When Donald Trump won the election, many in Silicon Valley were flummoxed: “How could a bigoted billionaire with no government experience and a twitchy Twitter trigger finger win the U.S. presidential election?” they asked themselves.
Liberal outlets have tried to make sense of the massive divide between “our” (upper-class liberals working in tech) vision of the country and “their” (blue-collar workers) vision of the country. We are facing a collective identity crisis, living in a “post-truth” world, utterly perplexed as to how a person so at odds with our Bay Area politics could win the most important democratically elected seat in the country.
It’s quite simple: Trump won precisely because Silicon Valley is so disconnected from the Rust Belt. He won because of machination, because of outsourcing, because of the definitive end to The Industrial Age. Trump won because, for all of our innovation, “we” have not been giving jobs to “them.”
Where did the jobs go?
In 1960, 1 in 4 Americans had a job in manufacturing; today, it’s fewer than 1 in 10. The industrial age is over — U.S. coal mining has declined 25 percent since 2008, which resulted in 50,000 jobs being lost over a four-year period. The mining industry, in general, has lost more than 191,000 jobs since 2014.
This is not particularly new, however. In the late-20th century, we entered the Information Age, a period of time characterized by the economic shift from a dependence on traditional industry to a dependence on computers and digital information. In addition to outsourcing, middle-class workers now had a new beast with which to contend: automation. It is this phenomenon on which Donald Trump based his campaign: America’s middle class is declining, and blue-collar workers are out of work.
However, Trump interpreted the reality of American job loss into an illogical solution: that we need to bring back mining, that we should travel back in time, pre information-age and “make America great again.” He has said that “We will put our coal miners and steelworkers back to work,” and that it will be “American hands that rebuild this country.”
We need to focus on our new, innovative industries that will put us ahead of our global competition.
While the goal is an extremely valid one, the means by which he intends to accomplish it do not make sense. Trump blames outsourcing and government policy for the decline of mining and the coal industry, when in fact it is market shifts that are to blame. Natural gas and renewable energy sources have become increasingly affordable, and in many instances even cost-competitive with coal.
In fact, these industries have been growing in tandem with the coal industry’s decline: The solar industry has been growing at a rate of 20 percent annually, and a study found that most coal employees could be easily retrained for similar jobs in the solar industry. We don’t need to rebuild the coal industry; we need to focus on our new, innovative industries that will put us ahead of our global competition.
Automation is bringing jobs back stateside
For us in Silicon Valley, this seems patently obvious: The tech industry currently employs 6.7 million people, and over the last 25 years, practically all new private sector jobs have been created by businesses less than five years old.
“In fact, between 1988 and 2011, companies more than five years old destroyed more jobs than they created in all but eight of those years,” wrote Jason Wiens and Chris Jackson of the Kauffman Foundation.
It’s worth noting that emerging markets offer more employment opportunities than staid ones (like the coal industry). Furthermore, if history is any indication of the future, increased automation will result in an infusion of jobs across existing industries.
For instance, as James Bessen of The Atlantic noted, we have recently seen a large portion of paralegal work become automated with electronic discovery software. However, instead of throwing lawyers and paralegals out of work, jobs in this sector have actually grown faster than the labor force as a whole. In fact, on average since 1980, “occupations with above-average computer use have grown substantially faster (0.9 percent per year)” than those with average or below-average computer use.
The reason why is quite simple: “When demand increases enough in response to lower prices, employment goes up with automation, not down.” In other words, automation increases productivity, which lowers prices, which increases demand.
As demand goes up, so does the need for new employees. These employees are much more likely to be American because a) the company can now afford it and b) the workers will need to be more skilled than their (probably outsourced) counterparts who were previously doing the work that machines now do.
The tech industry can (and should) cut down on American outsourcing
As an entrepreneur in the customer service industry, both outsourcing and automation (the two main culprits of job loss) hit close to home. In this election, I have seen the politics of job outsourcing reflected in the micro-economy of customer service — an industry that is notorious for outsourcing.
For years, economic logic drove customer service jobs overseas to India or the Philippines. The global contact center spend stands at $300-350 billion, of which third-party outsourcing accounts for 20-25 percent.
When call centers ruled the customer service industry, quality dropped, because customers were interacting with overseas employees without a firm grasp of the language or proper training. We are at a turning point now. Consumer preference for efficient modes of communication, such as chat and email, have reduced the industry’s dependence on labor-intensive phone contact centers, which also decreases customer service costs.
The era of smartphones, apps and connected devices (like an internet-connected car or a thermostat) generate so much data about a customer and their usage history that interactions are now highly efficient, which allows us the financial wriggle room to bring customer service jobs back stateside. Technology has allowed customer service to be so efficient that companies no longer need to hire as many people. Instead of 500 foreigners, you can hire 40 Americans.
Automation and technology are cutting our dependence on outsourcing.
Around 2012, when customer service automation was taking off, customer service jobs began returning to the U.S. As one article noted, customer service jobs “fit a niche in the economy that is more and more underserved. Customer service jobs certainly are not no-skill — one needs good communication skills along with basic phone and computer abilities. But they do not require a college diploma, and the training can be done on the job. There were more than 2.1 million of these customer service jobs in 2010 and the Bureau of Labor Statistics expects that number to grow 15 percent over the next decade.”
In other words, automation and technology are cutting our dependence on outsourcing. The tech industry has the ability to streamline and automate processes to the extent that costs are cut enough to stop outsourcing. It’s not just in customer service; it’s in energy, car manufacturing and new industries like the shared economy.
Silicon Valley can make America great again
Studies have shown that consumers actually love buying products that are made in America. Just as I’ve found that people seeking customer support prefer instant messaging with an American employee to talking on the phone with someone in India. We all want the same thing: American jobs, American products and American customer support.
The only real issue is cost. And that’s why Silicon Valley has a duty to the country to use automation to bring jobs back to the United States. We don’t need coal; we need customer service, we need solar energy, we need self-driving cars.
Silicon Valley does not need to be removed from the Rust Belt. We are not in a bubble. We are both a part of the problem and a possible solution. The innovation that we see here is an economic opportunity for the entire country, not just because it’s a win for the economy, but because it’s a win for companies. Automation can bring back American jobs, which begets higher quality work and a new age of American greatness — one that speaks to what we have always been known for: innovation.