Most Workers Have Held Off the Machines So Far
One of the scariest questions in economics is whether human labor will someday be made obsolete by machines. Consultants and academics put out reports telling you how likely you are to lose your job to a robot. Economists argue back and forth about whether it’s possible for humanity to go the way of the horse. Technology industry leaders boldly talk about the need to implement a universal basic income once humans are no longer needed for work.
Have the machines already started putting humanity out of a job? It’s hard to tell, because lots of things muddy the data. Aging and increasing education levels decrease the amount of time the average person spends in the workforce. Gender norms change, pulling women into or out of the formal economy. Long recessions can reduce employment for years. But overall, in rich countries -- those most likely to implement the latest automation technologies -- human employment has held fairly steady for the last quarter-century:
This could change rapidly, of course -- the advent of machine learning might replace humans en masse. But so far, the threat from the “rise of the robots” has been subtler. Inequality may have risen from what economists call “skill-biased technological change” -- an economy that rewards people with the smarts and training to use new technologies, while punishing those who can’t upgrade their skills. There’s also the question of whether new technology has made people’s careers more turbulent and uncertain.
In the past, the skills a worker learned on one job could fairly easily be used to do another. Whether you were selling products door-to- door, filling out paper forms in a back office or working on an assembly line, a change of job mostly meant a change in the identity of the person who wrote your paycheck. The general skills of what economists call “routine cognitive” and “routine manual” jobs were portable.
But these sorts of jobs have been vanishing. Economists David Autor and Brendan Price calculate how the amount of work that go into these sorts of tasks has changed in the U.S., and find a decline of routine work:
The categories that have gained the most are nonroutine tasks -- jobs that require people to constantly be doing something different. Anyone who has worked in the private sector probably knows this all too well already. Modern jobs require people to constantly learn how to use new apps and data sources, and many require quick thinking and flexibility rather than mechanical paper-pushing or button-pushing.
So the machines haven’t eliminated those kinds of jobs, but they do keep workers on their toes. That can make a typical workday more fun and exciting, and also more tiring and stressful. But the real danger is that it’s hurting workers by forcing them to retrain frequently, and putting them at risk of having their skills suddenly devalued.
Human capital -- the value of a worker’s accumulated skill set -- is a valuable asset, especially in the modern economy. But technological change can suddenly make human capital obsolete. Suppose you’re a financial adviser who helps wealthy clients diversify their investments. But then in the space of a few years, the invention of online trading, exchange-traded funds, robo-advisers and other financial technology makes your interpersonal skills suddenly less valuable (keep in mind that this is just a hypothetical). Your human capital has been abruptly devalued by technological change.
What do you do? You can either invest the time and effort to learn to work with the new technologies -- to “race with the machine,” as economist Erik Brynjolffson likes to say -- or you can try to retrain for a new occupation. Either way, it’s going to be a lot of time and effort, and there’s a risk your income at the end of the process won’t be as high as what you’re used to.
When the pace and direction of technological change is highly uncertain, this creates risks across the whole economy -- risks for which there is no insurance policy you can buy. It’s a personal catastrophe to work for years learning a trade, only to see it made obsolete overnight by a fancy new app. At age 25 or 30, the thought of retraining for a new, potentially better job can be a fun, exciting challenge, but for a 50-year-old worker with a mortgage and kids in college, it can be a nightmare.
Maybe this is one reason why workers in the U.S. are switching jobs less often. In an age where everyone’s skills are at risk of instant obsolescence, a job can seem like a comforting source of stability. Overall, that could lead to a reduction in economic dynamism -- as employees stop hopping from company to company, they will stop spreading technological and management know-how throughout their industries.
In any case, economists and policy makers should be thinking more about this subtle danger of technological change. If there’s one thing economists have learned about big structural shifts, it’s that people don’t adjust to them very smoothly. Careers are ruined, expectations are dashed and social ills can take hold. Even if humanity overall is still working, this is a very real way that technological change could hurt the average worker.
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