It’s hard to ignore the impending doom illustrated in every sci-fi classic since the 1950s, but realistically speaking, should we be concerned with a rise in automation? Is the human species one short circuit away from a robot-ruled world? Probably not, at least not in our lifetime, but there is cause for concern when it comes to the global job market. Headlines proclaiming swaths of hardworking, middle-class citizens will be replaced by a robotic arm dance across nightly news casts, most of which feature fearmongering experts dishing out job advice they will likely never have to use themselves. The current sluggish state of industry in Canada does nothing to quell such fears, either. Rather, it puts an all too real face to the infamous boogeyman lurching in the dark. The fear is real, but is it warranted? Perhaps so, but it doesn’t have to be.
Quick History Recap
Automation has been replacing menial human labour for centuries. In fact, we don’t have to scour history textbooks to find poignant examples of new technologies replacing tasks once executed by people. Think turn-of-the-century farming equipment that vastly improved agricultural production, but also drastically shrunk sector employment. Ponder the Luddite movement of the early 19th century, in which English textile artisans destroyed textile production machines in protest against automation.
Naturally, stark unemployment followed both technological events, but rates eventually sorted themselves out through redistribution in emerging sectors. This phenomenon is something David Autor reiterates in his essay, Why Are There Still So Many Jobs? The History and Future of Workplace Automation, when he says, “although the unemployment rate fluctuates cyclically, there is no apparent long-run increase.” In fact, prediction theory suggests that economists may study the duration of fluctuating highs and lows, as well as associated re-stabilizing costs, leaving room to wonder how this next phase of automation will unfold.
By analyzing fluctuating rates of unemployment throughout the last several decades, Autor explains that automation has not eradicated jobs because it complements labour by raising output in ways that increase demand for labour in similar sectors.
“Journalists and even expert commentators tend to overstate the extent of machine substitution for human labor and ignore the strong complementarities between automation and labor that increase productivity, raise earnings, and augment demand for labor,” stated Autor.
To illustrate this point, let’s turn back to the rise in agricultural technology. Turn-of-the-century technology pushed thousands of individuals (almost 4 percent per decade since WWII) away from once highly demanded farming jobs, but tech progress has also transformed the agricultural sector into a well-oiled production machine. In fact, a recent article in the Economist found that a rise in “smart farming” has allowed modern-day farmers to leverage such innovations as intuitive irrigation systems, computer-run fertilizer systems, and animal fitness trackers. Improving technology in agriculture means farmers can more accurately and sustainably produce consumer goods, helping to reduce production costs and increase benefits to consumers. More importantly, advancements in tech carves out time for brilliant minds to address the inevitable influx of hungry mouths to feed, while considering Earth’s dwindling resources.
In short, it is important to consider the impact of technology on the marginal product of labour, as well as on the economies on leisure, when talking about agricultural development. Modern-day farmers not only require less labour to produce similar, if not higher, levels of output, but technology also means greater output efficiency in the job sector, lending to improvements in overall quality of life. I would argue that several sectors of employment benefit in similar capacities.
The Rise of AI, Economic Growth, and Inequality
If we’re analyzing the world from the abovementioned vantage point, then it would seem we have nothing to worry about. Unemployment will ebb and flow as technology continues to advance: Robots will replace some jobs, but new opportunities will come along to soak up the unemployment pool. Adding to technology’s defence, GDP growth can be attributed to technological growth, something that Georg Graetz and Guy Michaels vouch for in their paper, Robots at Work.
Advancements in artificial intelligence, such as robots, contributed to annual GDP growth by 0.36 percentage points between 1993 and 2007, stated the paper. Graetz and Micheals’ data set was comprised of 17 countries, including Germany, Denmark, and Italy, with all three of these locations experiencing a substantial increase in robot density by comparison.
On the other hand, Carl Frey and Michael Osborne are troubled by the rise in AI. In their journal— The Future of Employment: How Susceptible are Jobs to Computerisation?—they cite 47 percent of total US employment as highly susceptible to automation.
Regardless of such diverse perspectives, it is imperative to remember that elasticity between GDP and GDP job growth are not homogenous. Meaning, a nation’s annual GDP may be on the rise, and it may be in some capacity attributed to technological growth; however, a bump in GDP does not necessarily equate to simultaneous job growth. Our main concern should be distribution of wealth, not exclusively overall GDP growth.
