Jackson Hole: Automation And The Labor Market

"Automation, Robotization, Software-Enhanced Productivity And Permanent Job Loss"

http://paxonbothhouses.blogspot.com/2012/02/automation-robotization-and-job-loss.html

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Automation Is Polarizing the Labor Market

By

 

JON HILSENRATH

JACKSON HOLE, WYO.–In an essay in The Wall Street Journal last month, Harvard University economist Lawrence Summers envisioned a world in which computers and machines displace a vast new array of human work, creating an economy that produced few opportunities and sources of income for actual people.

Taxis wouldn’t need drivers, nor retailers cashiers or banks financial analysts. “The challenge for economic policy will increasingly be generating enough work for all who need work for income, purchasing power and dignity,” he argued.

David Autor, a Massachusetts Institute of Technology economics professor, argues in apaper to be presented Friday to central bankers at the Kansas City Fed’s Jackson Hole symposium that automation is creating a different kind of problem for the economy. Rather than destroying jobs broadly, it is polarizing the labor market. While thinning out the ranks of middle-class jobs easily replaced by machines, he argues automation is increasing the ranks of low-skilled workers who perform tasks that can’t easily be displaced by machines — like cooks or home health workers — and the ranks of high-end workers with abstract thinking skills that computers can’t match.

In 1979, middle-income jobs in sales, office work, manufacturing and administrative work accounted for 60% of U.S. employment. By 2012, these jobs had declined to 46% of employment, while the share of high-end and low-end work expanded, Mr. Autor shows. A similar pattern emerges in Europe, where middle-income jobs have declined as a share of total employment.

The biggest beneficiaries are people at the high end. “From 1979 through 2007, wages rose consistently across all three abstract task-intensive categories of professional, technical and managerial occupations,” Mr. Autor argued. Their work tends to be complemented by machines, he argued, making their services more valuable.

By contrast, wage growth in the middle has been anemic and pressured at the low end by middle-income workers looking for income at lower-end jobs.

“In the 2000s, employment and wage trends in (low-end) manual task-intensive occupations diverged. While employment growth in these occupations exceeded that in all other categories between 2000 and 2007, wage growth was generally negative–more so than almost all other categories,” he said.

In the long-run, Mr. Autor argues the economy and workforce will adjust.

“There is a long history of leading thinkers overestimating the potential of new technologies to substitute for human labor and underestimating their potential to complement it,” he argues.

“The green revolution displaced labor from farming. The industrial revolution replaced skilled artisanal labor with unskilled factory labor. The mass-produced automobile drastically reduced demand for blacksmiths, stable hands, and many other equestrian occupations. Successive waves of earth moving equipment and powered tools displaced manual labor from construction.

“In each case, groups of workers lost employment and earnings as specific jobs and accompanying skill sets were rendered obsolete. Yet, short-term employment losses sparked by rising productivity were eventually more than offset by subsequent employment gains–in some cases in the innovating sectors, in many cases elsewhere.”