Five ways to make the digital revolution work for the middle class

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Last week, I walked into a room of industry, government, and civil society leaders at the World Economic Forum in Davos, Switzerland, and challenged them not to forget about the middle class as they grapple with a digital revolution that can dramatically increase…

daniel hertzberg for the boston globe

Last week, I walked into a room of industry, government, and civil society leaders at the World Economic Forum in Davos, Switzerland, and challenged them not to forget about the middle class as they grapple with a digital revolution that can dramatically increase economic growth, improve productivity, and create better jobs and new industries.

It is a time of great promise, but also a time of great peril if we don’t get this right. How will the warehouse worker who used to ship an order, or the salesperson who used to take it, make a living? Does greater work flexibility mean fewer worker protections? What are the practical and moral consequences of technological breakthroughs that can cure defects and diseases in utero? Will they be available for everyone, or just those with means?

And what will happen to the heart of the middle class — a belief in possibility? Will a decent life and the dignity and respect that comes with a good job be possible for anyone willing to work for it?

America’s middle class emerged from a basic bargain — that if you contributed to the success and the profitability of an enterprise, you shared in the benefits. With a thriving middle class came economic, political, and social stability for generations.

But that bargain has been broken over the last few decades. The middle class has been hollowed out by globalization, skill-biased change, the decline of unions, and changes in corporate governance. For the few decades that followed World War II, productivity and wages moved in lockstep. But over the last four decades, we have not seen wages keep up with productivity. The result is that paychecks have stagnated despite rising national income and advances in technology.

The digital revolution has the potential to exacerbate this hollowing out of the middle class.

It is our responsibility to bend these changes to create far more winners than losers — just as we did with the steam engine, assembly lines, and computing. Each displaced worker produced demands for new worker protections, and fundamentally rewrote the rules of the marketplace. But each also produced a net economic positive.

Here are five guideposts we should follow to make this digital revolution successful for the middle class.

First — provide access to education and job training that is early, life-long, affordable, and accessible.

In today’s economy, there’s going to be a constant requirement for workers to retool and retrain for the very jobs they possess.

This education and training is not only an obligation of our governments, but a responsibility and opportunity for our businesses. CEOs need to invest in their workers. They need to make “up-skilling” part of their business model. We should support apprenticeships and partnerships that expose and train young people for the jobs of the future.

Second — ensure basic protections for workers.

Governments have an obligation to strengthen worker protections, like a living wage, overtime rules, child care and sick leave, and the right to unionize and collectively bargain. But companies have an obligation too.

Over the last decade, a recent study found, 449 companies on the S&P 500 made $2.4 trillion in profit. But 54 percent of that profit was used to buy back stock and 37 percent went to dividends for shareholders. That leaves just 9 percent for research and development, cash reserves, and investing in employees.

When companies invest in their business and workers, they grow faster and we grow together.

Third — modernize our infrastructure.

In the United States our world-class infrastructure attracted businesses and workers. These investments create middle-class jobs, not just at the construction site, but at the local diner and for the truck driver moving material and product.

But in addition to taxpayer investment in infrastructure, we need more public-private partnerships.

Fourth — support a progressive tax code to pay for these priorities.

This isn’t meant to penalize anybody’s success. President Obama and I have worked to make sure everyone pays their fair share so we can invest in what grows the economy and the middle class. That means education, training, infrastructure, and other priorities that benefit workers and businesses alike.

But the private sector has a role to play too. As the world’s elites flew into Davos last week, an Oxfam report found 62 of the world’s wealthiest people own as much wealth as the poorest 3.6 billion people combined.

So to companies keeping billions of dollars in offshore tax havens — it might be good for your shareholders, but it robs your home country. Bring it back. Invest in the communities where your enterprises first thrived.

This is not just about tax equity. It’s about economic growth. Both the IMF and the World Bank have argued that growing inequality is a threat to economic growth around the world.

Fifth — expand access to capital.

We need to make existing capital and the tools that support entrepreneurship available to entrepreneurs who never had them before. This leads to greater innovation, new commercialization, and new jobs.

Getting back to an environment that creates a strong middle class isn’t just an economic imperative. It’s a global security imperative.

When people feel their shot at a decent life dashed away, the inevitable human reaction is anxiety, frustration, and anger — providing fertile terrain for reactionary politicians and demagogues peddling xenophobic, anti-immigrant, nationalist, and isolationist views.

It begins to shred our social fabric and stirs instability.

People become attracted to terrorist groups, like ISIL, anarchist groups, or left-wing or right-wing extremist movements — which offer the violent fantasy of tearing down the entire system.

A polarized, fractured economy is not inevitable. Neither is an economy that grows from the bottom up and the middle out. It is a choice.

And we can make the right one — together.

Joe Biden is vice president of the United States.


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