Automation could displace millions of jobs in as little as 15 years, making Americans more reliant on Medicaid. The safety net program, however, may face large cuts within the next 10 years, just as we begin to feel the greatest effects from automation’s rapid development.

Given our low unemployment rate of 4.3%, it’s difficult to imagine that in just 15 years many Americans may be out of work, but it’s possible according to a recent report.

One of the world’s largest professional services firms, PricewaterhouseCoopers, stated in March that automation may displace up to 38% of all American jobs within that timeframe across several industries including wholesale, retail, manufacturing, storage and transportation, among others.

The company assessed the automatability of work tasks and even workers themselves (education and training levels), while also reviewing previous studies. Its conclusion resembled that of another assessment, published in 2013 by researchers at Oxford University, which found that computerization could eliminate 47% of American jobs by the early 2030s.

PwC seemed optimistic in its report, as it expects technological advances to simultaneously create some jobs for which workers would have to acquire new skills.  Researchers theorized that productivity improvements would lead to higher-paying jobs, and people employed in those fields would then have more expendable income to spend in non-automated areas, creating employment there as well.

The net effect, however, of the shuffling of all those jobs is even more difficult to predict according to the company. In other words, the firm could not say whether the number of jobs created would offset those lost.

Skeptics have questioned the validity of such reports predicting automation’s impact.  Much like when climate change was first discussed, naysayers deny that automation will be disruptive, citing similar technological advances – computerization and the Internet – that revolutionized the way we work and live but also added employment opportunities.

Even if the optimists (or naysayers) are correct and automation creates jobs, it’s at least possible that the sum total will be negative.  That’s because the very definition or aim of automation, unlike other technological innovations, is to replace human workers with machines, systems, or processes to create greater production efficiency, leading to more profit.

Automation’s Greatest Impact Is Yet To Come

Many companies have opted to use human labor instead of investing in such technology, citing high start-up costs. They’re waiting for early adopters in their fields to test the waters and perfect technology before investing in it themselves.

That strategy can only work for so long, though, because as competitive as our markets are, companies that are unwilling to invest in efficiency technology may soon find themselves at a financial and profit disadvantage. That could cause their stocks to lose value.

Take the example of the retail industry, which employs about 16 million Americans (one in 10 of those working). Amazon, which quietly came onto the scene as an online book seller in 1994, has grown into the world’s largest cyber retailer and is beta-testing physical stores that operate with only a few employees.  Now, the online behemoth is celebrating its most recent purchase, Whole Foods.

Whether Amazon plans to apply its hyper-efficient productivity strategy to its newest acquisition, displacing some workers, remains to be seen, but it’s safe to say that other grocers, including large-scale retailers like Walmart, Kroger, and Target, must improve efficiency to stay competitive.  If hyper efficiency allows Amazon to offer items at a lower price to consumers, its competitors will have to follow suit.

A study by Cornerstone Capital Group stated last month that 47% of retail jobs could be eliminated within 10 years due to automation development.

So it isn’t a matter of if, but when, automation will create greater efficiency and possibly lead to a slimming of jobs in many fields.  We can choose to look the other way and hope for the best (similar to the administration’s approach to climate change), or we can prepare for a future we know is coming.

Policy Implications to Consider

The PwC report wisely recommends that governments prepare for potentially rising unemployment by considering social programs that could defray costs for citizens. It’s sound advice that our national leaders should heed, starting right now with the health care debate.

No one knows how disruptive automation will be, but if it increases the unemployment rate even moderately, more Americans will depend on Medicaid. We should not curtail the program or its funding, especially just as automation’s greatest impacts are felt. That is, however, just what GOP leaders appear to be doing with the Senate health care bill.

The nonpartisan Congressional Budget Office reported that the bill calls for $772 billion less in funding for Medicaid through 2026, a 25% reduction as compared to what the program would receive under current law. By 2036, when automation advances would be well underway according to PwC, Medicaid spending would be reduced even further, taking a 35% federal funding reduction.  In other words, we’ll have comparatively fewer funds to aid greater numbers of people living close to the poverty level.

We also must be strategic in reforming the tax system, specifically in determining who should benefit from planned tax breaks, another key component of the Senate’s health care bill.  If signed into law, it would provide large tax cuts for the wealthy, the very people who will benefit most from automation’s advances (think of how investors and corporations will stand to gain higher profits as efficiency is improved).

Ironically, those whose jobs will be displaced by technology – the poor and elderly, who may not have the education or training required for new jobs created – would be struck twice if the health care legislation goes through: first, because they would be most vulnerable to job cuts due to lack of education, and second, because Medicaid’s safety net may not be available to them due to decreased funding for the program.

So, while it’s human nature to focus mostly on immediate consequences when discussing health care policy, the employment horizon ahead is arguably uncertain, and we need to safeguard against negative effects by bolstering social safety net programs like Medicaid.