Big Think | Aidan Quinn, Editor in Chief
The jobs aren’t coming back:
One of the key drivers for Donald Trump’s shock victory during the U.S. election has been an anxiety about job security and the changes that the globalized economy has made across the globe. President Elect Trump capitalized on a ground-swell of dissatisfaction that middle-class Americans felt about stagnating wages and rapidly shrinking job opportunities, stoking anger at illegal immigrants that have “stolen jobs”.
But there’s a greater shift occurring across the world thanks to the rapid advances in robotics and artificial intelligence (AI).
Jobs that left American shores for Chinese factories are disappearing as the cost of robotic labor becomes even cheaper than the rock-bottom wages in foreign sweat-shops.
This is not a uniquely American problem either. 49% of the Japanese workforce, and 35% of the British workforce have been identified as vulnerable to automation, a trend that is mirrored across the developed world.
The problem is in fact far worse for developing countries where so much of manufacturing was shifted thanks to cheap wages and much more forgiving manufacturing policies that often came at the cost of the local environment. In countries such as India, China and Ethiopia, the threat of automation hovers at 69%, 77% and 85% respectively. This presents a huge challenge to countries which have relied on manufacturing the world’s goods to propel themselves out of poverty.
Who are the most vulnerable? And is it all doom and gloom?
The Statistics: The United States of America
- 47% of American jobs are at high risk of automation over the next two decades according to the highly cited study by Carl Benedikt and Michael Osbourne in 2013.
- Transport jobs will be almost entirely replaced by self-driving vehicles over the coming decade. In 2014 the industry employed more than 4 million Americans including;
- Sales and Services jobs will continue to be bit into by self-service checkouts and automated sales programs.
- Support office staff can expect menial jobs such as data entry to dwindle as artificial intelligence becomes more sophisticated.
- Rural jobs are at particular risk, with 60% of regional jobs at risk of automation in Australia for instance, as the efficiency and ability of machines and robots allows fewer workers to service a broader area.
A two-class economy:
The main issue that economists worry about is the problem of job polarization that occurs as middle-class jobs disappear. As middle-skilled jobs such as manufacturing and trades decline, low-skill and high-skill jobs have continued to expand. This creates a problem whereby the workforce is now split between the highly paid and highly skilled, and the vast majority of people who will be forced into the lowly paid and lowly skilled tier. Many economists believe that the stagnation of middle-class wages is a key indicator that this two-class economy is starting to become a reality.
According to the Oxford Martin School’s Programme on the Impacts of Future Technology report, changes across the job market will be happening in two stages:
- Computers and robots have already begun to replace jobs in menial roles such as transportation, production labor (think factories), administrative support, logistics, as well as sales and retail.
- As robotics and computer AI become more complex, specialized roles such as in engineering, science and management may also start to become at risk.
Not so bad after all?
During its in-depth investigation into automation, The Economist explores the net-impact of technological progress and it isn’t all doom and gloom.
A key example comes in the case of the introduction of new technology to a group of radiologists. The study found that the computer program was 50% better at identifying malignant tumors, and had a false-negative rate (where the cancer is not identified) of zero. Compare this to a false-negative of 7% in radiologists, and patients are recieving a better outcome. Instead of replacing the doctors, the program became a tool for doctors to assess more patients and have more accurate readings.
David Autor, an economist at MIT, explains that by automating a particular task you allow it to be done faster or cheaper which in turn increases the demand for human workers to do the other tasks that do require their input. In essence, you increase the value of human capital by freeing them from repetitive labor.
The automation of shopping through e-commerce was initially feared to be a nail in the coffin of retailers. Over the long-term however it has been a net benefit to savvy employers – increasing access to new markets for suppliers, and improving the quality of goods available to consumers whilst actually increasing employment.
Whilst the loss of the all-American love of cars and driving them may be a tragedy for the millions employed in their industries, a study by McKinsey & Company predicted that a driver-less future would mean a crash rate reduction of up to 90 percent. For the general public, this means less money spent on car repairs, maintenance, and health bills related to automotive accidents and savings of around US$180 billion per year.
It’s not all smooth sailing
Even if there are net-benefits to automation, the main problem surrounds whether governments are adequately prepared to help the transition from soon to be defunct industries.
Advanced countries such as Australia are a prime example of the problems that governments face. A recent report by the Committee for Economic Development in Australia found that the government was woefully unprepared for the upcoming changes to the economy and was scathing of the lack of commitment to properly fund education and innovation policies.
The report recommended that the government prepare by adapting the “Denmark Solution” for change by:
- Flexibility in the workplace around hiring and firing employees
- Decent unemployment benefits to help people get new jobs
- Good and thorough re-skilling programs.
The world is changing, and the challenge will be how we help those who are being left behind.
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