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The last time we were in Toronto in August, we noticed more self-checkouts and less cashiers.
We noticed the same thing in cities in the UK and Europe. Gone are the days where you had a smiling cashier asking you whether you want plastic or paper. Now, you simply scan your own groceries and bag it yourself as a cheerful looking avatar smiles approvingly from the screen.
And it wasn’t just cashiers either. I also noticed machines replacing wait staff, driverless cars replacing drivers, and robots replacing factory workers.
This got me thinking, are machines stealing our jobs?
According to a study by the McKinsey Global Institute, up to 800 million global workers will lose their jobs by 2030 and be replaced by robotic automation. Most of them will be food workers and machine operators, jobs that are easier to automate by machines.
Jobs that require social interaction like doctors, lawyers, teachers, plumbers, and healthcare workers are less likely to be affected. But if you’re a mortgage broker, paralegal, accountant, or back-office staff, watch out. The machines could be gunning for your job.
You could be headed for what’s called an “episodic career” as John Oliver explains in this episode on workplace automation .
Basically, it’s the idea that rather than having one job for 25 years, we will need to keep switching careers throughout our lives. The stability that our parents have come to rely on—to work for the same company doing basically the same job until you’re rewarded with a gold-plated pension at 65—no longer exists.
So, what does that mean for Millennials and the next generation? Are we all screwed? Should we pivot towards careers in the healthcare and IT industries? Focus on jobs less likely to be replaced by machines?
What can we do to protect ourselves from being caught up shit creek without a paddle? Here are a few things you can do make the future of “episodic work” work for you.
Don’t Chain Yourself to a Mortgage
When a house costs only 2-5X your annual salary, putting a down payment on a house and getting a mortgage won’t make you break into a cold sweat.
But what happens when that cost becomes 10-13X your annual salary, and paying it off takes 25-30 years? And what happens when your job is so unstable, you need to switch jobs every 2-3 years? Chaining yourself to a mortgage while dealing with job insecurity and having to adapt to the ever-changing career landscape is like deliberately jumping into white water rapids with an anvil tied around your foot.
There’s an inverse relationship between flexibility and the size of your mortgage. The bigger the debt, the more a job loss screws you over.
One of the reasons I was able to avoid working on the project that almost killed my co-worker with stress is because I didn’t chain myself to a mortgage. When my boss tried to push me onto it, I dug in my heels and refused. Since I had FU money (even though I wasn’t completely FI at the time) getting fired or laid off didn’t scare me. I could simply live off the passive income form my portfolio and savings while I looked for another job. My co-worker, on the other hand, couldn’t. He had saddled himself with a massive mortgage, so he had no choice but to be our boss’s bitch.
This is exactly why managers love giving the bad projects to employees with big mortgages, kids in private school, or lots of consumer debt. No wonder he kept pushing me to buy a house because “interest rates are going up so you better lock in now!” HA! Good thing I didn’t fall into his trap.
Become Location Independent
As an extension to point #1, not having a mortgage opens up a whole new way of life that wouldn’t have been possible: Location independence!
I never learned about the joys of geographic arbitrage until we started travelling the world. Not only are you getting a burst of creativity every day from the change in scenery and culture, you’re making your retirement safer by reducing your cost of living. The flexibility that location independence gives you makes you invincible to inflation, stock market downturns, and job instability.
One of the reasons world schooling came about is because parents started travelling with their kids in 2008. This dropped their cost of living while they figured out ways to work online when they lost their jobs during the Great Financial Crisis. They started to realize that having a massive mortgage chained them to an unstable job and forced them to spend precious time away from their kids.
Now, let me be clear. Becoming location independent doesn’t mean you have to travel around the world. It simply means unchaining yourself from a specific city with an astronomical cost of living just because your job is there. If you have the ability to move to a city with a lower cost of living, that flexibility will prevent you from getting screwed from job instability, as well as make it easier to move across the country to where the new jobs are.
Get FU Money
JLColllins said it best when he said “There are many things money can buy, but the most valuable of all is freedom“. With FU Money, you have that. You don’t even need to be 100% financially independent to taste some of that freedom. The more FU money you have, the more freedom you will have earned. And once you’ve earned your freedom, you will no longer be a bitch to your boss, the bank, or the machine that’s taking over your job. You will even welcome the idea of an “episodic career” because now you can try different jobs and find out what your true passion because you want to, not because you’re forced to.
