examples are farming equipments, auto manufacturing robots, ATMs, vending machines, self checkout counters in supermarkets and airports, and others.

During the recession, people start to realize that some lost jobs may never come back. It’s a shrinking job market. Some people blame immigrants for taking their jobs. But, they fail to realize that some job lost may be due to automation. When less people are working and contributing to social security, the risk of running out the social security increases.

Current policy continues to assume people are working for most of their life. What would happen to our benefit, if this assumption is no longer valid? What if the job market is actually shrinking? How can we sustain our social security with a shrinking job market?

A solution is to change our social security policy to restore the contribution of the lost jobs as a result of automation.

Specifically, the productivity gain of automation can be treated as intangible labor in the collection of the social security. Governments can calculate the productivity of these machines and their share of social security contribution in terms of the number of people they replace, including the length of working hours. This way, social security can continue to be funded independent from the shrinking labor market.

Then, you would ask: (1) What will motivate people to work, if they will still have their social security? (2) What will motivate companies to follow the policy change?

An answer to the first question within the context of this article is the payout of social security. We can maintain our current payout policy of the social security. People would get more benefit, if they have been contributing; people would get less (but not zero), if they did not contribute enough in the past.

For the second question, companies’ contribution for both tangible and intangible labor will continue to be deductible from their taxable income. If machines retire, or need repair or replacement, companies can get deduction on their taxable income for the value after depreciation. Small businesses can waive their contribution of intangible labor, if their revenue is within a certain limit.

Besides the proposed change, I would like to add that a successful immigration policy will actually help a country to fill the jobs which people are not willing to take, such as agriculture jobs, or to fill jobs of research and technology to strengthen the growth of the country. Without immigration, a country would suffocate to little growth. Evidently, both US farmers and British Nobel Prize winners advocated the importance of immigration recently. Legal immigrants also pay tax and contribute to social security.

In summary, these are examples of my idea to sustain our social security under a shrinking job market. Economics experts and policy makers can work on the details, if they agree. With the proposed change, we will be able to replenish our social security to support retirement. Governments will have a much accurate measure of the productivity from both tangible and intangible labor. Companies can continue to be socially responsible and gain cost savings and tax deduction for their automation. Automation will no longer cost our social security by taking our jobs away but, instead, increase our social security benefit.

Web-Based Fund Raising Services

Recently, Dallas Morning News has an article about web-based fund raising services. If you are looking for venture capitals to fund your ideas or projects and do not want to go through the business-type of screening process, I would recommend you to check out those web sites. If you are interested in sponsoring other people’s ideas or projects, those web sites also allow your contribution.

The news article mentions the following two web sites:

The major difference between these two sites is that Kickstarter does not award the grant until your project reaches a certain stage of your project, whereas IndieGoGo allows you to keep the grant, even if you did not work out your project.

Be sure to check out both web sites for their rules and requirements. Feel free to reach me, if you have questions or have something to share.

HBR: Smart IT

Since 2005, I have been advocating the idea of empowering IT users. In my company, I recommended the change of its user requirement management system to be a self-service system such that users can manage their own change requests; I recommended the development of business intelligence front-end with a data warehouse to support the self-service of user reporting, while maintaining the consistency of data. In a recent Harvard Business Review webinar, I found that Susan Cramm’s “8 Things We Hate About IT: How to Move Beyond the Frustrations to Form a New Partnership with IT” has been mirroring my idea of IT service.

Susan thinks the future state of IT should be:

  • Focus on what matters most. What applications are people using? Do they have appropriate access? Are version controls in place? These are better questions than whether a device is on the approved list.
  • Manage IT as an asset. IT is more than a lone department; it should be viewed as an asset and a capability found throughout the organization.
  • Let users do it themselves. Allow users to provide their own devices and support, but be sure to design an infra-structure platform, such as a “virtualized desktop,” that safely enables this.

Critical roles of future IT are

  1. Being a fiduciary. This includes effective technology strategy and policies, performance monitoring, R&D, enterprise architecture, regulatory compliance, and risk management. Ensuring data security is also part of IT’s fiduciary role.
  2. Access to economics of scale. IT must provide access to low-cost, scalable commodity services, such as email, networks, archives, and teleconferences.
  3. Enabling self-service. IT enables self-service across the organization through coaching, toolkits, brokering resources, and departmental relationship management.

At the end of the webinar, she recommended the following action items:

  1. Raise their expectations. By insisting that staffers become more self-sufficient through training or self-study, leaders will break the bottleneck around IT service — and likely discover “shadow IT” pockets within their departments.
  2. Hold people accountable. The new role definition includes the effective use by the business of analytic and reporting tools as part of everyone’s job, just as financial tasks such as budgeting, forecasting, and purchase orders are. Failure to accomplish this has a measurable impact on performance evaluations.
  3. Make sure that new hires are tech-savvy. Each year, more and more candidates are comfortable with using technology and solving problems on their own. Due to the pace of change, consumer equipment and applications are often more sophisticated than those in the workplace.

Interested readers can click here to obtain a copy of the webinar summary. You can also check out Susan’s book web site for additional information and white papers.