Current era of innovation causing concern as fewer expected to benefit in this third industrial revolution.
For several years, as America struggled through its most severe “jobless recovery” since the end of World War II, it has been out there. The robot question.
Economists have watched the rise of a new generation of sophisticated automation, including ever-more-capable robots, and wondered how it would affect human employment.
It was easy to denigrate the worriers as Luddites, because industry has become ever more automated since the Industrial Revolution yet employment generally kept growing. In the early 19th century, economist David Ricardo stated that machinery would “render the population redundant.” It didn’t happen.
Or to dismiss people with reservations about tech advances as “buggy-whip makers,” hopeless to stop inevitable progress.
But now the question is less speculative, even as the economy is creating jobs, although mostly lower wages, at a decent clip.
Last month, an exhaustive report was released seeking to answer “the future of innovation and employment.” With chief authors Carl Benedikt Frey and Michael Osborne of the University of Oxford and backed by Citi, it makes for sober human reading.
The report states: “This time is different.”
As many as 47 percent of U.S. jobs are at risk of being replaced by computerization and robots.
It goes on, “There is reason to be concerned that we are experiencing an era in which innovation benefits the few rather than the many.”
Contrast this with the rise of the automobile industry. While it displaced a few buggy- whip artisans, it created millions of jobs, including new high-skilled work. It was one of the biggest forces behind the rise of the American middle class.
But humans wear two economic hats, as producers and consumers. Technological innovation affects both. Lately, while consumers have gotten lower prices, producers also have suffered stagnant or slow-growing wages. Globalization and many other forces are at play. But automation, especially in manufacturing, is a profound cause.
Digital breakthroughs make it easier to export work. For example, MRI scans here can be interpreted by lower-paid physicians in India. But the challenges won’t be limited to offshoring.
Frey and Osborne argue that the automation to come will profoundly affect living standards and increase inequality beyond even today’s startling levels.
New digital companies require far smaller workforces. For example, Twitch employed 170 when the live-streaming company was acquired by Amazon last year for $970 million. Big data, the Internet of Things, 3-D printing and digitalization of businesses promise to further hollow out the midrange jobs, leaving a small, highly compensated elite and a larger, low-wage labor underclass.
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And that’s before factoring in the highly advanced robots being developed as part of this wider automation.
Late last year, star economist Nouriel Roubini wrote that this “Third Industrial Revolution” might be symbolized by a factory of a thousand robots with one person overseeing their work.
Skynet may not be self-aware but technological advances are on a trajectory to create plenty of job terminators.
So-called robotic hardware has been around at least since the 1980s. Industrial robots have already replaced the majority of manufacturing workers in the United States, although human and robot still work alongside in places such as Boeing and the auto industry.
From cow-milking robots to Predator drones, the machines are widely used and increasing in capabilities, while their costs are going down. Some 15,000 robots work in Amazon warehouses. Maybe one vacuums your home. Maybe one took your job.
Next up: autonomous robots, which use advanced sensors and connections to big data to accomplish tasks that were once the solid province of humans.
One of the most appealing of these is the self-driving car. Here, I am skeptical. Americans love to drive. But self-driving trucks could displace thousands of jobs. And the same technology applied across the economy could see these robots replace jobs at both the high and low end.
The risk to jobs in the future is made more severe by the lack of major new technological breakthroughs that create large employment opportunities. Facebook and the Apple watch are not equal to, say, the development of the steam locomotive, electricity or the semiconductor. These were transformative breakthroughs that spawned vast new industries and jobs, where productivity was widely shared.
If the pessimists are correct, the problem moves from the economic to the political arena.
For example, Foxconn wants to replace its problematic human workers with a million robots. So far, the experiment hasn’t been successful. It reminds me of the infamous episode in the 1980s at General Motors’ Buick City plant, where robots smashed windshields on the assembly line.
But the auto industry finally got robots right, and Foxconn might, too. What will that mean for Chinese social stability, which depends on abundant jobs?
In advanced countries such as the United States, the stakes are no less high.
Lack of inclusive growth, leading to the worst inequality since the Gilded Age, is already a divisive issue. If the gains from smart robots and other advances go only to the elite and jobs are widely destroyed, Americans might lose their faith in technology in a hurry. And this was a nation born in revolution.
Information in this article, originally published March 14, 2015, was corrected March 16, 2015. A previous version of this story incorrectly stated when economist David Ricardo did his most important work.