Invest for Your Future
Once you have enough FU money, turn it into an endless stream of income so that your money now works harder than you ever can. Ever since we retired, we’ve gotten richer because we know that our money is doing the heavy lifting, even in our sleep. I used to work 10X harder for 1/10 the amount of gain. Now, without having to start the next Facebook, I don’t have to do anything and the money keeps coming in.
Investing isn’t about an immediate win. It’s about sticking it out for the long run and using the power of compound interest to take each of those snowflakes, roll them together into a snowball that keeps growing over time, until it develops a momentum of its own. At a certain point, it becomes unstoppable.
With the threat of automation and job instability on the horizon, we need to build a solid portfolio that throws off income, so that when we’re on our second, third, or fourth career, we never have to stress out about our dwindling back accounts and impending mortgage payments.
We simply glide our way to financial independence by building our FU stash, a little bit at a time, with larger and larger percentage of our expenses being replaced each year until finally, we’re free.
The world is changing, and we have to change with it. The old advice that our parents have given us no longer works. Chaining ourselves to a massive mortgage for decades no longer makes sense when we can’t rely on our jobs to be there for even the next five years.
With “episodic careers” on the horizon due to automation, we all have two choices. Become FIRE or get fired.
What do you think? Will machines replace our jobs? If so, what are you doing to combat it?
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I couldn’t agree more with this article. Working in capital markets, I’m literally on projects to further automate processes in order to get rid of my job in the future. You see this happening right in front of your eyes….
Also, with FU money set aside, I’m not fearful of losing my job. It’s afforded me the ability to take risks and bold moves to further my career without fear of repercussion. It’s given me the confidence to work as aggressively as I want without care of what the boss thinks.
“I’m literally on projects to further automate processes in order to get rid of my job.” Yikes. Well,I hope you don’t work too hard on it!
Kudos for having FU money. It makes all the difference.
YES to FU Money! That is what has allowed us to move abroad and discover our true passions. It is so liberating and absolutely necessary in this ever-changing world.
Awesome! Where abroad?
Cancun, Mexico! Though we briefly considered Merida after your post about it, we like being close to the beach and being near an international airport. And it’s still more affordable than the US 🙂
Hi FC,
I agree with your analogy of saving the FU money. FU money gives us the power to do the things on our terms and control.
WTK
JLCollins said it best 😉 FU money all the way!
The next generation belongs to the entrepreneur, you no longer get a paycheck, just cuz you sit in the same chair day after day. Jobs will be short term contracts, and we will call them gigs. A year a month, or a project, will be your stream of income. And yes, Real Estate could take a real kick in the teeth, but people will still need a place to live. Already we see alternative housing, (Airbnb etc) and renting and communal living will become more popular. But also housing in remote areas, and suburbs will become popular as remote working becomes the norm.
The predictions of Nostradumass ….
My kids will be ok with this, as it will be as normal as texting and self driving electric cars are today… they are both in Engineering at University, and I force them to read this blog… what could go wrong.
“they are both in Engineering at University, and I force them to read this blog… what could go wrong.”
Uh-oh. We all know how much kids love doing what their parents force them to do 😉 Well, at least I get to be a bad influence–so there’s that!
Have you ever thought about buying an income property, renting it out, and continuing to travel and be location independent with a view to having it as a place to land should you ever wish to have a home base – while tenants pay off the mortgage?
Travelling around is a lot of fun, but a lot, maybe the majority (?) of people like to have a safe home with a comfortable bed, some family heirlooms, great decor, cooking gear and hobby items. A garden is good too. Friends and family gatherings and regular neighbourhood long-term connections can be worth a lot to some.
If you ever don’t want to travel and practice geographic arbitrage, being a renter has some financial and security downsides, especially if you are not in purpose-built cost controlled housing such as a co-op. And you never benefit from the use of leverage on appreciation.
Might be fun for you guys to run the numbers on the option of having someone else pay down your mortgage now that you may have some additional income to invest if a stable place is attractive at any time. Maybe not downtown TO but perhaps a suburb? Or another country altogether.
