Is de Blasio’s “robot tax” a good idea?

A pensive robot.
A pensive robot.
Phonlamai Photo/Shutterstock

Is de Blasio’s “robot tax” a good idea?

Andrew Yang isn’t the only New Yorker bringing automation to the presidential campaign trail.
September 8, 2019

New York City Mayor (and Democratic presidential primary candidate) Bill de Blasio has a plan to combat the effects of workplace automation, and while it’s not as inspiringly named as Andrew Yang’s $1,000 monthly ”Freedom Dividend,” the proposal is aimed at the same issue that Yang has built his campaign around: the loss of jobs due to automation.

Late last week, in an op-ed in the tech magazine Wired, de Blasio unveiled a “robot tax” plan to protect workers. It’s one of just a few major policy proposals in his platform, which includes a workers’ bill of rights, a wealth tax and a guarantee of “equity of resources and pay” for women’s and men’s national sports teams.

And while de Blasio has failed to gain traction in polls and with donors – and has even suggested that his campaign could end next month – experts say that his automation plan is a welcome addition to the primary campaign. “Kudos to the mayor for tackling this,” Jonathan Bowles, executive director for the New York-based think tank Center for an Urban Future, told City & State. “This is an issue that the next president absolutely needs to get ahead of. There's going to be huge dislocation in jobs as a result of automation, and we need a national strategy for that.”

De Blasio’s plan consists of a few central points, one of which would establish a new national office, the Federal Automation and Worker Protection Agency, which would create a permitting process for companies that want to increase automation in a way that would displace workers. Companies would be required to either offer displaced workers new jobs with equal pay or appropriate severance packages.

The highlight of the plan may be the so-called “robot tax,” a tax on large companies that automate away jobs and fail to provide workers with replacement positions. Companies that fall into that category would be required to pay five years of payroll taxes up front for each eliminated worker. De Blasio wrote that revenue from the tax would go towards creating “a new generation of labor-intensive, high-employment infrastructure projects and new jobs in areas such as health care and green energy that would provide new employment.”

In addition to the robot tax, the plan mentions closing tax loopholes that make it beneficial for some corporations to invest in automation. Companies save on payroll taxes, for example, when they replace humans with machines.

Yang has raised some eyebrows with his plan to give Americans $1,000 per month aimed in part at combatting the effects of automation, and Mark Muro, a senior fellow and policy director of the Metropolitan Policy Program at the Brookings Institution, said that the idea of a robot tax has also garnered some criticism in the past. When Bill Gates suggested a robot tax, a former economic advisor in the Obama administration dismissed it as “profoundly misguided,” as The New York Times has noted.

“Even mentioning a robot tax is usually viewed as crazy and unacceptable,” Muro said, but he suggested that if it is structured properly, something like that could work. “It shouldn't be dismissed as completely beyond the pale.”

Still, the challenges of technological shifts in the workplace go beyond robots. “It's probably a little narrow,” Muro said of a robot tax. “Automation per se, or robots per se, are part of a whole continuum of technology that is affecting the world of work. So it may be too narrowly focused, when really it's not just robots, but also all kinds of forms of automation, as well as the use of software in the office, and new forms of (artificial intelligence that) are all going to have tremendous advances in the next decade.”

And while Bowles commends de Blasio for being another candidate in the Democratic presidential primary to take on the issue – joining Yang and South Bend, Ind. Mayor Pete Buttigieg – he suggested that the New York City mayor’s presidential ambitions don’t need to come to fruition in order for him to lead on this front.

“I think that the mayor should start with New York City. There's so much here in the five boroughs that the mayor can do, and I think the mayor could be a national leader in having a city strategy for preparing the workforce for automation,” Bowles said. “I have questions about a robot tax, but I think that there may be parts of the mayor's plan that absolutely make sense. I'd just love to see him focus on a human capital strategy and doing it in New York.”

That “human capital strategy” might involve training workers to keep up with the changing economy, and it doesn’t require the mayor to introduce a new tax. Bowles said that an effort to deal with worker displacement from automation should focus not on a robot tax, but a massive new investment in “upskilling” and lifelong learning. “People are going to have to buttress their skills, they're going to have to be adding new credentials and certificates and badges and just continuously bolstering their skills, as technology changes,” he said. “There's no need to wait until 2021. I think that the mayor can absolutely lead on this with a New York City automation preparation plan.” 

A report by Bowles’ Center for an Urban Future found that New York City is less susceptible to automation than the nation as a whole, though by no means immune to its effects. The study reports that about one in 10 jobs in the city could be largely automated with existing technology. In lower and middle-income occupations, automation is also likely to have a significant impact. “Occupations where there's a lot of repetitive tasks are ones that are vulnerable to automation. So certain bookkeeping functions, the kind of backend jobs at a lot of restaurants, cashier positions in retail and food service – all of those are highly automatable,” Bowles said. “Home health aides and others where there's direct human connection, where communication is key, those I think are actually going to still stick around in a lot of ways.”

A Brookings Institution report co-authored by Muro found that 20.5% of New York City metropolitan-area jobs are considered at high-risk of automation, compared to roughly 25% across the country. Proposals like a robot tax or Yang’s universal basic income alone are not equipped to address the coming shift, Muro said. “I think neither are as comprehensive as needed. And, in fact, much of what we need is not so much specific, super-exotic responses to quote-unquote robots, but to rebuild education, social services and labor-market protections.” 

Automation could move closer to the forefront as 2020 approaches. While de Blasio has still yet to catch hold in the presidential primary, candidates leading in the polls, including former Vice President Joe Biden and Sen. Kamala Harris have also raised the issue. And Muro said that concern over the threat to blue-collar jobs appeals to both Democrats and Republicans. “I think that this is secretly one of the big issues of the campaign, and that this is what people are sitting around talking about around the dinner table,” he said.

Even a FOX News pundit lauded de Blasio on the effort. “My praise of you on this question is totally sincere,” Carlson told de Blasio during an appearance on his FOX show last week. “Very few people are taking this seriously. Andrew Yang is one of them, you’re another, I can’t think of many others who are. So God bless you.”

Annie McDonough
Annie McDonough
is a tech and policy reporter at City & State.
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