Tuesday, May 17, 2011

The Robots Take Over

There was an excellent article at econfuture that discussed the problems in employement caused by increases in productivity through technology.  This actually is one of the therious associated with the Great Depression, but is not populart with any of the current brand of economist it appears.

  • Specialized software automation and artificial intelligence applications—and in particular machine learning technology—will increasingly threaten knowledge-based occupations. This may be especially true of entry-level positions typically taken by new college graduates.
  • Robots are going to get better and cheaper, and ultimately they will invade a great many lower-wage occupations in the service sector.  These low-wage jobs are responsible for the majority of new jobs now being created.
  • The migration of all types of information and entertainment to digital format will continue. We have already seen substantial disruptions of business models in traditional labor-intensive industries as a result of this (print media, movie rentals, physical book stores, etc.).  As information is increasingly hosted in the cloud and delivered electronically, there will be fewer jobs.
Is it likely that future innovation will create new industries that are labor-intensive enough to keep up with growth in the labor force (at least 1 million new workers per year in the US) and also absorb potentially millions of people displaced from more traditional industries? I doubt it.  All the evidence suggests that the industries of the future will be technology-intensive with fewer opportunities for workers—especially those without elite, technical skills.
One of the few exceptions may be “green” jobs associated with installing solar panels, etc. However, these are largely temporary infrastructure jobs rather than permanent, sustainable positions, and the numbers seem unlikely to be sufficient to counteract the broader trend toward fewer jobs in other industries.
I saw another article recently (ht NC), that reinforced this point.

April Jobs Report: The Impact of Education and Age on Manufacturing Employment

First, the manufacturing sector has become more competitive.  From the beginning of the recession through 2010, labor productivity in manufacturing increased a whopping 12.3 percent.  That means that we need one-eighth fewer worker hours to produce the same amount of output as compared to three years ago.  Second, the manufacturing sector has steadily been “up-skilling,” meaning it’s been building a labor force of higher-educated and higher-skilled workers. 
Of course this make the traditional manufacturing force starting to feel like the draft horse after it has just seen its first mechanical tractor.

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