We did it with two duplexes. The one where we live is legally licensed as a short-term rental now. We can travel, rent it out and it covers all our travel costs. There are lots of options with income-producing properties and most things can be managed remotely these days with the help of a reliable handy-person and cleaner.
Robots can’t replace a rental property, accommodation will always be a basic need, and it sure brings a lot of tax advantages, security and flexibility in uncertain times… in addition to (not replacing) a nice investment portfolio like you already have.
I’d rather do it with REITs. No need to deal with tenants or change light bulbs. I hate that stuff. But hey, if you enjoy real-estate investing and it works for you, more power to you.
Hmmm, can I send avatar me, or robot me to team meetings? Program it to nod and smile? I am 1-2 years from FI, they could replace me with a robot, I would gladly take the buyout! So lovely to spend March break with miracle baby, and now a week away with extended family, and marshmellow dad finally gets some time off. Looking forward to the time when this is our ‘always’ ways of life : )
Yeah, the last 1-2 years is the hardest. And from experience and talking to other people, when you want to get replaced, you never do. They’re on to you 🙂 Hang in there though! You are so close…and then it’s 100% MB time, all the time!
I’m in the same situation, but I couldn’t wait 2 more years until the final FU amount was there. So, I am soon taking a 1 yr unpaid leave to travel Europe in our campervan. It will extend my retirement date, but hopefully when I return I can work another 1-2 yrs being a bit more rested and motivated? Mark in Amsterdam (age 48)
The jobs will change, not go away. As someone who works in AI, there is an *incredible* amount of work to be done before we get to the point of full servitude by robots. I don’t think healthcare is safe, one of the first AI projects I ever did was a skin cancer detection algorithm you can access with your smartphone camera that was more accurate than the median level specialist doctor. Maintaining this ecosystem takes work of all skill levels. And as I said, there is quite a road to get there, depending on how you define us “arriving.”
Your choice of words is quite telling about the near-term future:
“…before we get to the point of full servitude by robots”.
This is where we are heading short-term: humans are providing servitude, only until they are replaced by AI/Robots, at which point they are discarded. No wonder we see less and less need for manufacturing, transportation, mining, clerical jobs, and only a rise in low-income service industries. It makes me really sad every time I go to a grocery store with self-checkout, seeing the look at the cashier face knowing that they are working side-by-side with their machine replacement, just waiting for the day the transition is done fully.
It is sad. This is where we are going and this ship can’t really turn back, but just as the world population is peaking, there is actually less and less need for people to do any work. Feeding huge amounts of people can be done at scale and cheaply with mechanized farm equipment. Same for moving people around, moving goods around, making goods. Textile making is yet to be automated at large scale but it will come too.
While from your vantage point you can see a large need for workers in the field of AI, very few of the world inhabitants are mentally capable of doing this job. And either case, one small company with a bright idea can displace millions of worker globally (think Google Duplex and call centers). So, twenty, one hundred or even a thousand software engineers can today easily displace millions. There isn’t THAT much need for more AI engineers that can soak up the hoards of the un-needed masses.
I think some jobs with go away, but you are correct that new ones will be created as well. How many go away and how many new ones get created is something we can’t predict and will have to see. Interesting point of view on healthcare not being safe and how there’s now technology to detect skin cancer. I wonder if the next generation will be more comfortable using an app to self-diagnose rather than talking to a doctor–I prefer the personal interaction, but maybe that’s just me?
“The jobs will change, not go away.”
One is usually a cashier because of one’s level of intelligence and/or motivation. Where do the cashier who weren’t selected to monitor the automated checkout go? I just don’t know what other job is going to change so that ex-cashiers have something to do – don’t say Amazon warehouse worker, because the whole warehouse will eventually operate in the dark with no one around other than (maybe) someone at the delivery dock to offload and on load trucks. Subway might need a sandwich artist but they’ll quickly be overwhelmed with ex-cashiers application so some will be out of luck.
Where did parking attendants go? The ones that collected your money on the way out? What other job changed to employ them?
