Tuesday, March 28, 2017

"Robots are killing jobs after all, apparently: One droid equals 5.6 workers"

One of the lessons they really try to drive home in junior analyst school is: don't say "This time is different".
But this time might actually be different and the accumulated history of technology vis-à-vis employment may not be of much use as a guide. And the stakes are pretty high.

From The Register:

So much for the utopian techno future, according to this study
Industrial robots are depressing wages and increasing unemployment, according to a paper published by the National Bureau of Economic Research, a private, non-profit, non-partisan research organization in America.

Written by MIT economists Daron Acemoglu and Pascual Restrepo, "Robots and Jobs: Evidence from US Labor Markets" appears only days after Treasury Secretary Steve Mnuchin dismissed the possibility of automated systems taking jobs from people, saying, "It's not even on our radar screen."
Similar to the cosmological conundrum about whether the universe will continue expanding indefinitely or collapse upon itself, the impact of automation and AI on human employment is the subject of ongoing debate about whether automated systems will create more jobs than they destroy.
Among technology advocates, there's predictable optimism. Robert D Atkinson, president and founder of the Information Technology and Innovation Foundation, has gone so far as to place a bet through the Long Now Foundation that by June of 2025 the labor force participation rate and unemployment rate, reported by the US Bureau of Labor Statistics, will respectively be above 60 per cent and below 7.5 per cent.

"The 'robots are killing our jobs' proponents miss the fact that automation lowers prices (or raises wages), which in turn spurs increased demand for goods and services, and hence labor," he states in his argument.

If Acemoglu and Restrepo are correct, however, that may not be a wise bet. The researchers analyzed how the increase in industrial robot usage between 1990 and 2007 affected US local labor markets.
These robots are fully autonomous machines that operate without human intervention, doing tasks that at some point in the past were done manually, such as welding, painting, product assembly, moving materials, and packaging.

There are presently somewhere between 1.5 and 1.75 million industrial robots operating around the globe, according to the International Federation of Robotics. The auto industry uses about 39 per cent of such robots, followed by the electronics industry (19 per cent), metal product manufacturing (9 per cent), and the plastics and chemicals industry (9 percent), according to the researchers.

Acemoglu and Restrepo found that in areas exposed to industrial robots, between 1990 and 2007, "both employment and wages decline in a robust and significant manner (compared to other less exposed areas)."...

If you don't have access to the NBER version linked above here are Professor Acemoglu's MIT web pages.