Is automation good or bad? It’s clear to see the jury’s still out on that question. Consequentially, there are countless arguments favouring both sides of the spectrum, and thoughtful economists are hard pressed to draw definitive conclusions either way. However, several prominent economists do agree that new and complicated issues, such as inequality, are on the rise. Meaning, we would be naïve to assume these compounding issues will not have a profound effect on society.
Returning to Autor’s piece, he discusses labour and income inequality as a recent phenomenon that coincides with advancements in tech: “In the last few decades, one noticeable change has been ‘polarization’ of the labor market, in which wage gains went disproportionately to those at the top and at the bottom of the income and skill distribution, not to those in the middle.”
Autor explains that after the late 1970s, the cyclical movement of jobs due to automation began to slow, and in some cases reversed. As illustrated in figure one, certain jobs grew rapidly between 1980 and 2010, while other occupations rapidly diminished or changed direction all together. Essentially, Autor is saying that employment opportunities began to diverge, (skilled, high-paid professions on one end, low-paid personnel services on the other end) as a large percentage of the uneducated, middle-class labour pool continued to lose their jobs. With limited education to meet the intellectual demands of the high-paid labour force, the middle-class are forced into lower paying positions.
If we’re living in a polarized reality, how is the rise in automation to blame? To answer this question, Autor draws on Polanyi’s paradox, which essentially means that human beings intuitively understand a set of specific tasks that are difficult to translate into computer code. With Polanyi’s paradox in mind, Autor’s polarized labour force begins to make sense because employment opportunities have essentially moved into one of two camps, abstract and manual. Employees in either camp are meeting a labour demand that a computer cannot adequately address.
The first camp, abstract labour force, refers to employees with high levels of education, problem-solving capabilities, intuition, creativity, and persuasion. The abstract labour force includes jobs that “place a premium on inductive reasoning, communication abilities, and expert mastery,” stated Autor. These include technical, managerial, and professional occupations. The second camp, coined manual labour force, “includes tasks requiring situation adaptability, visual and language recognition, and in-person interactions.” Manual tasks are associated with serving jobs, cleaning and janitorial work, in-person health assistance by home health aides, and security and protective services.
Eduardo Porter, with the New York Times, reverberates this sentiment, citing the rise in AI as responsible for the decline of national income per capita in the U.S.
“Despite the spread of information technology, robots and artificial intelligence breakthroughs, overall productivity growth remains sluggish,” stated Porter.
The problem? Monopolies are employing a minimal level of abstract employees at a decent rate, while maintaining a relatively stable level of productivity growth. Meanwhile, middle-class jobs are rendered virtually obsolete, pushing an influx of the labour pool into manual jobs.
“Semiconductor companies like Intel or NXP are among the most successful in the Phoenix area. […] In 2017, the semiconductor and related devices industry employed 16,600 people in the Phoenix area, about 10,000 fewer than three decades ago,” explained Porter.
Canada is not immune to this phenomenon. Monopolies that leverage artificial intelligence are not only widening inequality and facilitating job polarization, but thanks to their deeply rooted ties with Canadian political institutions, their actions are often destabilizing to Canada’s relatively small economy. Case and point: SNC Lavalin.
In their journal, The Race Between Man and Machine, economic thought-leaders, Daron Acemoglu and Pascual Restrepo draw on the frameworks developed above. They state that not only are we experiencing job polarization, but that high-skilled employees have a comparative advantaged over the burgeoning low-paid labour force. Developing an economic model that encompassed a diverse range of occupational skill sets, Acemoglu and Pascual hypothesized that new tasks created through automation would favour high-skilled workers because of their education and experience in solving complex tasks. Based on their results illustrated in figure 4, occupations with new job titles tend to employ individuals with more schooling.
On the other hand, their research also found that as technology advanced and new tasks standardized processes, productivity performance by less skilled workers increased. In other words, job polarization leading to inequality will eventually return to its equilibrium.
“These observations suggest that inequality may be high following a period of adjustment in which labor share first declines (due to increases in automation), and then recovers (due to the introduction and later standardization of new tasks),” said Acemoglu and Restrepo.
Despite this fleeting glimmer of hope, it is essential to maintain discretion. Inequality and unemployment will be hard pressed to sort themselves out in the face of oligarchical institutions. Social and political constraints also have a heavy hand in the game, playing their cards at the detriment of low-to-middle income communities. In short, automation does not have to be the demise of employment opportunities for human beings, but if we’re not careful, it will be a devastating reality for much of the population.
