Will Future Advances In Automation Create New Higher Level Jobs?

As is always the case – the development and deployment of new technology creates new jobs for some while eliminating existing jobs for others. For example, consider the retail store automation described at the beginning of this article:

Analysis, concepting, and programming will be done by highly specialized engineers.

Despite losing millions of jobs to automation technology over the past 50 years, even in this current deep and prolonged recession we have more total jobs than we did when the steel and auto and telephone and food industries had a lot more workers and a lot less automation. Somehow, new jobs get created to replace the old ones. However, the problem is that the thousands of jobs created by providers of automation will not offset the millions of production and service jobs lost to automation.

In the past, technology has not had this effect. For example, before there were backhoes there were men with shovels. A backhoe replaced a hundred men with shovels. But new businesses and factories sprang up to manufacture the backhoes, and those companies hired people - many of them former ditch diggers. All of these new businesses and factories tended to employ many of the workers displaced by technology. The economy generally absorbed every unemployed worker in the new businesses that were created by advances in technology. Today, new jobs are being created, but not at the usual pace, and not fast enough to soak up the unemployed.

But it’s wrong to blame technology for today’s loss of jobs. The bigger problem currently is housing, where hundreds of thousands of workers have lost their jobs. The source of that problem isn't technology but an over-reaching housing policy and distorted financing practices. The solution is relatively easy (albeit politically charged) - let the housing market clear, let interest rates rise, stop subsidizing mortgages, and clean up the foreclosure mess. That would let housing starts return to something like normal and the problem is solved.

Understanding Future Job Creation Issues

Aside from all of the politics associated with current job creation - the hard truth about the U.S. economy today and going forward is that businesses don’t need as many of us as workers, but, still need us as consumers. The American economy depends on a healthy base of consumers spending their money. As we experienced in the Great Depression, and now in the Great Recession, massive across the board unemployment causes a sharp downward spiral that hurts the entire economy.

We are standing right now on the threshold of the robotic era. Once autonomous robots start arriving in the job market in significant numbers (something that we will see happening by the end of this decade) they have the potential to dramatically change the global economy.

The guesstimated size of the U.S. labor pool is 150 million give or take a few million. The U.S. economy seems to run smoothly when unemployment is 5% or less. A 10% rate of unemployment produces the current situation. So there is not much leeway (7 to 8 million jobs) between relatively good times and relatively terrible times. With consumer spending accounting for two-thirds of economic activity, anything that spooks consumers (who have jobs) into losing confidence in their future prospects fuels the downward spiral.

The issues are profound. How do we prevent this downward spiral from happening? Are we smart enough to see the automation revolution that is coming and plan for it prior to the crisis? Can we redesign the economy so that we enter the new era of autonomous robots smoothly? With robots doing most of the work, can we actually create a society that takes advantage of the leisure time that automation can provide? Or, will the millions of people displaced by automation end up being homeless and destitute, living in government provided dormitories?

Final Thoughts

The nation’s current economic health depends on elected politicians who are willing to take the political risks necessary to balance the budget, rein in health care and retirement costs, revamp our failing public education system, eliminate job destroying regulations, and standup to the fact that taxes cannot be raised without cuts in spending.

While these current issues are complex they are just the tip of the iceberg. It is time to start rethinking our economic system and understand how we will allow people to live their lives in an automation driven nation. Instead of letting the robots happen to us in a highly disruptive way, we should take this opportunity to think about how we want the U.S. economy to work for all of the citizens of the automation age. The time to be doing that is now.

Editor’s note: We want to credit Marshall Brain (http://marshallbrain.com ), who is the author of Robotic Nation 2015, for his perspectives on this important subject, a few of which have been included in this article.

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