Blog Post

AEIdeas

Reason writer Ronald Bailey outlines a strong case that fears about technological unemployment are overblown. For instance: He adds needed context to the recent finding by MIT economist Daron Acemoglu and Boston University economist Pascual Restrepo that each additional industrial robot in the United States results in 5.6 American workers losing their jobs.

But even taking the high-end estimate, job loss due to robots was has been just 670,000 since 1990 while “last year some 62.5 million Americans were hired in new jobs, while 60.1 million either quit or were laid off from old ones, according the Bureau of Labor Statistics.” ​I would add that total nonfarm employment over that span has increased by nearly 40 million.

And Bailey on the basic economics that shock stories often miss:

When businesses automate to boost productivity, they can cut their prices, thus increasing the demand for their products, which in turn requires more workers. Furthermore, the lower prices allow consumers to take the money they save and spend it on other goods or services, and this increased demand creates more jobs in those other industries. New products and services create new markets and new demands, and the result is more new jobs.

Pessimists also fail to appreciate our inability to imagine what future jobs look like, a failing that stems from our inability to imagine future technology and its uses. Bailey cites research from economist Michael Mandel that in the decade since the advent of the smartphone, the “app economy” now supports nearly two million jobs.

Let me end with this bit from Bailey that quotes economist David Autor:

Imagine a time-traveling economist from our day meeting with Thomas Edison, Henry Ford, and John D. Rockefeller at the turn of the 20th century. She informs these titans that in 2017, only 14 percent of American workers will be employed in agriculture, mining, construction, and manufacturing, down from around 70 percent in 1900. Then the economist asks the trio, “What do you think the other 56 percent of workers are going to do?” They wouldn’t know the answer. And as we look ahead now to the end of the 21st century, we can’t predict what jobs workers will be doing then either. But that’s no reason to assume those jobs won’t exist. “I can’t tell you what people are going to do for work 100 years from now,” Autor said last year, “but the future doesn’t hinge on my imagination.”

​(For more on the issues surrounding automation, a relatively recent piece from the Richmond Fed is worth reading. It looks at things through the lens of how driverless vehicles might affect truck drivers.)