Gates: Tax consumption to fix unemployment caused by technology [VIDEO]
Billionaire software mogul Bill Gates has joined the growing chorus of tech experts who predict that low-skill Americans will face greater unemployment because more jobs are being done by software and robots.
The Microsoft founder, whose net worth is $76 billion, suggested the problem could be fixed by reducing taxes on employers and raising taxes on employees, via the reduction of payroll taxes and the addition of new federal consumption taxes.
The widening recognition of greater low-skill unemployment is also creating a problem for the many executives — including Gates — and lobbyists and legislators pushing for increased immigration. They back the Senate’s immigration bill, which would dramatically increase the supply of foreign labor, despite Americans’ high unemployment rates.
“Software substitution, you know, whether it’s for drivers or waiters or nurses or even, you know, whatever it is you do … is progressing,” Gates told university-trained Washington professionals gathered at a March 13 talk hosted by the American Enterprise Institute.
The growing role of technology “will reduce demand for jobs particularly at the lower end of the skill set. … These things are coming fast,” he said.
“Twenty years from now, labor demand for lots of skill sets will be substantially lower, and I don’t think people have that in their mental model,” he added, echoing other predictions of low-skill unemployment.
A 2013 “study by Oxford University researchers Carl Benedikt Frey and Michael A. Osborne … [predicted] that nearly half of American jobs are at ‘high risk’ of being taken over by robots in the next decade or two,” National Journal reported in March.
The automation is also impacting higher-skilled professionals. This reporter used the Internet, a cellphone and a laptop to write this and three other diverse stories in one day. More dramatically, a reporter at the Los Angeles Times has developed a software-robot that autonomously reports breaking news about earthquakes.
“Democrats concerned by poverty and inequality — and Republicans who resist the social welfare measures necessitated by poverty and inequality — need to think harder about this [immigration and technology trade-off] question,” said a February article in The Daily Beast.
“I think it’s [a] tough” task to protect the middle class from the impact of automation, billionaire investor and immigration-advocate Steve Case said in December.
“I do think tax structures will have to move away from taxing [companies’] payroll because society has a desire to have employment,” Gates said.
“That’s going to force us to rethink how these tax structures work in order to maximize employment,” he said. One alternative, he said, would be to create consumption taxes — such as a federal sales tax — to hit higher-income people, while also reducing taxes paid by employers for each employee.
“The idea that consumption should be progressively taxed, I think that makes a lot of sense,” he said.
That shift would allow companies to profit by importing low-skill immigrants, even though the immigrants would also have to be supported by taxpayers. For example, the Senate’s June 2013 immigration bill offers conditional amnesty to at least 11.7 million illegal immigrants, who would cost taxpayers roughly $6.3 trillion over the next several decades, according to the Heritage Foundation.
Despite accelerating automation, President Barack Obama and many Democrats are promoting the Senate’s immigration rewrite that would double legal immigration to 46 million over the next 20 years. The bill would also double the inflow of guest workers, to at least 20 million.
Currently, the nation accepts one million immigrants and 650,000 non-agriculture immigrants each year, to join the working population of 150 million.
So far, GOP leaders in the House have blocked the Senate’s immigration expansion.
The immigration increases are backed by progressives who believe new immigrants will vote for Democrats. They’re also backed by wealthy voters who stand to gain from cheaper workers or services, such as landscaping and childcare. The increases are also backed by many business leaders, including Gates and Facebook founder Mark Zuckerberg, who try to hire cheap foreign professionals for jobs sought by American professionals.
Competition from immigrants adds to the widening competition for work between Americans and the new waves of technology — such as software automation and untiring robots. Since 2000, the number of native-born, working-age Americans who aren’t working has shot up by almost 15 million to a total of 50 million, according to a new report by the Center for Immigration Studies, a group that favors reduced immigration.
Some GOP leaders echo the claims by business lobbyists that a surge of low-skill immigration is needed, despite high unemployment among Americans.
“We will have labor shortages in — not right now — but in the near future, in, say, a decade,” Republican Budget Chairman Rep. Paul Ryan predicted during a January appearance at the Hispanic Chamber of Commerce in San Antonio.
“We’ve got 10,000 people retiring every day in America … and so the problem we have is our birthrates aren’t where they need to be,” said Ryan. “You need to prepare for that, and you need an immigration system that is wired and ready for that.”
In 2013, Ryan told an interviewer that dairy farmers need a perpetual supply of low-wage farm hands to milk cows, even though some farms in his Wisconsin district are increasingly using robots to milk their cows.
North Carolina Rep. Renee Ellmers made the same pitch in a February constituency meeting where several business leaders said they want to hire immigrant laborers instead of her constituents. “We know that we need the workforce,” she said.
Ellmers repeated her claim that farmers are facing a labor shortage during a contentious radio interview with Laura Ingraham.
The Gates tax-raising strategy is being challenged by California libertarian Run Unz, who says a $12 minimum wage would deter companies from importing low-wage workers for low-wage, taxpayer-supported jobs, and also reduce government welfare spending.
The $12 minimum wage would shift the nation toward a high-tech, high-wage, middle-class economy, like Switzerland, and away from its current progress toward a low-wage economy like Bangladesh, he said.
“Politics would be completely different … what you’re doing is reducing the 47 percent [of non-taxpayers] by 10 to 15 points and giving Republicans a chance to make their case about cutting government spending and reducing taxes,” he told The Daily Caller.