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Where Do Good Jobs Come From?

Many regard the falloff in the creation of high-wage jobs as the inevitable result of advances in artificial intelligence and robotics. It isn’t. Technology can be used either to displace labor or to enhance worker productivity.

CAMBRIDGE – Around the world this May Day, policy proposals that would have appeared radical just a few years ago are now on the agenda. In the United States, for example, high marginal tax rates, wealth taxes, and single-payer health care have become mainstream ideas. Yet unless policymakers get their priorities right, the opportunity for meaningful reform could be squandered, leading to even deeper social and political divisions.

In fact, while the reforms that are needed are radical and sweeping, they are not the ones currently in vogue. The top priority should be creating high-wage jobs, and this goal should guide policymakers’ approach to everything from technology, regulation, and taxes to education and social programs. Historically, no known human society has created shared prosperity purely through redistribution. Prosperity comes from creating jobs that pay decent wages. And it is good jobs, not redistribution, that provide people with purpose and meaning in life.

Creating such jobs requires that technological innovation be directed toward boosting demand for workers. Good jobs do not emerge naturally from free markets. Rather, they require labor-market institutions that protect and empower workers, generously funded education systems, and effective social safety nets. This is the institutional architecture that furnished the US and other advanced economies with four decades of strong, inclusive growth after World War II.