Automation and Working Class Displacement
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In the land where oil jobs were once a guaranteed road to security for blue-collar workers, Eustasio Velazquez’s career has been upended by technology.
For 10 years, he laid cables for service companies doing seismic testing in the search for the next big gusher. Then, powerful computer hardware and software replaced cables with wireless data collection, and he lost his job. He found new work connecting pipes on rigs, but lost that job, too, when plunging oil prices in 2015 forced the driller he worked for to replace rig hands with cheaper, more reliable automated tools.
“I don’t see a future,” Mr. Velazquez, 44, said on a recent afternoon as he stooped over his shopping cart at a local grocery store. “Pretty soon every rig will have one worker and a robot.”
Oil and gas workers have traditionally had some of the highest-paying blue-collar jobs — just the type that President Trump has vowed to preserve and bring back. But the West Texas oil fields, where activity is gearing back up as prices rebound, illustrate how difficult it will be to meet that goal. As in other industries, automation is creating a new demand for high-tech workers — sometimes hundreds of miles away in a control center — but their numbers don’t offset the ranks of field hands no longer required to sling chains and lift iron.
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And despite all the lost workers, United States oil production is galloping upward, to nine million barrels a day from 8.6 million in September. Nationwide, with a bit more than one-third as many rigs operating as in 2014, production is not even down 10 percent from record levels.
Some of the best wells here in the Permian Basin that three years ago required an oil price of over $60 a barrel for an operator to break even now need about $35, well below the current price of about $53.
Much of the technology has been developed by the aviation and automotive industries, along with deepwater oil exploration, over more than a decade. But companies drilling on land were slow to adapt until oil prices crashed and companies needed to get efficient quickly or go out of business.
All the big companies, and many smaller ones, have organized teams of technicians that collect well and tank data to develop complex algorithms enabling them to duplicate the design for the most productive wells over and over, and to repair valves and other parts before they break down.
The result is improved production and safety, but also a far smaller work force, and one that is increasingly morphing from muscle to brain power.
Pioneer Natural Resources, one of the most productive West Texas producers, has slashed the number of days to drill and complete wells so drastically that it has been able to cut costs by 25 percent in wells completed since early 2015. The typical rig that drilled eight to 12 wells a year just a few years ago now drills up to 16. Last year, the company added nearly 240 wells to its Permian Basin inventory without adding new employees.
The problem with automation is not its existence per se. After all, the search for greater efficiency has existed since the beginning of the Industrial Revolution. The problem with automation today is that as opposed to previous eras where automation might cause short-term displacement but would absorb those unemployed workers in other jobs in a booming industrial economy, today’s era of automation leaves no hope for equally good work in an economy where work itself is being phased out. There might be space for a few workers who can adapt to tech-oriented jobs, but many of these workers cannot. This will likely cause massive social problems. There simply are millions of Americans who will never go to college. They do not have that ability or desire. There has to be good jobs that pay well for them. If we get rid of all of these jobs, as it seems that we are, then what is the future for them?
This is why I think the Trump election may be seen in the future as the first of the Automation Era. The lack of economic opportunity creates desperation, hatred, and appeals to radicalism. It leads to a greater embrace of racism, ethnic nationalism, and violence. Of course Trump has no real answer for these workers in terms of reversing automation or creating a welfare state where the loss of work doesn’t matter. But he very much had an appealing message for white working class voters who long for the better days of the past mythologized or not (and it’s a little of both) in ways that include, but is not exclusive to, stable jobs that paid well and allowed the movement of workers into the middle-class. Yes, that’s racialized too. But it also doesn’t mean that they are wrong about their own position in the economy. The endless amount of data that demonstrate growing income inequality, working-class stagnation, debt, and the fact that nearly all the economic gains of the last 20 years have gone to the 1 percent are very real things. Unemployment may be low right now, but that doesn’t mean that the economy is doing well for working people of any race. It’s not. It means they can get a low-paying job. Or probably 2 or 3 of those low-paying jobs. Working on an oil rig is not a fun job. The Permian Basin in shockingly hot and awful (I would argue it is the single worst place in the United States). This is dangerous labor. There might be good reason to automate it. But it also pays well. And when you are trying to feed your family, you will sacrifice a lot to make that happen. If you don’t feel like you can feed your family, you will do anything to lash out at those who you think are causing your life’s problems. While we might want them to do that lashing at their employers, that has proven fleeting in American history. It’s going to be others they lash out against.
These are very hard questions. I don’t have all the answers. But I do know we have to find a future for working-class Americans of all races where they are paid well for dignified labor, whatever that might be. I have no problem with Universal Basic Income except that everything in American history says that people will largely reject it as a welfare program that is unrelated to work and therefore creates dependence. UBI strikes at core American mythology. So I don’t think it is feasible or even if it is, it isn’t good enough. We need a real jobs plan to put people to work. That might mean some industrial protectionism, even while we do not reject globalism in much of our society. It almost certainly means a massive green infrastructure program that ensures that our wind energy future is built from union-made, American-produced steel. That’s just a start. But we have to support and articulate that future. Because a world without decently-paid working-class jobs is a disastrous, awful, horrible world of massive instability. You don’t want to live in that version of the United States. And you are just beginning to find out why.
In a related point, you may also find this interesting, but I found it kind of wanky.