“The view that we should not worry about any of these things and follow technology to wherever it will go is insane,” stated Daron Acemoglu, as cited in the New York Times.
Effective Policy and the Future of Jobs
Robots may not be overthrowing the human race anytime soon—although with advancements in machine learning you never know—but the very real and terrifying consequences of the diminishing working class are alive and growing today. In that sense, fears are very much warranted, but it is imperative to understand that technology isn’t the boogeyman hiding in the closet. Rather, the monster responsible for widening inequality is not the technology designed by humans, it’s the humans behind the technology. More specifically, it’s our governing institutions for failing to manage technological growth appropriately.
For the sake of clarity, I am by no means suggesting that we should be pointing a finger to blame at the ground-breaking entrepreneurs, engineers, and scientists for propelling technological growth. As I have reiterated, technological progress is what keeps society humming along. Infrastructure, social development and the fight for equality, health and well-being, a general sense of purpose on this planet are all reliant on our intellectual progress as human beings, which more or less boils down to our technological advancements. Too much stagnation and the global economy will inhabit the land of sluggish limbo, all but halting our ability to develop, both physically and mentally. We should all be huge advocates for technological growth, but that does not mean the consequences of such growth are fair. Who’s to blame, then? Who should be shouldering the monumental responsibility of national, and to a larger extend global, equitable well-fare and simultaneous technological growth?
We elect, and pay taxes to, governing institutions that manage our education systems, our health care, and ironically enough, our level of technological development. In that regard, would it not make sense that our governing institutions also be responsible for implementing effective policy to protect all constituents? Whether we’re rooting for the robots or praying to the Gods that technological advancement will suddenly come to a crashing halt, our current reality dictates adaptability by the population base and sound socio-economic policy from positions of authority. In that light, prudent questions regarding the impact of automation/AI on human well-being and our connection to democracy must be raised. Are all interest groups represented in policy development? Will our democratic principles be upheld and respected?
Optimistic economists agree that job polarization, and subsequent inequality, will not continue indefinitely. However, most are also quick to add that unless effective measures are taken to mitigate the inevitable growth of inequality and job loss, we’re going to be digging ourselves into the ground sooner rather than later.
“If human labour is indeed rendered superfluous by automation, then our chief economic problem will be one of distribution, not of scarcity. The primary system of income distribution in market economies is rooted in labor scarcity; citizens possess (or acquire) a bundle of valuable ‘human capital’ that, due to its scarcity, generates a flow of income over the career path. If machines were in fact to make human labor superfluous, we would have vast aggregate wealth but a serious challenge in determining who owns it and how to share it,” explained Autor.
Baseline Policies Are Required
Stating the obvious, thoughtful and well-structured policies are a necessity, and for those failing to concede to such policies, applicable monetary and social consequences are required. But, as is usually the case, the problem is complex and finding solutions will be difficult. However, a solution is not completely out of reach, and to be frank, failing to address this problem is not an option.
Putting it bluntly, institutional and economic mechanisms, such as intellectual property rights, incentivize innovation and therefore encourage societal development. However, in today’s world, we would be remised to ignore difficult conversations around technological ownership.
Turning back to a few examples I used at the beginning of this article, small-to-medium engineering firms in Canada can maximize productivity by fairly employing local labour while leveraging technological advancements. But, if monopolies are not kept in check, how can we expect such businesses to financially afford the burden of employment?
Canadian farmers can use the latest and greatest technologies to produce safe, sustainable, and affordable food for consumers, but without adequate industry regulations regarding property development, tilling the land isn’t economically viable. Climate change, a beast in its own right, is drying up Canadian prairies, shrinking coastlines, and literally burning millions of hectares of forest to the ground, all of which are contributing factors to our rapidly changing agricultural sector. Who will solve these problems and what technological rights will incentivize development? That question has yet to be answered, but if we don’t address it soon, it doesn’t matter who you are, living in Canada will be extremely difficult without food.
Forward-Thinking Business Models a Necessity
Considering technological growth impacts literally every aspect of society, it is imperative that governing institutions create more nuanced solutions that incorporate a multidisciplinary approach. It is even more vital that organizations incorporate such approaches into their business model.
An article in Forbes by journalist Tendayi Viki discusses the current trappings of traditional R&D (research and development) initiatives. Highlighting the need for diversification in the R&D sector, Viki suggests that our inability to factor in the outside world inhibits the potential of technological advancement.
