Is Automation Destroying Work?

Thoughts about digital transformation for legal & compliance advisors

These posts represent my personal views or occasionally those of colleagues working on legal and regulatory compliance issues related to enterprise digital transformation powered by the cloud and artificial intelligence. Unless otherwise indicated, they do not represent the official views of Microsoft.

The dystopian fear that AI will automate millions of jobs out of existence without creating enough new jobs to replace them is widespread. Not a week goes by without a new report from a prominent publication or think tank grimly forecasting the dawn of an era where robots and AI render most human workers redundant.

Technology optimists usually respond by pointing to the many past instances where a new technology displaced older kinds of work but without devastating effects—for example, the rise of the automobile in the early 20th century that ended the world of horse-drawn transportation. The optimists note that in the long run each new technology has always ended up creating many more jobs than it destroyed. But today’s pessimists have a retort: because AI’s potential to replace human work is so extraordinarily broad, this episode in the long-running story of technology displacing workers will have a different and much less happy outcome.

Consider for example this report from a February issue of TIME magazine:

“The number of jobs lost to more efficient machines is only part of the problem. What worries many job experts more is that automation may prevent the economy from creating enough new jobs... In the past, new industries hired far more people than those they put out of business. But this is not true of many of today’s new industries... Today’s new industries have comparatively few jobs for the unskilled or semiskilled, just the class of workers whose jobs are being eliminated by automation.”

Like me, you’ve probably read many recent articles that advance similar views. But would you be surprised if I told you that the excerpt above comes from an issue of TIME published in February 1961? As we can infer from the present state of the world, that pessimistic forecast from the era of President Kennedy proved wildly off the mark. While automation has indeed eliminated untold millions of jobs since that time, our economy has more than compensated for that technology-driven headwind. According to the U.S. Bureau of Labor Statistics, in December 2018 roughly 157 million people were employed in the U.S., more than double the 70 million employed in 1960, and unemployment is today at a 50-year low. Clearly something very important has been happening in our economy to compensate not only for the kinds of automation that existed in 1961, but for all the succeeding waves of tech-powered automation since then. And let’s not forget that those succeeding waves have included every major phase to-date of the seemingly never-ending progress of computer power: from mainframes to PCs to the Internet and now the cloud. So far, the cumulative impact of these innovations in computing has not come close to destroying work in the modern economy.

Of course, these facts don’t prove that today’s technology pessimists will turn out to be just as wrong as those of 1961. Although today’s economy indisputably remains a powerhouse creator of jobs, no one in their right mind would claim, like Voltaire’s Pangloss, that we are living in the best of all possible worlds. Few things are more important to our collective well-being than the ability of every member of society who wants one to obtain a good job at a good wage. This remains a benchmark we have yet to fully achieve. It would be terrible if we were to move further away from it than we are today rather than using technology and policy innovations to close in on it. That’s a compelling reason why we should continue to take the pessimists’ concerns with the utmost seriousness, no matter how many times their predictions fail to come true.

Next week I propose to look at some ideas from economics that may explain why new jobs continue to be created even as automation ceaselessly marches on. I hope that these ideas might even give us some guidance on what enterprises and policymakers can do to increase the odds that AI will become a net creator of good jobs at good wages rather than a destroyer.

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