Automation will cause worker displacement but will also create jobs

By Steve Brachmann
November 5, 2015

robot-hamburgerConcerns over the effects of robots and job automation on the American and larger global workforce have been airing for some time, but have been ramping up in recent months. The BBC used an unpublished study to stoke fears back in August by indicating that robotic automation threatens jobs that employ 47 percent of Americans. The growing scare that robots might create a major unemployment crisis is just one aspect of the many suspicions that Western cultures seem to have of robots. The rise of autonomous vehicles and drones in the past year has contributed fodder for technophobes in their own way as well.

Of course, new technologies are disruptive and it has forced people out of work in the past. But how much of that concern is valid and how can we move forward while realizing that technological innovation cannot be stopped to prevent robotics? That was part of the subject at debate during a moderated discussion held at the Brookings Institution on Monday, October 26th, titled How Robotics Will Affect the Availability of Employment and Social Benefits. This event was preceded by the publication of a paper with the same title co-authored by Darrell M. West, vice president and director of governance studies for Brookings. That paper discusses ways of restructuring social benefits like the earned income tax credit or creating new ones, like a minimum guaranteed income for every American citizen.

Giving a stirring defense for the role of technological innovation and its ability to help humans prosper was Nick Hanauer, co-founder and partner at venture capital firm Second Avenue Partners. Questioned early by West about the 47 percent of jobs being automated according to an Oxford University study, perhaps the same one cited above by the BBC, Hanauer was adamant about the good that innovation has provided humans throughout history: “Prosperity in human societies is best understood not in the accrual of money but in how many of life’s problems have been solved by products and services available to people in that society… People who project a dystopian future reject the idea that economic arrangements are made by people.”

Advancing the argument that robotics and job automation are major hindrances to the American worker was Scott Santens, a writer and advocate with Basic Income Action, an advocacy group for basic guaranteed income benefits. In his view, the American workforce was decreasing the number of high skilled jobs available but increasing low skilled jobs, a notion that was later contested by Hanauer. “The gig economy, uber economy, zero hour contracts, it’s a very precarious form of work that’s coming, it’s just making everybody’s lives more insecure.” Santens noted the development of an artificial intelligence interface known as Amelia, made by AI technology firm IPsoft, and its ability to displace more than 200 million workers who handle IT calls.

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Technology allows companies to be more valuable with less workers. West pointed out how Google, now Alphabet Inc. (NASDAQ:GOOG), is one of the world’s most valuable companies but employs only a tenth of the number of workers of past giants of industry like AT&T and General Motors did about a half century ago. But, much like Hanauer, we need to point out some obvious problems with the theory that technological innovation is dealing irreparable harm to the American workforce. Simply stated, you cannot ignore the reality that technological innovation is a net creator of jobs, from those who create the innovation, to those who market and sell the innovations, to those who install and maintain the innovations. Focusing only on the low income workers who will be displaced by robotics, for example, creates an inaccurate picture that significantly distorts the workplace realities. Further, it is those innovation based jobs that are the high paying jobs that our economy most wants and which will pay livable wages.

Of course, the transition to an innovation economy that touches all segments of the workforce will not always be a smooth process. In industries where automation will take jobs soon, like in truck driving, those workers could use help in charting their future effectively. As Hanauer said, “We don’t know what the industries of the future will be, but 10,000 years of human history shows that it’s always something.” He cited the example of yoga workers, noting how that fifty years ago, there was no real industry for yoga instructors and yet today yoga is a growth industry. An opinion piece published this March by Forbes expands upon this, echoing Hanauer’s view that prosperity is not necessarily a measure of how many jobs are created but rather our ability to produce more with less work. It’s also shortsighted to neglect job growth in the robotics industry, which is expected to rise from $25 billion in global revenues this year up to $67 billion by 2025 and a sector where companies are reporting increased hiring activities.

