Will Automation Kill Jobs?

Dennis Kriebal of Youngstown, Ohio, had been a su­pervisor at an aluminum extrusion factory, where he punched out parts for cars and tractors. Six years ago, he lost his job to a robot, and since then has been doing odd jobs to keep afloat. Sherry Johnson used to work for the local newspaper in Marietta, Geor­gia, feeding paper into printing machines and laying out pages. She lost this job as well as others making medical equipment and working in inventory and filing to automation.

These situations illustrate the negative impact of computer technology on jobs. Far more U.S. jobs have been lost to robots and automation than to trade with China, Mexico, or any other country. According to a study by the Center for Business and Economic Research at Ball State University, about 87 percent of manufacturing job losses between 2000 and 2010 stemmed from factories becoming more efficient through automation and better technology. Only 13 percent of job losses were due to trade. For example, the U.S. steel industry lost 400,000 jobs between 1962 and 2005. A study by the American Economic Review found that steel shipments did not decline, but fewer people were needed to do the same amount of work as before, with major productivity gains from using mini mills (small plants that make specialty steel from scrap iron).

A November 2015 McKinsey Global Institute re­port by Michael Chui, James Manyika, and Mehdi Miremadi examined 2,000 distinct types of work activities in 800 occupations. The authors found that 45 percent of these work activities could be automated by 2055 using technologies that cur­rently exist. About 51 percent of the work activities Americans perform involve predictable and routine physical work, data collection, and data process­ing. All of these tasks are ripe for some degree of automation. No one knows exactly how many U.S. jobs will be lost or how soon, but the researchers estimate that from 9 to 47 percent of jobs could eventually be affected and perhaps 5 percent of jobs eliminated entirely. These changes shouldn’t lead to mass unemployment because automation could increase global productivity by 0.8 percent to 1.4 percent annually over the next 50 years and create many new jobs.

According to a study by MIT labor economist David Autor, automation advances up to this point have not eliminated most jobs. Sometimes ma­chines do replace humans, as in agriculture and manufacturing, but not across an entire economy. Productivity gains from workforce automation have increased the demand for goods and services, in turn increasing the demand for new forms of labor. Jobs that have not been eliminated by au­tomation are often enhanced by it. For example, since BMW’s Spartanburg, South Carolina, plant automated many routine production tasks over the past decade, it has more than doubled its an­nual car production to more than 400,000 units. The Spartanburg labor force has grown from 4,200 workers to 10,000, and they handle vastly more complex autos. (Cars that once had 3,000 parts now have 15,000.)

The positive and negative impacts of technology are not delivered in an equal way. All the new jobs created by automation are not necessarily better jobs. There have been increases in high-paying jobs (such as accountants) but also in low-paying jobs such as food service workers and home health aides. Disappearing factory jobs have been largely replaced by new jobs in the service sector but often at lower wages.

Manufacturing jobs have been the hardest hit by robots and automation. There are more than 5 million fewer jobs in manufacturing today than in 2000. According to a study by economists Daron Acemoglu of MIT and Pascual Restrepo of Boston University, for every robot per thousand workers, up to six workers lost their jobs and wages fell as much as 0.75 percent. Acemoglu and Restrepo found very little employment increase in other occupations to offset job losses in manufacturing. That increase could eventually happen, but right now there are large numbers of people out of work in the United States, especially blue-collar men and women with­out college degrees. These researchers also found in­dustrial robots were to blame for as many as 670,000 manufacturing jobs lost between 1990 and 2007, and this number will rise going forward because the number of industrial robots is predicted to qua­druple. Acemoglu and Restrepo noted that a specific local economy, such as Detroit, could be especially hard-hit, although nationally the effects of robots are smaller because jobs were created in other places. The new jobs created by technology are not neces­sarily in the places losing jobs, such as the Rust Belt. Those forced out of a job by robots generally do not have the skills or mobility to assume the new jobs created by automation.

Automation is not just affecting manual labor and factory jobs. Computers are now capable of taking over certain kinds of white collar and service-sector work, including X-ray analysis and sifting through documents. Job opportunities are shrinking slightly for medical technicians, supervisors, and even law­yers. Work that requires creativity, management, information technology skills, or personal caregiving is least at risk.

According to Boston University economist James Bessen, the problem is not mass unemployment; it’s transitioning people from one job to another. People need to learn new skills to work in the new economy. When the United States moved from an agrarian to an industrialized economy, high school education expanded rapidly. By 1951 the average American had 6.2 more years of education than someone born 75 years earlier. Additional education enabled people to do new kinds of jobs in factories, hospitals, and schools.

Source: Laudon Kenneth C., Laudon Jane Price (2020), Management Information Systems: Managing the Digital Firm, Pearson; 16^th edition.