Workplace automation

By Chang Se-moon

An article in the December 2015 issue of the Monthly Labor Review, published by the U.S. Bureau of Labor Statistics, has an interesting observation regarding the impact of technology on employment. The article states that the doomsayers who predicted machines would replace human beings and thus lead to mass unemployment were wrong because the factory replaced the farm, service jobs once unimagined replaced the assembly line, and new wants led to new jobs. “Today, those warnings are heard again,” because “now computers seem to be replacing the human brain.”

In the process of looking for some help on the subject, I found an interesting article: “Why Are There Still So Many Jobs? The History and Future of Workplace Automation,” written by MIT Professor David Autor and published in the summer 2015 issue of the Journal of Economic Perspectives.

Autor introduces the history of concerns regarding how automation and new technology might negatively affect employment, which includes a Feb. 24, 1961 article in Time Magazine titled “The Automation Jobless.” In 1964, U.S. President Lyndon B. Johnson empaneled a blue-ribbon national commission to tackle “the problem that productivity was rising so fast it might outstrip demand for labor.”

Although the commission concluded that “automation did not threaten employment,” the controversy continues to this date. In their 2014 book “The Second Machine Age,” MIT scholars Erik Brynjolfsson and Andrew McAfee made the following interesting observation. The quotation below is from Autor’s article in introducing the book: “there’s never been a better time to be a worker with special skills or the right education, because these people can use technology to create and capture value. However, there’s never been a worse time to be a worker with only ordinary skills and abilities to offer, because computers, robots, and other digital technologies are acquiring these skills and abilities at an extraordinary rate.”

According to Professor Autor, automation does substitute for labor, but automation also “complements labor, raises output in ways that lead to higher demand for labor, and interacts with adjustments in labor supply.” Professor Autor has noticed that changes in technology do alter the types of jobs available and what those jobs pay, by polarizing “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,” although he advises that “this polarization is unlikely to continue very far into the foreseeable future.”

The question is why these labor-saving technologies have not lowered aggregate employment. The answer is that there are tasks that cannot be substituted by automation and these “tasks that cannot be substituted by automation are generally complemented by it.” Most work processes require a multifaceted set of inputs such as repetition that can be replaced by automation and creativity that cannot be replaced by automation. Further “productivity improvements in one set of tasks almost necessarily increase the economic value of the remaining tasks.”

Autor cites computer technologies as an example. Computers follow procedures laid out by programmers. The programmer must first understand the sequence of steps required to perform a particular task, and then write a program that carries out the steps. “The principle of computer simulation of workplace tasks has not fundamentally changed since the dawn of the computer era ― but its cost has.” The cost of computations has “fallen by at least 1.7 trillion-fold since the manual computing era, with most of that decline occurring since 1980.” Firms thus have strong economic incentives to substitute computers for relatively expensive human labor, leading to “a decline in employment in clerical and administrative support.

Although computers can substitute routine tasks, they cannot substitute non-routine tasks such as “problem-solving capabilities, intuition, creativity, and persuasion” that are characteristic of professional, technical, and managerial occupations. Computers can also not substitute “situational adaptability, visual and language recognition, and in-person interactions” that are “characteristic of food preparation and serving jobs, cleaning and janitorial work, grounds cleaning and maintenance, in-person health assistance by home health aides, and numerous jobs in security and protective services.” These jobs may not require high levels of formal education, but can also not be replaced by computers. Autor concludes that education and job training systems should focus on producing workers who can combine abstract and routine capabilities.

On page 1 of the February 2016 issue of the Monthly Labor Review, Rob Atkinson who is president of the Information Technology and Innovation Foundation aptly summarizes the impact of technology on employment by stating that in 25 years, “unemployment and labor force participation rates then should be quite similar to the rates of today. … What is likely to be different, however, is the occupational distribution of those jobs.”

Chang Se-moon is the director of the Gulf Coast Center for Impact Studies. He can be reached at changsemoon@yahoo.com.