When I say “what other job changed to employ them” I mean what new type of job was created, because that’s what you implied, there would be new kinds of jobs, something that hasn’t existed before. We can’t just change existing jobs to employee these out of luck cashiers and attendants. We need to create entirely new jobs. New high tech jobs will be created to support AI, but cashiers aren’t going to make the cut there or in any robot maintenance job.
It is incredibly thoughtless to say “The jobs will change, not go away.” It is as thoughtless as when elite media types report on US jobs losses due to automation or being exported people should just “learn to code.” Yes, a 35 year old factory worker is suddenly going to have the intelligence and motivation to learn Java, C++ and SQL.
What to do with people that used to stock grocery store shelves after the grocery store is organized so robots can stock shelves. I can see that happening but self driving cars are manufactured by the millions, but just as ex-stockers change to a driving career, darn, there goes those jobs as well. So now we need new jobs for ex-stockers and ex-drivers too. And, remember when I say new jobs, I mean jobs that never existed before.
Good post. I’ll try to answer both of your question FIRECracker and let me know what you think.
1 – Will machines replace our jobs?
Sure as this has been happening for years. Let me show you one example if you don’t mind. Let’s take our time machine back to the 1900’s. What do you see around you? Probably a lot of crops, farms & farmers that manually grow their crops and harvest the fruits of their labor (punt intended!) a few months later. And what happened since then? Well they traded their hands for horses and later for more powerful machine. Now back in 2019 how many farmers do we see around us? Well not that much however agriculture has pretty much exploded hasn’t it?
2 – What are we doing to combat it?
Well, we’ve already reached financial freedom so we passed the stage were we should really worry about that since we can now work for free. That being said, I don’t know if there is much we can do to “combat” it. Should we instead embrace what automation has already brought to our lives in the past century?
A funny though is that if you go return back to 1900 and tell a farmer that his/her job will be replaced in a near future by someone that will be an “influencer” on “social media” he/she would probably think that you are a crazy witch. So I think it might be pretty hard for us to imagine what automation will enable us to work on next. Let’s make sure however it will be for the good of humankind!
Ya, you got it… look at a list of jobs from say…. 1980…
Press Operator
Phone Installer
Block Buster Client Rep
2019
SEO Specialist
AGILE Developer
User Experience Analyst
Many old jobs are disappearing, did you enjoy working at Block Buster? Or would you rather be programming digital streaming audio web sites in C++ and Perl.
Granted, there are much less “Unskilled” jobs, but those jobs pay crap anyway. An unskilled laborer does ok here in North America, but in Taiwan, its a minimum wage job. Something like $500/month Can $. North America is headed in the same direction, more people, less unskilled jobs, so get a skill, or 2 or 3 and make it a good one.
cheers
I agree with your point about agriculture. In the United States, from 1900 to 2000 the percent of the population involved in the ag sector dropped from a third of all workers to about 2.5 percent. (see:https://www.agclassroom.org/gan/timeline/farmers_land.htm).
Would we be better off with all these people still plowing the fields by hand? Or with people hand sewing all their clothes? No. Machines doing work for us is specifically what raises productivity and therefore living standards. That said, specific individuals always lose in these technological shifts. Uber drivers someday (probably not as soon as we think) will be gone and replaced by software. This is brutal, but better to adapt than to whine about it. And that’s what this Mill-Rev article was all about. Being prepared for these changes. Good stuff.
“If you go return back to 1900 and tell a farmer that his/her job will be replaced in a near future by someone that will be an “influencer” on “social media” he/she would probably think that you are a crazy witch. ”
Completely with you on this line of thinking. There are so many new position that have been created in the last decade that I couldn’t even have imagined when I was in high school! SEO optimizer, brand ambassador, digital nomad–none of those words where in my vocabulary and yet, here we are. Who knows what kind of crazy-sounding positions will be created in the next few decades.
Great post. Another way to handle the constant automation-driven change is to be willing to move if the opportunity arises. I’ve moved several times in my career, and it’s really helped me hack my income and build some valuable skills across multiple employers – which makes me more valuable as an employee.
At the same time, I know many peers that feel tied to the area in which they live and don’t want to move. But then they go and complain about how bad the local job market is. I get so frustrated at that. Seriously, I’m like “you’re not a spectator in this – take the leap!”
