How to save jobs

A study by the Centre for Business and Economic Research at Ball State University states that 85 per cent of the job losses are caused by technological change, other than trade suggested by the US president-elect Trump. How could he keep his promise to save the US jobs?

Businesses are businesses, they want to maximise their profits. If there are more profits to move their companies to other countries, 'facing serious consequences' is not something unacceptable. If companies see that employing machines is cheaper than employing humans, then they will switch to machines and reduce their employees or force down the wages and make labour costs cheaper.

Based on this nature, there are two ways to save jobs from technologies. The first solution is to increase taxes on firms with higher technology adoption rates. This will increase the costs of switching to machines and technologies; however, as long as it does not lower the cost of labours, the firms will be forced to move their firms to other countries, as the general tax levels increase the costs of cooperations. The second solution is to remove the minimum wage. Once the adoption to machines seem more attractive firms get greater bargain power over their employees, then they are likely to force down their employee wages and reduce their costs of labours. However, this could widen the domestic wealth gap and create some degree of social unrest. Although there is a solution to this problem that the government could provide subsidies to companies who use more labours than machines, the costs of such solution is too high to be sustainable.

Overall, we cannot stop firms from switch some jobs from labours to technologies, as they are rational and make decisions on profit maximisation.