In our prior post, we pointed out that China is on the verge of becoming the world leader in the production, sale and implementation of robots, with a stated goal of producing at least half the nation’s own robots for manufacturing by 2025. The takeaway from that view, outlined recently in Bloomberg BusinessWeek might be that the world has much to fear from the ascendance of this wave of Chinese bots.
But a recent counterpoint to such a robot apocalypse offered by Greg Ip of the Wall Street Journal suggests that in fact, robots aren’t destroying enough jobs, fast enough.
In short, Ip points out that by enabling society to produce more with the same workers, automation like robots becomes a major driver of rising standards of living – in effect, a productivity boost. While some say that “this time is different” because the technological change is so profound they fear that millions of workers will be out of work or at best consigned to more menial tasks… Ip says the evidence shows we’re moving in exactly the opposite direction.
He notes that while the U.S. “has many problems, job creation isn’t one of them.” Job creation has averaged 185,000 per month this year and unemployment is down to a ten year low. Wage gains are even up, slightly. Ip says that “if automation were rapidly displacing workers the productivity of the remaining workers ought to be growing rapidly.” Instead, worker output per hour has been dismal in most sectors, including manufacturing.
When slow-growing occupations are compared to fast-growing ones in data going back to 1850 (a proxy for job creation and destruction driven by ‘technology’), they find that churn relative to total employment today is the lowest on record.
Ip’s point is that the past was, in fact, much more ‘convulsive’ than today’s job churn. American consumption he notes is gravitating toward goods and services whose production is not easily automated. Societies increasingly are devoting “a growing share of their income to consumption in sectors where productivity [is] stagnant.” The idea is that robots can replace fewer things that go into GDP than we think.
As examples he cites medical breakthroughs in new, more expensive treatments rather than cheaper existing treatments, and that child-care work has soared because parents won’t leave kids in the care of a robot. Over the past decade, “low productivity sectors” including education, health care, social assistance, leisure and hospitality have added nearly 7 million jobs, whereas information and finance, where value added per worker is 5 to 10 times higher, have cut or barely added jobs.
His conclusion: We need a change in priorities. Instead of worrying about robots destroying jobs, we need to use them more, especially in low-productivity sectors. While robots may one day replace truck drivers, “it’s more urgent to make existing drivers, now in short supply, more efficient,” and to be more concerned about reducing the labor, and thus the cost of energy, rather than worry about jobs added in areas like solar power. The alternative, notes Ip, “is a tightening labor market that forces companies to pay ever higher wages that must be passed on as inflation. And that, he notes, “is a more imminent threat than an army of androids.”