Incidentally, for some industries the ability to move isn’t necessarily tied to whether you co-own your home with the bank or if you rent. All of my moves since graduating have come with relocation packages, in which they pay all the transaction costs associated with home sales / purchase along with moving expenses, etc. I don’t think that is necessarily a good reason to buy a home or anything – personally I think I’ve lost money on home ownership overall, when you factor in maintenance costs etc – but it does take a lot of the sting out of it.
You make a good point about building valuable skills to make yourself valuable as an employee. That is another way to hedge against being replaced. Though in my case, I’ve seen far too many developers get older, not be as valuable as the younger ones who just came out of school, and it because harder harder as they age to keep up with technology. That might just be the IT field though–I’d imagine in healthcare, age = experience and ageism because less of an issue.
As for the company compensating for your moving/closing costs–this is an exception rather than the rule. Good for the people who get it, but it’s definitely not something people can rely on–especially in fields where the demand is low but supply of workers is high. Good point in bringing that up though.
If robots replace workers, who will get paid for the work that the robots do? The owners of the stocks of those corporations.
So not only investing protect you from the robots, but allow you to actually benefits from the robot!
And that’s why the richer get richer by investing in assets and poor get poor by buying “stuff”. If people position themselves correctly, they will definitely be able to profit from this shift towards automation.
You don’t have to build the next facebook…
But if you do, thats an extra billion dollars … something to think about.
Ride sharing, Uber, Lyft. Airbnb. The whole sharing economy did not exist a decade ago.
If you’re retired or don’t need the money, what else are you going to do? Build the next great thing!
Or booze and weed. That’s always fun to too 🙂
Yes, keep investing to capture some of the gains from automation by big tech, but there is something else you can do: Vote for Andrew Yang for US president in 2020. He has proposed a 10% VAT (half the European rate) on tech companies to fund a dividend for all adult American citizens of $1000 per month – – similar to the oil check all Alaska residents get each year. Check out his policy proposals at Yang2020.com
Interesting. Thanks for sharing.
Hi Jack
Can you help me with income properties, i want to build portfolio of income properties and retire. I know its contrary to what firecracker is teaching however there is still potential to make money from properties not the single family homes, but rental income properties.
It depends where you live/invest. I’m on the west coast of Canada. You should find someone who has done what you’d like to do in the area you hope to invest. Maybe go on BiggerPockets and ask? Lots of RE investors there from all over.
As usual from you all, a worthwhile post. I agree with all of it–and appreciate that your writing is pragmatic rather than alarmist.
To explore these topics further, I highly recommend the book “Average Is Over” by Tyler Cowen: https://mightyinvestor.com/working-with-the-machines/. The title makes you think this is some stupid book about getting pumped up and “conquering the world,” but it is actually just about recent trends in the knowledge economy.
Basically, you want to know how to “work with the machines” rather than “be replaced by the machines.” And “working with the machines” isn’t just about coding–it can also be marketing for a tech firm and other soft skills related to technology.
Cheers!
Interesting! That’s similar point of view as John Oliver–that jobs will be created to work with machines rather than be eliminated all together. Will put that book on my TBR list. Thanks for the rec.
I just wrote about this recently. I’m worried for my son. It’ll be a different world in 15 years. You’ll need different skills to thrive in the AI economy. I don’t think STEM is the way to go. The tech jobs will become commoditized and corporations will be more cut-throat. Well, who knows.
I like your take. It’s from a younger generation and you talk about different things than I did. I agree the next generation needs to be more flexible. The world will move at a faster pace so you can’t be tied down. It’ll be tough….
I just read it. Great post. I can see where you are coming from in terms of the risk of outsourcing and automation for tech jobs–though I still think those jobs are way more secure and in demand than lower skilled jobs.
We can’t predict the future but we can teach the next generation to understand money and make strategic decisions so they don’t get screwed.
