Self-driving vehicles, self-serve kiosks, increases in manufacturing and energy production efficiency, and declining retail numbers all contribute to what is likely going to be a significant problem in the coming decades.
It’s not that automation itself is a bad thing, within our lifetimes we will probably see the majority of our day-to-day activities be automated. However, the transition to an economy based on robots more than people is going to affect those who can ill-afford to lose their jobs the most.
Conservative estimates put future job losses at 20 million with some estimates going up to as high as 70 million. When someone loses their job, they stop paying taxes, while their employers stop paying payroll and other types of taxes at the same time. Compounding the issue is the fact that many people who lose their jobs start to depend on the economic support of the government, along with their families.
Take a taxi driver in a medium-sized city for example: They may gross about $65,000/year, of which around $15,000 would be paid in taxes. Their employer is also likely paying around $10,000 in taxes related specifically to that one employee. When that person loses their job, the government loses out on $25,000 in taxes, not even counting the positive economic impact coming from that employee spending their income.
Now, that former employee has to request government assistance since every taxi company is moving towards an automated model. $1500/month just for that individual and their family to survive equals a $43,000 swing the wrong way in government revenues. The extra profit generated by the taxi company is taxed at a far lower rate and may very well end up sitting in an investment account, not doing much to foster increased economic activity.
Multiply those numbers by 20-70 million and it’s easy to see we have a real problem on our hands. Higher taxes on those making less than $250,000/year from all sources would probably compound the problem. Higher corporate and capital gains tax rates would probably alleviate the problem, but while those types of tax increases are supported by a majority of the population, for some reason lawmakers don’t seem to agree.
A growing population and dwindling jobs will result in much higher levels of unemployment in working-age adults than we see now. To top it off, the number of people on either side of the working-age spectrum (under-18, over-67) are growing substantially. Something has to give at some point, whether that means the advent of a basic income system or substantial corporate/capital taxes, the transitional period we are currently in cannot last forever.