Automation and Employment
Although technology has been a net job creator, fears about unemployment have been raised throughout history due to automation. We believe that with every wave of innovation, the conventional wisdom is reaffirmed: “This time, it’s different.”
Automation and unemployment
Modern robots are the latest chapter of a long story about technology replacing humans. Recent advances in artificial intelligence, much like the past, are leading some to predict a future in which humans won’t be able to find work. However, current data doesn’t support this conclusion. The economic history of automation shows that it does not replace human labor but complements it.
(The loss of certain jobs or industries leads to new ones). It is contradictory to claim that automation causes joblessness. However, we have had significant and continuous automation over many decades. We did not experience a steady rise in unemployment. The notion that automation is increasing exponentially and causing joblessness is not supported only empirically.
Although it is possible for breakthroughs to occur at any moment, there are still reasons to doubt that automation will lead to mass unemployment.
Economists have documented the effect of a recession upon the growth of automation. It has been shown that automation doesn’t grow in steady increments. When there are strong incentives to save money, businesses are more likely than others to automate after suffering economic shocks.
Researchers from the University of Rochester searched through 87 million job postings online before and after the Great Recession. Employers in the hardest hit cities were finding that they were replacing their workers with more skilled workers and labor-saving technology. According to a Century Foundation report, “robot intensity” rose in 2009 after the Great Recession. This was especially true in the manufacturing sector.
Although automation increases can be beneficial for educated workers, and may help stimulate the economy in some cases, studies also show that new technology tends not to benefit low-wage workers.
The importance of automation.
Automating can help increase wages.
Automating non-market activities can make them commercial.
We believe that many industries have illustrated these points, and will continue to do so. For example, during the 30-year period ending in the early 1970s, the percentage of farms equipped with tractors grew from around 20% to more than 80 percent.
The shift from mules to tractor led to an increase in labor productivity or the output per hour. To produce 100 lbs of lint cotton, a farm needed 42 hours of labor and almost half an acre of ground. thirty years later, in 1975, farms using tractors produced the same amount with just 2.5 labor-hours and 0.25 acres of land.
Accelerating the pace of change
As mentioned above, economists are skeptical about fears related to technological unemployment. They point to data that indicates this scenario is not likely to happen. Thou Technologists and futurists agree with these conclusions but they question the validity of historical trends as a guide to what’s next. The rate of technological change has been greatly underestimated in the past and its impact on the economy.
Two economists evaluated the future of automation in the mid-2000s and concluded that driving in traffic would prove difficult to teach a computer. A review based on fifty years of research concluded human-level speech recognition was “elusive”. We now know that these predictions are wrong today due to recent advancements in artificial intelligence. Artificial intelligence has beaten professional gamers and has sparked a new era of digital innovation and is now piloting self-driving cars. Its impact can be felt across a variety of industries including transportation, logistics, finance, and health.
This technology is the driving force behind much of today’s automation and has the potential to become a disruptive force in the future. Modern automation is replacing cognitive work, which is unlike the Industrial Revolution’s automation. Although artificial intelligence is certainly improving, the real advances in modern technology are not in manual labor.
It is in roles like bookkeeping and accounting that artificial intelligence is most useful. Some believe that machines are increasingly reflecting human cognition and this could have many (potentially harmful) consequences for our knowledge-based economy and service economy.
Another point of view from researchers about automation.
Although it is possible for breakthroughs to occur at any moment, there are still reasons to doubt that automation will lead to mass unemployment.
Economists have documented the effect of a recession upon the growth of automation. It has been shown that automation doesn’t grow in steady increments. When there are strong incentives to save money, businesses are more likely than others to automate after suffering economic shocks.
Researchers from the University of Rochester searched through 87 million job postings online before and after the Great Recession. Employers in the hardest hit cities were finding that they were replacing their workers with more skilled workers and labor-saving technology. According to a Century Foundation report, “robot intensity” rose in 2009 after the Great Recession. This was especially true in the manufacturing sector.
Although automation increases can be beneficial for educated workers, and may help stimulate the economy in some cases, studies also show that new technology tends not to benefit low-wage workers.
Daron Acemoglu of the Massachusetts Institute of Technology said that automation has been a key driver of inequality. Acemoglu was a co-author of a study that was published in May. It showed that automation creates a “prosperity hole” that favors high-skilled workers over lower-skilled ones.
Low-wage workers are more vulnerable to job loss and wage depression from automation. They also suffered the greatest job losses as a result of shutdowns. Higher-wage workers are more likely than lower-wage workers to be able work remotely during the pandemic. However, lower-wage workers – a disproportionately large of which are Black or Hispanic– are more vulnerable to being laid off due to shutdown orders.
Robotics will be careful to point out that artificial intelligence technology isn’t smart enough to cause massive layoffs. It can be costly to invest in new AI technology, which is something many businesses will not have the resources and time to do.
Acemoglu stated that AI has the “tremendous potential to make humans more productive” but not replace them. This is if society adopts a human-centric approach when it comes to technological advancements. However, without the political will to ensure that those who lose their jobs are compensated by training them for new positions, the consequences of automation could be catastrophic. A pandemic that already affected those workers most severely could leave a legacy of unemployment.
Acemoglu stated that automation is not a problem. “We have done this in a significant way over the past 30 years. The pandemic will only exacerbate this.”
The impact of modern technology and automation on our lives is obvious. However, it is also true that it has radically changed our lives and economy.