Thanks for another great post! I was in China several years back when they were enforcing one child per family. Wherever you went there were 2 people working each cashier job. It was weird but the rationale was to prepare the economy for the less people and keep everyone employed. The policy has changed a bit and China seems to have made it through this ok. My point is that whether it is AI, robots, smartphones, the internet, the car, etc, the jobs and the economy just change and adapt. Our standard of living to date has gotten better each time and if we can assess it on its own as opposed to relative to others then we are all wealthier. Your advice for handling a possible near term tumult is awesome and I am going to use it. I am also fine with robots doing a job if it means that I don’t have to and I can now do something else. As long as these robots don’t turn into the Terminator and my life gets easier, I am hopeful that this is a good thing for me and my little ones too. 😉
As long as Skynet doesn’t get created to kill us all, we’re good 😉
Call me an idealist but my hope is that all the automation leads to a universal basic income or similar sort of arrangement so society can relax a bit more and do more worthwhile work that they enjoy instead of having to work themselves to death doing meaningless work for a company who sees them merely as “human capital”. Not likely I know but you can always dream 🙂
I find it interesting that when a lot of people talk about automation and the coming robot takeover they seem to think everyone else’s professions are in danger but their’s will be ok.
On a more serious note I agree with most of your recommendations except for the location independence one. If your profession is wiped out by robots taking over the labour there’s not going to be jobs available doing it anywhere, regardless of what the cost of living is like. I would argue that whilst it can help whilst you’re unemployed to be able to move easily, keeping your skills up-to-date and learning skills in a variety of areas is far more important in this respect.
Learning skills and being flexible to change careers is definitely more important than location independence. However, it does help you move easier to get new jobs or decrease your cost of living and not be tied down to one location. The more flexible you are, the better 🙂
UBI is interesting to considering and explore. The question would be the logistics of how to pay for it (AI/robot tax? Re-allocate tax dollars from elsewhere? Increase taxes on higher earners?) and how to get everyone to agree on how to pay for it. Definitely an intriguing discussion to have.
Great post! I think the new jobs of the 21st century will require new skills and we’ll have to adapt. There’ll some short-term pains as people find themselves unemployed but they’ll eventually learn new skills and switch to new careers. That being said, it’s good to prepare ourselves for bad scenarios by doing things you listed in your post.
Can’t predict the future so being prepared is the next best thing 🙂
Affiliate marketing is here forever and powered by humans.
You make the most random comments, but I’ll allow it because it amuses me.
This is very true. Sometimes I comment with a virtual long dissertation. Then I comment with one or 2 sentences. But in actuality, I said that because this is the age of side hustling and information technology and automation. Have you heard of automated cashiers cutting jobs from cashiers @ Walmart? Yeah, it’s true. Who’s going to live on a decent salary that doesn’t know about affiliate marketing and side hustling and not in the entrepreneur state of mind on an hourly salary today? Robots are not only taking our jobs, but it’s forcing some people to start a side hustle and transform into the “side hustle millionaire” mindset. Am I riiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiiight I say? L 😛 L
Learn how to fix robots.
Robots taking our jobs is like the legend of John Henry 100+ years ago.
https://en.wikipedia.org/wiki/John_Henry_(folklore)
“According to legend, John Henry’s prowess as a steel-driver was measured in a race against a steam-powered rock drilling machine, a race that he won only to die in victory with hammer in hand as his heart gave out from stress. ”
Who remembers Yellow Pages & White Pages? Back in the 80-90’s before the internet and google, if you needed a plumber you looked through yellow pages. You could find your friend’s number in the white pages. Even the Terminator found John Connor’s address in the White Pages.
I was working as an analyst on Wall St. when Supermedia Group (parent group of Yellow pages) was gutted by hedge funds and investment banks. Everyone walked away with money from the death of that whale. The remaining yellow pages I have now are really useful for starting the BBQ (the paper lights really well).
A few years from now, Google will be gutted just like Supermedia Group when human programmers are automated by machines (AI perhaps).
When robots learn to fix robots… then… well, watch the Terminator.
Skynet is coming! Run for your lives!
What is Skynet, my friend? 🙂
Great article. This video is from Andrew Yang for President 2020. Automation is coming. Yang argues for a Freedom Dividend of $1000 per month for each American 18 years or older to help with the transition….- https://twitter.com/andrewyang/status/1108509194888663041…
Thanks for the link, Davis. Another reader also recommended him.
As a former teacher I used to tell students to look carefully at the future job market. Many of the jobs they see now would not exist by the time they finished post secondary school and that there would be many jobs that currently don’t exist but will exist in the future.
