Winning the Hardware Software Game Winning the Hardware-Software Game - 2nd Edition

Using Game Theory to Optimize the Pace of New Technology Adoption
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A copy of the full analysis can be downloaded by clicking on the link at the bottom of this blog entry.

 

The degree to which US jobs in the future will be replaced by automation is a question that has been debated for decades. More recently, perhaps during the past decade, it seems that more people believe that a larger portion of jobs will be lost to automation, particularly unskilled jobs.  And in the last few years, especially with the advent of Google’s driverless car, it seems that everyone is talking about the potential for a (nearly) jobless future for all but the most skilled, due the imminent automation of a larger and larger portion of jobs.

This series of blogposts is my attempt to better understand the extent to which future jobs in the US will be complemented by or substituted for technology and automation.

After reading through some of the literature on the subject, I found that there are two general strains of thought on the degree to which future jobs in the US will be replaced by automation (software, computers, robots, etc.): (i) This time is no different, and (ii) this time is different.

This Time Is No Different

The “This Time Is No Different” view looks at historical periods when (waves of) new technologies have been introduced into society. They note that when this has happened in the past, there has often been periods of dislocation and adjustment.  However, over the longer run, the new technologies have always resulted in more job gains than losses.  And this time is no different.  According to this view, the increasing prevalence of various forms of automation in society might very well lead to some short-term dislocations and periods of transition and adjustment.  However, over the longer run, automation will end up serving as a complement to labor, rather than as a substitute for it, and jobs will proliferate.

For example, David Rotman, in “How Technology Is Destroying Jobs”, describes this process as follows.

At least since the Industrial Revolution began in the 1700s, improvements in technology have changed the nature of work and destroyed some types of jobs in the process….

While such changes can be painful for workers whose skills no longer match the needs of employers, Lawrence Katz, a Harvard economist, says that no historical pattern shows these shifts leading to a net decrease in jobs over an extended period. Katz has done extensive research on how technological advances have affected jobs over the last few centuries—describing, for example, how highly skilled artisans in the mid-19th century were displaced by lower-skilled workers in factories. While it can take decades for workers to acquire the expertise needed for new types of employment, he says, “we never have run out of jobs. There is no long-term trend of eliminating work for people. Over the long term, employment rates are fairly stable. People have always been able to create new jobs. People come up with new things to do.”

 

This Time Is Different

The “This Time Is Different” view acknowledges that in the past the introduction of new technologies has always led to more job gains than losses.  However, this view argues that this time is different, given the advancements in artificial intelligence, robotics, and automation.  From this perspective the US will turn into a dystopian society, consisting of a permanent underclass of unskilled workers, together with an upper class of skilled workers and owners of technology.  Supporters of this view contend that the Middle Class has already been hollowed out, and automation will continue to replace a significant portion of unskilled jobs. This process will lead to an increasing number of workers at the bottom end of the skill distribution competing for the jobs available, ultimately suffering a subsistence-level existence.  Skilled workers, on the other hand, will benefit from higher productivity that comes with the development of new technologies, and they will continue to enjoy the associated higher wages, while technology owners will reap outsized returns.

For example, a NASA employee who was polled for a recently published Pew Research Center study, “AI, Robotics, and the Future of Jobs“ has this opinion about the future of jobs:

Mark Nall, a program manager for NASA, noted, “Unlike previous disruptions such as when farming machinery displaced farm workers but created factory jobs making the machines, robotics and AI are different. Due to their versatility and growing capabilities, not just a few economic sectors will be affected, but whole swaths will be. This is already being seen now in areas from robocalls to lights-out manufacturing. Economic efficiency will be the driver. The social consequence is that good-paying jobs will be increasingly scarce.”

The Pew Study further notes:

For those who expect AI and robotics to significantly displace human employment, these displacements seem certain to lead to an increase in income inequality, a continued hollowing out of the middle class, and even riots, social unrest, and/or the creation of a permanent, unemployable “underclass”.

As an additional note, much of the This Time Is Different (TTID) view sees a significant portion of the current unemployment as being due to the increasing use of automation in the workforce over the past few decades. TTID advocates then project the current state of the economy (high unemployment and decreasing standards of living for middle and lower class workers) into the future.

I have thus established that there are two perspectives on the impact of new technologies on future labor markets:

•  The “This Time Is No Different” view suggests that based on what has always happened in the past, we can expect new technologies in the future to eventually create more jobs than they eliminate.

•  The “This Time Is Different” view suggests that further improvements in technology will further exacerbate the current trend toward a bifurcation of society, eventually resulting in an unskilled lower class and a skilled upper class.

 

 

Go to Automation of Jobs, Part 2: The Current Global Environment Is Unique

Go to Automation of Jobs, Part 3: The Nature of Jobs Has Changed over Time with the Introduction of New Technologies

Go to Automation of Jobs, Part 4: What Automation Can and Cannot Do

Go to Automation of Jobs, Part 5: What Will the Future Hold for Jobs?

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