“Having a great R&D process and achieving market success with the technologies we invent are two different things,” said Viki. “Innovation requires that companies develop a deep understanding of customer needs in order to be able to make products people want. […] In addition to making products people want, companies also need to develop good business models to support those products.”
Essentially, Viki is underlining the fact that society tends to look at the amount of investment and assume innovative causation. In reality, sound innovation and effective implementation demand competent investment strategy and business management. There is more to innovation than simply coming up with a grand idea and pouring billions of dollars into development. Is the product or service marketable to consumers? Is it something we need? Who will be responsible for managing access and distribution? How will new technologies be tested during development and evaluated post-market? Questioning the traditional methods behind technological growth are essential to finding adequate solutions for the future. For this reason, the most important questions should address privilege in innovation, where investment dollars are funnelled, and ownership once technology hits the market. In other words, the business world must learn how to appreciate their triple-bottom-line, which not only factors in shareholder needs, but social and environmental needs as well.
Education Revamp Absolutely Crucial
We need to think outside the box when we’re talking about innovation and technological development. Traditionally, we’re programed to imagine talking robots and self-driving cars as innovation. But are we too quick to forget the drastic benefits technological innovation in sectors such as agriculture and education have contributed to societal development? Point being, if we’re pouring money into one sector of technological innovation, that means were neglecting a whole host of other areas that, if funded properly, will continue to propel society forward.
Take education: An industry in North America that has been notoriously underfunded and continues to move in the direction of elite privatization. Addressing equity in the education system is beyond the scope of this article; however, it is essential to acknowledge that a crippling lack of funding to the industry more broadly inhibits our development as a society to adapt in our rapidly changing world. It is a disservice of paramount proportions, and if we do not collectively act now, most constituents will be left behind.
As I’ve outlined, automation of routine technical tasks will continue to excel, drastically altering the traditional notion of what it means to hold a job. The inaccessibility of the abstract labour force will push most eligible employees into the manual labour force, further widening the equity gap between rich and poor. Therefore, not only do we need to increase access to education, but we need to fundamentally enhance what we are teaching society, both formally and informally. Formally by reshaping curriculum, and informally by empowering our society with the confidence to pursue higher levels of education. To be clear, I do not mean that everyone should pursue a career in traditional academia, but I am advocating for our society to cultivate a generation of curious and mindful constituents who view life-long-learning as a fundamental building block in their personal development. The more society continues to learn, the more difficult it will be for our governing institutions to enact policies that disproportionality hinder constituents.
Jobs in the future, above anything else, will require flexibility, adaptability, acute critical thinking, original problem solving, and improved interpersonal skills. Although seemingly easy enough, such skills are not necessarily intuitive, they reflect society and culture. Therefore, the education system must develop an interdisciplinary approach where such skills are cultivated and applied to complex problems facing society. No longer is a sound basis in science or math enough. We need civic lessons intertwined with theoretical understandings of global trade policy. We need lessons on human psychology patterned with how cultural parameters shape funding decisions. We need a firm grasp on the inner workings of governing institutions, coupled with an innate understanding of how to balance a budget. Most importantly, formative education systems to post-secondary institutions must adapt their curriculum to equip people with a well-rounded skill set, if we are to collectively evolve alongside technology.
A study conducted by the Harvard Business Review reiterated this point, stating that if our societies do not adequately blend the dynamics between manual and abstract labour, unemployment will continue to rise. “More than one in three workers may need to adapt their skills’ mix by 2030, which is more than double the number who could be displaced by automation under some of our adoption scenarios—and lifelong learning of new skills will be essential for all,” read the study.
Driving my point home, we cannot ethically leave our fate in the hands of market powers. In this scenario, the invisible hand requires guidance by our governing institutions.
There are mounds of research justifying our fears; however, technological growth is inevitable, and in more ways than one, it will make our lives on this planet more sustainable, enjoyable, and easier. It’s the ultimate catch-22, and unfortunately implementing a comprehensive solution will come down to effective management by our governing institutions. We need policies that mitigate equity disparity caused by technological growth, but more than that, we need to foster a set of skills that will encourage adaptability, critical thinking, and resourceful problem solving. Sadly, our current state of affairs depicts a rather bleak picture of what tomorrow will bring; however, it does not take away from our capacity as human beings to define our future. We have a responsibility to each other, and we have a responsibility to hold our governing institutions accountable. Perhaps now more than ever, it’s time to lay off the robots and divert our attention and efforts to those running the show behind the curtain.
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