Job security is decreasing and has been for a long time. In the 80’s I worked in Calgary during an oil downturn and saw people sell their mortgages back to the banks for $1. People were being met at the door of their offices by security guards holding a cardboard box and told to clean out their desks. That’s how they found out they lost their jobs. Some of those same people were later hired back by the same company as consultants.
As a young person I decided NEVER to put myself into that kind of stressful environment again. I became a teacher lower pay but job security for the most part. Retired 28 years later from an amazing career.
I tell my kids to diversify their work skills. Learn to build and fix things including tech.
I’m just here for the robots…
Robots are fun…unless they’re from Skynet. Then much less fun.
As a software engineer from Eastern Europe on my way to FI (4-5 years maybe) I can say that it’s worse than it looks.
White-collar jobs are not safe (maybe healthcare but not really sure). Whenever you have enough data for a ML algorithm to make decisions on it is doable to automate it.
Even coding is on it’s way to being automated – see low-code and no-code solutions which at least in my company are already being tested.
Actually coding is the new blue-collar job (except we fail to see it being so involved in it) therefore : open plan offices, Scrum (mostly corrupted by management needs), limited time for innovation outside business direct goals.
The good news is that until 2020s we had a lot of jobs coming our way. Plenty of companies from US , Canada and Europe outsource software development to Eastern Europe .. but that won’t last. Salaries are becoming similar to the Western world.
So far the only reasonable way out is Universal Basic Income . I like to call that financial independence for all. Except in my country (and maybe US too) inequality is huge and most people are fine with it. Never mind the huge pain it inflicts on society.. people don’t want to let anybody get a free ride. It’s actually bad since the poor are the first to complain about this and rich people like Warren Buffet support it.
As for buying a house .. most software engineers I know are not only owners but also landlords. Buying to rent is our favorite investment game ( I am also apartment owner but invest in index funds ). And nobody trusts the stock market ..
So maybe in 2030’s people will wake up in Eastern Europe as well. Hope to be FI by then and in the safety of my own bunker. .
Hello and thanks for joining us from Eastern Europe! A few other readers also mentioned UBI. Would be an interesting thought exercise to think about the logistics of implementing it (how to pay for it, how much should each person get, etc).
Congrats on being only 4-5 years from FI! You mention you do real-estate investing as well as index investing. Is that easy to do from Eastern Europe? Do you have access to Vanguard funds?
Investing:
Currently only VTI (and since March 2018 actually I have to go to Ishares for S&P 500 index funds due to MiFID) and some local ETF here in Romania. No bonds (well less than 5%).
Real estate investing (other than our own paid for condo) I do not do .. and after reading jlcollinsh blog would not do (even with almost zero property taxes).
Universal Basic Income
Regarding UBI I am quite confident that Andrew Yang’s approach is the best and seriously is what we need (but for the world not only US) -VAT tax (already existing in Europe) + increasing taxes slightly.
The fact that absolutely nobody opposes dividends (or rent) should be the main point of influence for people. Need to get all the work of machines shared to multiple people
so that Freedom Dividend (or Civilization Dividend) is what we get for living in these amazing times…
And when I say this I mean that all the code and algorithms (including ML) are the product of hundreds of years of Math and tens of years of computer science. We are standing on the shoulders of giants and only some get to rip the rewards (it’s true I am starting to get into the “some” club).
But inequality can and will affect civilization (see Richard Wilkinson’s TED presentation) so overall it won’t do any of us any good. My country Romania is one of the worst in Europe in terms of inequality (GINI index) so I get to “enjoy” it even if I am in the lucky 10%.
You guys (although a few years younger than me) are really my inspiration to FI (and as a software engineer I totally relate). Already started cutting on expenses in order to accelerate FI (but even so still 4 more years are needed since I started in 2017 after paying the mortgage ..)
Very cool! Thanks for sharing your thoughts and kudos on accelerating your progress towards FI (so awesome that we inspired you to do it!) We found that once you get started on the path, it goes faster and faster ’cause you keep finding optimizations.
Jesus said it best, “there will always be the poor”, and unfortunately he was correct, as there will always be lazy, depressed, sick, disabled, oppressed people in the world. There is no Utopia, and handing money to people only empowers them to do less, and seek more hand outs, this has been proven time and time again.
