Contrary to popular belief, robots aren't snatching away your livelihoods. The real issue lies elsewhere. It's not about job loss, but rather the unfulfilled potential of automation and AI in revolutionizing the workforce and productivity. Let's delve into this paradox.
President Obama has warned that ATMs and airport check-in kiosks are contributing to high unemployment
Sen. Marco Rubio said that the central challenge of our times is to ensure that the rise of the machines is not the fall of the worker
- The bad news is that these concerns are wrong
- We’ve actually been living through a slowdown in the pace of productivity growth
- Unless it reverses, we’ll be waking up soon to find ourselves in a depressing world of longer working years, unmanageable health-care needs, higher taxes, and a public sector starved of needed infrastructure resources
It’s getting worse
The productivity slowdown began decades ago and initially corresponded with bad news from abroad about oil prices. It persisted through a sharp recession that broke the back of inflation, and continued through the Reagan recovery.
- In the most recent years, it’s gotten worse than ever due to a period of weak demand, high unemployment, and agonizingly slow wage growth.
- This all adds up to an environment in which managers have little budget to invest in new equipment due to weak sales, and little incentive to give raises due to poor worker bargaining power.
If the robots don’t arrive
The real threat is precisely the opposite – that the per-hour productivity of the American worker won’t increase at a more rapid rate
- We will either have to reduce the living standards of the elderly by cutting their benefits or raise their taxes
- Or, we will keep doing a little bit of both
The past of automation
Machines have been replacing humans for hundreds of years.
- In 1950, the average employed person in the United States worked about 1,909 hours. By 1973, that had fallen to 1,797 hours
- The per-worker output of the American economy actually increased at its fastest-ever rate in the quarter century between 1948 and 1973
The big slowdown
Despite the techno-hype and national obsession with disruption, the pace of productivity growth has slowed down
- The American economy has grown, but largely by adding workers rather than by workers equipping themselves with powerful new machines to multiply their capabilities
- And the number of hours worked per worker has stayed relatively flat, even while other countries have continued to enhance their leisure
- If robots were taking our jobs, the productivity of the workers who still have jobs would be going up rapidly
- It is rising, but it’s rising slower than it did in the past
