Saturday, May 2, 2015

Is Worrying About Job Losses "a Distraction?"

James Bessen, a lecturer on technology and IP issues at Boston University, has an article in The Atlantic. He pooh pooh's the concern that accelerating technological changes doom the prospects of full employment for a middle class as "a distraction." The title of the article captures the credo: "Scarce Skills, not Scarce Jobs." Regardless of whether the ongoing technological revolution is displacing jobs or eliminating them, says Bessen, we should focus on policies that retrain workers for the new jobs.  That much is surely right; but it hardly means we should ignore the broader implications of automation reducing the net number of jobs available in the economy and what this might mean for society.

Here is Bessen:
In their book The Second Machine Age, Erik Brynjolfsson and Andrew McAfee make a strong argument that technology is transforming work in a wide range of occupations. “There’s never been a worse time to be a worker with only ‘ordinary’ skills and abilities to offer, because computers, robots, and other digital technologies are acquiring these skills and abilities at an extraordinary rate,” they write. In the past, new technologies tended to automate blue-collar jobs. Now, information technology has begun automating even white-collar jobs, and the new technologies will increasingly automate jobs for highly educated professionals such as doctors and lawyers. Already computers can diagnose breast cancer from X-rays and predict survival rates at least as well as the average radiologist. 
There is no doubt that technology is transforming work, but the question here is exactly how. ... [O]ne view contends that technology is not only taking over tasks, it is now eliminating work overall....  [T]he other view [is], technology doesn’t replace workers; it displaces workers to jobs with somewhat different skill sets. .... [I]n this view, technology is not causing an endemic shortage of jobs except in very mature industries. Instead, wages are stagnant because it is difficult for many workers to acquire the new skills and labor markets do not fully compensate workers for those skills. .... 
The difference between replacement and displacement is important because it affects policy. If technology is replacing workers, then there is little that policy can do to overcome economic inequality short of drastic redistribution. On the other hand, if technology is mainly displacing workers rather than replacing them, the future, perhaps after a lengthy transition, might not be so different from the past. But achieving that future depends critically on putting in place the policies that will encourage broad-based development of new skills. 
Bessen comes down on the side of "jobs are being displaced" not "replaced," but this seems to be an article of faith with him. The evidence he points to is not sufficient to support the conclusion. 

A close look at actual trends in the labor market suggests a difficult transition is underway today rather than a sharp break with history.
It might seem obvious that when smart machines take over human tasks, jobs disappear. According to 60 Minutes, “bank tellers have given way to ATMs, sales clerks are surrendering to e-commerce, and switchboard operators and secretaries to voice recognition technology.” But that is not what actually happened. ATMs did not eliminate tellers. Instead, because banks could operate branch offices with fewer tellers, they opened more offices and the total number of tellers grew.
That's pretty flimsy. Bessen's chart above shows the number of bank tellers hired leveled off sharply starting in 1978.  The number of tellers based on the above chart increased perhaps 80,000 from 1978 to 2009--a 13.7% increase.  However, U.S. population over this same period increased 38%, 222 million to 307 million. All those extra bank branches Bessen boasts of did not result in teller jobs keeping pace with population growth. There would have been many more teller jobs but for ATM machines becoming ubiquitous. 

Bessen goes on: 
While technology takes over some tasks, it also increases demand for goods and services and hence increases demand for workers performing the remaining tasks.
Does this seem like a non-sequitor to you? It does to me. Demand for goods and services in a consumer economy is driven by people wanting to buy consumer goods, which requires them to have money in their pockets to spend. If technology and automation eliminates jobs required to produce those goods, there will be fewer people with money in their pocket and less demand for consumer goods.

This much seems correct:
Instead of just eliminating jobs, new jobs are also created, sometimes in different occupations.
But the question is how many jobs are eliminated and how many are created. This is a matter of data and research. It won't do to go on faith alone that "things will work out."

Bessen continues:
The widespread deployment of computers in office occupations over the last three decades was accompanied by a 1.2% growth in jobs per year, even though some specific occupations such as switchboard operators lost jobs; healthcare jobs, which have also deployed computers, have grown at 2.5% per year. The total number of jobs in occupations that use computers has grown faster than the overall labor market. Computers have definitely not been replacing workers overall.
Bessen is being pretty vague here. What we know is that the labor force participation rate for the prime age group 25-54 has declined since 1992 from 71.4% to 63.1%. The question is, will accelarating technology changes, learning machines, and automation further erode this labor participation rate--no matter how we educate people. 

That's the essential question.

Bessen is correct that, no matter what, our policies should focus on educating a work force that can meet all the needs of the economy. 
[M]any of the new jobs require new skills. ...  In many of the new jobs, the required skills are difficult to learn, because the technology changes rapidly. When workers cannot easily acquire the skills that command good pay, their wages don’t grow. This—not massive unemployment—is why technology has contributed to stagnant wages for the last thirty years. While the unemployment numbers are down, over a third of businesses report difficulty hiring workers who have needed skills.

Perhaps new generations of artificial intelligence technology will change things in the near future. But, according to computer scientists, humans perform major tasks today that are not about to be taken over by machines. Artificial intelligence might also quicken the pace of change, intensifying the stress of switching to new jobs and learning new skills. But that is all the more reason for policies that can ameliorate the problems of displacement. A focus on the supposedly imminent end of work is at best a distraction from this challenge.
Bessen's conclusion that we should focus on educating the work force to meet our economy's needs is surely correct. However, the comment that "the supposedly imminent end of work is at best a distraction" is ideological and dangerous. If, as Bessen acknowledges might be the case, new generations of artificial intelligence technology will change things in the near future--which is the prediction made by the experts at the Milken Institute discussion (subject of my last post)--then focusing on that problem is essential. To treat it as a distraction will not prepare us to make the necessary changes in our thinking.

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