Instead of hand outs lets become builders of people, relationships, mentoring, teaching. Education for the mass’s. Teach a person to fish, don’t just give them a fish.
Since I typed all this out, might as well hit send…
I’m all for not anti-entitlement, anti-enabling, all that jazz, but I think the discussion on whether taxes (maybe AI/robot tax) could be used toward helping people retrain or with their expenses as they get educated in a new career, may make sense. It’s a discussion worth having, even if what ends up being implemented isn’t called UBI.
I agree with Bill Gates. I think at some point we’ll have to tax robots or any machine that automates a task so we can use taxes to pay people to do nothing. I don’t think it is in a person’s best interest to do nothing, but it seems that is where we are headed. Even MR here in retirement has found something to do. Most people want something to do. I think we have to think of solutions besides “you better learn another skill.”
This article specifically mentions cashiers so basically people at the bottom. Jobs at the bottom are the first automated, because they are simple and more people are in them so automating them first is more profitable.
Yet I see comments about the new economy and new jobs it has brought in the past. SEO for example, but most cashiers aren’t going into SEO work or Java programming or robot repair. Most of the jobs automation brings aren’t jobs cashiers, people at the bottom can learn to do. It is incredibly arrogant to simply say “you better learn a new skill.” People at the bottom, where millions live, they aren’t built for learning, that is why they are cashiers, parking lot attendants, janitors and inventory counters. So when you say there is going to be a job for these people, what’s the new simple jobs that CAN’T be automated?
Nothing against immigrants, but many can’t speak English well and they can’t write a paragraph without many errors. I know this because I have been in positions where I’ve dealt with immigrants. I’ve had to help them through very basic tasks. Many do very well speaking English, but can’t read or write English beyond the very basics so I wonder too where are these people going to work when the basic jobs are gone? Frankly, a lot of America citizens aren’t so well versed in English either, but you have to witness this understand. It is shocking to say the least.
Anyway, to sum this up, please think more about people at the bottom. They are impacted the most.
Not being able to speak English and being an immigrant doesn’t mean you’re screwed. Tons of immigrant stories (including my parents who came to Canada speaking very little English, and in my mom’s case didn’t even have a high school degree) showing that you can improve your situation over time. Other friends I know have started restaurants/small businesses and put their kids through university with the income. I’m not saying it’s easy because it definitely isn’t. But immigrants work insanely hard because we have the perspective that things could be so much worse where we came from (we’ve seen it with our own eyes). I get that people at the bottom need help, but just throwing up your hands and saying I’m screwed because I’m not built to learn is setting yourself up for failure.
Automation jobs also mean an interesting thing: companies don’t have to pay their employees (or robots) so the salary cost stays with them.
But, I believe that they will realize that if people are poor and out of work, they won’t come to the store to spend money.
I think the idea of a universal income will keep floating around. If the humans no longer create GDP, and the humans don’t profit from the GDP, then will the GDP exist? The companies will need to be taxed appropriately so that their income gets distributed.
It’s a very philosophical debate, and I am really interested in outcome of it. In European countries there seeem to be a general acceptance of the idea of universal income/gov. subsidies, but I don’t have much hope in America, where even a concept of healthcare is foreign.
But yes, FU money helps a lot to sit through the meeting discussing taking our jobs away. So far, I have been only included in geoarbitrage of some services to India or Eastern Europe (which is good for me, being here myself), but frankly, it’s not that different whether your job is taken away by a machine or Bob from Bangalore.
I’m interesting in that debate too. Even if full-fledge UBI doesn’t get implemented, something that helps people out while they retrain for a new career would be wise, imo. We can’t predict the future and no one can bank on UBI, but having FU money helps you stay afloat. Like the saying goes, “Pray to God, but keep rowing toward the shore.”
To talk about jobs, I just had to double back and ask everyone this question. How many people have ever felt violated by an employer asking illegal questions on a job application that you answered anyway, just because you needed a job in the moment? And did you say anything to that employer after they hired you or kept your mouth shut?
In the next 10-20 years you will need to be flexible where you live and learning new skills. Yes, FU helps but once in a while you will have to take one for the team. I just finished a book on the subject, The war on normal people, excellent read.