29 May 2017 – Blog #7
Losing jobs to machines: is it different this time?
A number of recent studies have described the jobs that will be lost to automation in the next few years. The World Economic Forum estimated that 5 million jobs will be lost to robots in the next five years, globally. The Brookfield Institute for Innovation and Entrepreneurship at Ryerson University issued a report that found that nearly 42 percent of the Canadian labour force is at a high risk of being affected by automation in the next decade or two. They found that the top five jobs at risk of automation were: retail salesperson, administrative assistant, food counter attendant, cashiers and transport truck drivers.
This report is consistent with other long-term trends in the economy. For example, a report in the Economist looked at employment growth in routine vs. non-routine jobs, and found that non-routine tasks grew much faster in the last 30 years.
The impact of automation and artificial intelligence seem so far-reaching that some people suggest it will permanently reduce the number of jobs needed in the economy. A recent study by the National Bureau of Economic Research in the US found that each new robot added to the workforce meant the loss of between 3 and 5.6 jobs in the local commuting area.
Meanwhile, for each new robot added per 1,000 workers, wages in the surrounding area would fall between 0.25 and 0.5 percent.
Fear of changing technology is noting new. A hundred years ago the Luddites destroyed weaving machinery they believed was threatening their jobs.
However, there are strong views saying that we shouldn’t worry about automation. In a poll of Canadians Abacus Research found that 89% of Canadians agreed that technological change has been good for the world. And 76% felt it had been good for their own economic well being. They may be on to something. According to the Global Entrepreneurship Monitor study of entrepreneurship, Canada is the most entrepreneurial country among the advanced countries. Entrepreneurship is basically creating new jobs by following opportunities, whatever the rest of the economy is doing.
There is heavy weight evidence to back up this view. Joel Mokyr, an economic historian, points out : “We can’t predict what jobs will be created in the future, but it’s always been like that. Imagine trying to tell someone a century ago that her great-grandchildren would be video-game designers or cybersecurity specialists. These are jobs that nobody in the past would have predicted.”
Carolyn Wilkins from the Bank of Canada points out that technological change has been part of the Canadian economy since Canada was founded 150 years ago. 100 years ago one third of jobs were in agriculture, today fewer than 2% are.
So there are optimists and pessimists. Who is right? And is it different this time?
While history supports the view that new jobs will be created to replace the jobs lost, we can’t be sure of that. So what should we do, given that uncertainty? It seems to me that we need to consider three actions:
- Expand adult re-training. It is pretty clear that many people are going to loose their jobs, and will need to find new ones.
- Update the education system to increase the focus on preparing people for the non-routine jobs that seem likely to dominate the economy in the next 50 years.
- Experiment with novel social programs that may be needed if the pessimists are right. A good example of this is the basic income experiments being carried out in many places round the world, including California, Finland,Italy, the Netherlands and in Ontario.