Bill Gates Says Neither People Nor Governments Are Prepared for the Huge Changes Coming to the Labor Market

Within 20 years, “software substitution” will dramatically reduce the demand for many types jobs, Bill Gates said Thursday at the American Enterprise Institute. It’s a gloomy prediction that he says many people, including governments, aren’t prepared for.

Make no mistake, “software substitution” is a fancy way of saying software automation — as in “bots” and whatnot. Many of the jobs that could be eliminated are lower skill occupations.

"Software substitution, whether it's for drivers or waiters or nurses … it's progressing,” Gates said. “Technology over time will reduce demand for jobs, particularly at the lower end of skill set. ... 20 years from now, labor demand for lots of skill sets will be substantially lower. I don’t think people have that in their mental model."

Philanthropist Bill Gates, co-founder of the Bill and Melinda Gates Foundation, speaks about agriculture at the US Capitol in Washington, DC, on March 13, 2014. AFP PHOTO / Jim WATSON

The billionaire also provided some common sense ways to get out ahead of the coming problem.

Firstly, he said, the tax codes need to be updated to encourage companies to hire employees. He suggested possibly doing away with income and payroll taxes entirely.

As he has before, Gates also warned against raising the national minimum wage out of fear that it will prevent employers from hiring new workers. Many of the workers that would be impacted by future “software substitution” would be those making minimum wage, he argued.

"When people say we should raise the minimum wage. I worry about what that does to job creation ... potentially damping demand in the part of the labor spectrum that I’m most worried about,” Gates said.

(H/T: Business Insider)

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