Santens, doing his best to play the Luddite on this afternoon, gave perhaps the best indication of why it’s pretty pointless to rail against technology’s role in the workforce. Decrying the effects of further automation at McDonald’s (NYSE:MCD) and the idea of replacing fast food workers through automation, Santens even noted how much better it would be for the consumer if drive-thru touchscreen automation was able to obviate the tinny, sometimes badly garbled sounds coming from the speaker: “I’d be much happier with it as a customer.” Companies will pursue anything that wins over customers. Santens lept from this point to question the meaning of work itself, bringing up a statistic that 85 percent of workers aren’t engaged in their jobs and often spend a couple hours of their workday engaged in water cooler conversation and Facebook scrolling. “We’re ignoring all this work outside of this bubble, all of the unpaid work at home,” Santens said. Although the work-family balance is always a difficult one to maintain, no matter the industry, let us just suggest that the fact that people have those few hours during their workdays is due to the progress of technology. Clerks no longer have to work late hours in order to lead a life just outside of the poorhouse the way Dickens’ Bob Cratchit had to in A Christmas Carol. In fact, reading any Dickens novel should show anyone that being poor today is completely different than being poor was nearly 200 years ago and the progress of innovation has much to do with that. If Cratchit had hours to kill around the water cooler, and Scrooge let him have one, he’d do it.

Jobs and census data available from the federal government also help frame the effects of robotics on the workforce in a more moderate light. Employment projections released by the U.S. Bureau of Labor Statistics (BLS) in December 2013 indicate that 15.6 million jobs will be created in the decade between 2012 and 2022, most of those in healthcare and related industries. Outside of farming, fishing and forestry, every major occupational sector is expected to see more jobs available by the end of the decade. At the same time, population forecasts released by the U.S. Census Bureau indicate that the country’s population will grow by about 18.3 million between 2015 and 2022. Population growth may be increasing quicker than job growth, but there will be jobs for the American worker far into the future.

For those workers displaced by robotics, however, the road towards a new career is never simple and can be damaging to families relying on a breadwinner who may have to take a lower paying job in the interim while pursuing training in a new field. Technology is also more disruptive than it’s ever been; Hanauer commented that previous generations experienced far fewer technological shifts affecting major areas of employment now that the cycle of innovation has sped up. Young people today might see three or four major technological shifts of a scale that was experienced maybe once in past generations. “The only thing you can say for sure about what [today’s young people] need to learn is that they should learn to learn,” Hanauer said.

New models of education for lifelong learning were discussed as one way to ameliorate the rapid industrial changes brought on by innovation and their effects on American workers. Hanauer said that there was “simply no doubt that people should go to college twice.” Occupations requiring a postsecondary education were expected to grow faster than jobs requiring a high school diploma or less by 2022, according to the BLS employment forecast report. Santens noted that we could do more to incentivize technical education in STEM fields. Hanauer went on the offensive against trickle-down economic theory, saying that it was “wrong and backwards” to conclude that investments in education should happen only when there is growth: “Growth is a consequence of those investments.”

Some interesting ideas involving social benefits were also brought up at the discussion, including the possibility of tying less benefits to jobs, which makes some sense as job-based benefits were developed during a time when a worker could better expect to work for one employer throughout a career without being displaced by technology. West brought up experiments in other countries, specifically England, where officials have discussed tying benefits to volunteer activities. A volunteer program with benefits could help bridge the gap for a worker who cannot replace a job quickly but needs to provide for a family.

Guaranteed minimum incomes, where a government promises a basic level of income to every individual, were also discussed as a potential way of empowering workers to hold out for higher paying jobs. “Basic income gives a person the ability to seek out [purpose-driven] work and it makes them much more productive,” Santens said. Obviously, guaranteed minimum income is an easy sell for progressives, who have been focusing recently on the income inequality debate, but it’s interesting to note that many conservatives have been proponents of this idea throughout the years, including former President Richard Nixon and libertarian economist Milton Friedman. Hanauer indicated that it was “completely unrealistic” to think that a guaranteed basic income could be passed at the federal level, it might be feasible to consider implementing it at the state level. “If you care about civic innovation, move out of this place and go somewhere where stuff is happening,” he said.

The Author

Steve Brachmann

Steve Brachmann is a freelance journalist located in Buffalo, New York. He has worked professionally as a freelancer for more than a decade. He writes about technology and innovation. His work has been published by The Buffalo News, The Hamburg Sun, USAToday.com, Chron.com, Motley Fool and OpenLettersMonthly.com. Steve also provides website copy and documents for various business clients and is available for research projects and freelance work.

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  1. Craig Keefner November 8, 2015 8:29 am

    Good article