Is Silicon Valley Automating Our Obsolescence? : All Tech Considered Silicon Valley has created mind-boggling amounts of wealth. Entire industries have been invented here. Billionaires are minted annually, but inequality is rising rapidly and the middle class is thinning out. Could the same technology that's making so many so rich undermine the labor market?

Is Silicon Valley Automating Our Obsolescence?

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From NPR News, this is ALL THINGS CONSIDERED. I'm Audie Cornish.


I'm Melissa Block. It's Monday and time for All Tech Considered.


BLOCK: This week, our tech team is focused on the technology-driven economy of Silicon Valley. It's a part of California that's creates mindboggling amounts of wealth: smartphones, search engines, and cars that drive themselves are all designed there. Billionaires are minted annually and inequality is also rising rapidly. Many economists say California's tech industry and the products it creates provide a glimpse into our nation's collective future. But is it a future we want?

Here's NPR's Steve Henn,

STEVE HENN, BYLINE: Before Silicon Valley was called Silicon Valley it was known as the Valley of Heavenly Delights. [POST-BROADCAST CORRECTION: It was known as the Valley of Heart's Delight.]

In the mid '50s this place was an agricultural paradise. Leslie Berlin is a historian at Stanford who specializes in the valley. I met her last week at a donut shop in Mountain View.

LESLIE BERLIN: One of the reasons I love studying the history of Silicon Valley is it's like someone took the history of the United States and pressed fast forward.

HENN: In the 1950s agriculture was king. In the '60s, manufacturing exploded. And then in the 1980s, it collapsed.

BERLIN: And then you are in the sort of knowledge economy.

HENN: In the U.S., these transitions took place over centuries.

BERLIN: And in Silicon Valley, you see it happen over a period of 40 years. Four decades and you've gone from agriculture to information economy. And it just - it makes your head spin.

HENN: We met here at this specific donut shop in Mountain View because it's right across the street from Intel's first silicon chip factory, or FAB.

BERLIN: That's right. This is where they started building their chips. This is where Intel first started getting inside of all of the machines.

HENN: From 1968, when Intel launched this FAB until the mid '80s, more than 200,000 manufacturing jobs were created right around here. These were good jobs - really good jobs.

BERLIN: The mobility that these workers could experience was enormous. The demand for employees was so high that, in 1979, the annual turnover at a semiconductor, a manufacturing facility, was 50 percent.

HENN: To keep employees happy and on the job, Intel let them buy stock at a 15 percent discount. And then in the '80s, global competition, automation, rising prices for labor and real estate drove chip manufacturing out of Silicon Valley. By 2008, Intel closed its last FAB in Silicon Valley and now you can't find these big plants like that anywhere near here.

What happened to manufacturing here isn't really unique; it happened all across this country. But what happened next is different. The same venture capitalists that helped build Intel and Apple began betting on software and design. The knowledge economy exploded. The Internet was created then commercialized.

TYLER COWEN: Many more people are becoming quite wealthy which is great, but there are a lot of people stuck in only OK service jobs.

HENN: Tyler Cowen is an economist at George Mason University.

COWEN: They struggle to pay the rents of Silicon Valley, so there is a thinning out of the middle-class.

HENN: Cowen is the author of the book "Average is Over." He says someone who, 30 years ago, could get a job here at a chip FAB, is now probably stuck at Starbucks. And this is driving more income inequality here. Cowen says it's only going to get worse.

COWEN: I think that's exactly right. You could say once again you could say the future is happening first in California.

HENN: Cowen believes technologies emerging now in Silicon Valley - things like artificial intelligence, robotics and self-driving cars - will soon begin replacing what are now solid middle-class jobs; even jobs in the knowledge economy aren't safe.

Last year, I took a ride in a self driving car.

So now the car is driving itself.

And while it was amazing, you have to wonder what's going to happen to taxi drivers or long-haul trucker drivers. Last week, I interviewed an entrepreneur who wants to replace my financial advisor with a robot. And at the University of California San Francisco administrators are investing millions in a robotic pharmacy.

COWEN: That's right.

HENN: Tyler Cowen.

COWEN: Those are great examples. They even now have artificial intelligence programs which can grade essay exams and seem to do it pretty well.

HENN: Cowen says very few jobs are safe. At UCSF, a robot fills prescriptions for hundreds of patients automatically. In the next room, pharmacists in sterile bunny suits - like Jon Hutchinson - supervise a robot named Riva who mixes chemotherapy treatments.

JON HUTCHINSON: It's more accurate. And it's also what we think is going to be safer for the patient.

HENN: Administrators here admit these machines could allow their hospital to get by with fewer pharmacists in the future. And some economists like Cowen argue that adding value to what computers and robots do automatically might just be the only path to job security for a shrinking middle-class.

Steve Henn, NPR News, Silicon Valley.

BLOCK: You can follow all of our stories about the Silicon Valley economy at

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