Industryweek 8738 Edge Promo

The Future of Work

May 12, 2015
Is the new automation different from the old automation?

Fifty years ago, on a trip to China, the renowned Chicago economist Milton Friedman was shown some of the country's noteworthy public works programs in which hundreds of laborers were digging a canal with shovels. When he asked his hosts why they weren't relying on earth-moving equipment, the officials responded that their strategy created more jobs. "In that case," he famously retorted, "why don't you replace the shovels with spoons?"

The debate over the impact of machines on employment has raged for centuries. But recent technological advances have given the debate renewed fervor.

On one side you have economists like Rob Atkinson at the Information Technology & Innovation Foundation and MIT's David Autor telling us to relax, that this is nothing new, and in the long run automation will create new jobs and raise living standards.

On the other side you have academics like Columbia University's Jeffrey Sachs and Boston University's Seth Benzell warning of the potential destruction of the middle class by robots. Research firms like Gartner are even projecting the loss of a third of all jobs to automation by the mid-2020s.

What, Me Worry?

Why the anxiety? Computers and robots have made remarkable advances into the workforce in recent years, not only on the factory floor but also in law offices, banks and motor vehicles. Not that it's the first time technology has replaced humans in the workplace. Mechanical looms took the place of artisans 200 years ago. The rise of personal computers reduced the need for secretaries 30 years ago. These advances in automation took a toll on specific professions and industries but raised our living standards overall.

The difference today is that changes seem to be coming much faster than before. We live in a time of exponential growth in technology, what MIT's Andrew McAfee and Erik Brynjolfsson brand the "Second Machine Age." As with other technological revolutions, automation is at the heart of the transformation. But this time around, digitalization is dramatically reducing transaction costs and helping spread change farther and faster than ever before.

The economics is straightforward: Automation allows people to complete tasks faster with fewer errors at cheaper costs.

Few can deny the benefits that these advances have brought to society since 2000. The economics is straightforward: Automation allows people to complete tasks faster with fewer errors at cheaper costs. This increases productivity, which means people don't have to spend as much time or money to accomplish tasks, which generates new wealth for society. True, if your job was eliminated through automation, you are personally less wealthy. That's the painful side of economic disruptions.

Automation and the Workforce

That relates back to the question of how automation will affect the workforce in coming years. While most high-skill jobs requiring problem-solving and creativity are safe, and many low-skill jobs seem resilient to automation, Autor thinks middle-skill jobs like machinists and bookkeepers are most at risk. As it is, he calculates a decline in these kinds of jobs from 60% of the U.S. economy in Jimmy Carter's term in the White House to 46% by Barack Obama's second term.

This is corroborated by a recent study published by the research group Third Way. Economists Henry Siu of the University of British Columbia and Nir Jaimovich of Duke University categorized the kinds of jobs that were created and eliminated over the past few decades. What they found was that over the past two recessions, all job growth has come from what they call "non-routine" jobs, both manual (like home health aides) and cognitive (like computer programming). On the other hand, routine jobs are down 5% since the most recent recession.

Still, while automation and robotics have made tremendous advances -- for example, Siri's language interface and Google's driverless car are two milestones many thought would not be met this quickly -- there are large hurdles that preclude robots' world domination. While robots are highly efficient at applying math to do routine tasks, humans are able to complement their robot "colleagues" with non-programmable capabilities, such as the ability to be flexible and adaptable, interact effectively with humans, and use judgment and common sense to solve unexpected problems.

As Dr. Siu surmises, "We'll do what we've always done. Human skills will adapt. We'll move toward our comparative advantage."

Popular Sponsored Recommendations

Modern Edge Computing Accelerates Smart Manufacturing Initiatives for Discrete Manufacturers

Oct. 22, 2023
Discover how Edge Computing platforms are a requisite for discrete manufacturers to solve production challenges, accelerate digitalization, and establish a reliable infrastructure...

Beware Extreme Software

Sept. 24, 2023
As a manufacturer, you understand the importance of staying ahead of the curve and being proactive in your approach to technology. With the rapid pace of change in the industry...

Are You Positioned To Tackle Supply Chain Risk?

Sept. 20, 2023
Supply chain disruption is here to stay, but you can keep ahead of potential issues — and identify new opportunities — by regularly assessing your suppliers. Download our supplier...

You Cannot Stay Competitive by Bolting New Technologies to a Legacy ERP

Oct. 20, 2023
Read this white paper to understand the benefits of shifting to a next-generation ERP system as part of a DOP.

Voice your opinion!

To join the conversation, and become an exclusive member of IndustryWeek, create an account today!