We are barreling toward a future of automation. A great proportion of the six million US manufacturing jobs that have disappeared over the last few decades were lost as a direct result of automation’s slow absorption of physical labor and factory work. Now the pace is quickening and thanks to developments in artificial intelligence, automation’s reach is expanding, too.
According to Elon Musk, self-driving cars will displace 15% of the world’s workforce. Musk warns that driverless cars are closer than they might appear. Increasingly, trading on the stock market is becoming automated. A staggering 70% of daily trading is done by software instead of humans, which has resulted in massive job losses for stockbrokers and traders. Quantitative analysts, investors who use complex mathematical models to assess the market, are being outclassed by artificial intelligence. AI-led hedge funds are beating out human-led quant firms by considerable margins.
Cars and stocks won’t be the only industries affected by automation’s expansion, either. Indeed, President Obama made mention of the AI issue during his farewell speech, stating, “The next wave of economic dislocations won’t come from overseas. It will come from the relentless pace of automation that makes a lot of good middle-class jobs obsolete.”
In an MIT paper published this year by the well-regarded economists Daron Acemoglu and Pascual Restrepo, a pair previously optimistic about AI’s effect on jobs, found verifiable reasons for alarm. “As robots and other computer-assisted technologies take over tasks previously performed by labor, there is increasing concern about the future of jobs and wages,” the paper reads. “[W]e estimate large and robust negative effects of robots on employment and wages.”
“Who is winning the race for jobs between robots and humans? Last year, two leading economists described a future in which humans come out ahead. But now they’ve declared a different winner: the robots,” writes Claire Cain Miller for The New York Times about the evidence for automation’s ill-effects in Acemoglu and Restrepo’s paper. “Robots are to blame for up to 670,000 lost manufacturing jobs between 1990 and 2007, [the paper] concluded, and that number will rise because industrial robots are expected to quadruple.” According to another paper, one published by Oxford in 2013, 47% of total US employment could be at risk.
Others still contend that, while AI may displace workers in the short term, we can expect jobs to be created from the robots themselves. Self-serve gas pumps eliminated thousands of US jobs, but were quickly replaced by better-paying ones, for example. Workers were pushed into attaining higher education, swept into the middle class, or lost in poorer wages. “Just as cranes replaced dockworkers but created related jobs for engineers and financiers, the theory goes, new technology has created new jobs for software developers and data analysts,” Miller wrote about Acemoglu and Restrepo’s older, more optimistic paper.
But, the paper touting automation’s potential to render new jobs wasn’t based on real world data. While it is true that we have seen benefits arise from automation, there is no reason to expect this to be the rule in the future.
As artificial intelligence grows more intelligent and automation gains new abilities, are we preparing for the inevitable economic shifts? According to the MIT Technology Review, the US government spends an abysmal .1% of its GDP on programs that assist people in workplace shifts like this -- an appallingly low number when compared to other developed countries -- and that percentage that has been dwindling for the last three decades.
Automation has become an imminent threat to some. One that requires immediate solutions, most notably in the form of more robust social protections. A Universal Basic Income (UBI) has been supported by vocal Silicon Valley elites. The income would guarantee that poverty would not become an epidemic, regardless of the job market.
There are no plans to implement an emergency infrastructure through the UBI on a federal level, however. “We should not advance a policy that is premised on giving up on the possibility of workers’ remaining employed,” a White House report published last year argues. Despite the fact that there have been examples of well-funded tech startups giving small stipends to families with reasonable success, resulting in more productivity and education among participants.
Automation is looming over the workforce. Whether it will bring widespread negative or positive effects is yet to be seen. Little has been proposed to prepare the American workforce for the rise of AI and no protections for the poor or middle classes have been seriously considered on a federal level. What will become of the job market and the future of work itself remains shrouded in mystery. The future is drawing near, but we may not be drawing up solutions as fast as we should be.
About the Author: Dr. Diane Schleier-Keller is a business strategist and finance columnist. She has 3 years of experience in M&A and has been traveling the world to help train entrepreneurs to succeed in their business. You may also connect with her on Twitter.
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