Obama Knows What's Really Killing Jobs. Is Trump Listening?

By Daniel B. Kline Markets Fool.com

President Donald Trump has made jobs, and bringing them back to the United States, a key part of his platform. That was a major theme during his campaign and his first acts in office have included opting out of trade deals, saluting companies that have made hiring announcements, and promising hefty tariffs for those sending work outside the country.

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It's a message that has played well to his base. That makes sense because a laid-off auto worker or former factory worker wants to hear that things can go back to where they were.

The problem, and it's one that Barack Obama laid out in his final interview as president, is that American jobs moving overseas is not the long-term issue. Instead, America's former commander in chief said, the issue is robots and automation. And, Obama pointed out, it's not just factories. It's also retail jobs being lost due to sales moving online to retailers led by Amazon (NASDAQ: AMZN), which employs about 200,000 people, but well less than the combined total of the retailers it's displacing.

Amazon uses a mix of humans and robots in its warehouse. Image source: Amazon.

Where are all the jobs going?

Appearing on the Pod Save American podcast hosted by a group of his former aides, Obama told Jon Favreau, Jon Lovett, Dan Pfeiffer, and Tommy Vietor, that the robots are coming. It wasn't presented as a rebuff to Trump, just as a statement of truth, delivered by a man who no longer has to run for office.

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"The fact is and the data shows this, the jobs that are going away are going away primarily due to automation," he said. "Automation is relentless and it's going to accelerate."

In the Jan. 19 podcast, Obama cited examples including the potential for driverless Uber vehicles along with office workers being displaced when their work becomes automated. He laid out that this is not just an issue involving factory jobs, but multiple segments of the employment market.

"You saw what happened to retail stores sales this past Christmas. Amazon and online sales is killing traditional retail, and what's true there is going to be true throughout our economy," he said. "We are going to have to start thinking about where do jobs come from and how much government involvement we want in the marketplace."

Facts back up Obama

What Obama said is supported by numbers from Rice University's Moshe Vardi. The professor of computational engineering has written about how manufacturing employment has been falling for more than 30 years, while U.S. manufacturing output is near itsall-time high.

"Job losses due to automation and robotics are often overlooked in discussions about the unexpected rise of outside political candidates like Trump and Bernie Sanders," said Vardi in a July 2016 press release. "U.S. factories are not disappearing; they simply aren't employing human workers."

What we want to hear vs. what we need to hear

A president with just hours left in office has a luxury that current politicians do not. He doesn't t have another election to win so he can stop peddling easy answers.

Obama acknowledged that tougher negotiations with Mexico or China might bring some jobs back for the short term, but that's clearly not the underlying problem. What the current administration needs to deal with is that automation and robots have changed the nature of work. That change might be delayed in some cases because foreign workers are cheaper than automating, but that's really just a question of time.

The current administration has a choice when it comes to jobs. It can focus on short-term victories that won't change the ending or it can look at the more complicated question of how to evolve a workforce for the jobs that will exist tomorrow not the ones from today and yesterday.

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Daniel Kline has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Amazon.com. The Motley Fool has a disclosure policy.