A Robot Is Going To Take Your Job
If you’re lucky
“People dramatically underestimate the size, complexity, and CHURN in the American economy as it currently exists.” — Marc Andreessen on the Tim Ferriss show
From December 2007 to June 2009 — the period known as the Great Recession — the American economy lost 8.8 million jobs.
So hearing how robots and artificial intelligence (automation) are going to replace millions of jobs sounds like a big deal.
But that 8.8 million number is calculated on net.
The monthly jobs report released by the Bureau of Labor Statistics (BLS) that gets the most attention reports the difference between jobs destroyed (Separations) and jobs created (Hires).
But the actual number of jobs destroyed during the Great Recession was much higher— more like 90 million!
We get these numbers from another BLS report — the Job Openings and Labor Turnover report (JOLTS).
The problem during the recession was not that we destroyed a lot of jobs, but that we didn’t create enough to replace them.
In fact, relative to the historical trend, the economy didn’t destroy that many.
During the 18 months of the Great Recession, we destroyed less jobs, a lot less, than we did the prior 18 months.
Check out the chart below — Separations fell during the recession.
Now look at this chart — Hires plummeted from over 5.2 million in October 2007 to a low of less than 3.6 million in June 2009.
Here are the charts together — when blue (Hires) is above red (Separations), more jobs are created than destroyed.
We actually created millions of jobs during the recession, just not enough to balance out the ones destroyed.
But the financial crisis and following recession wasn’t due to automation — those Layoffs were due to the collapse of a debt-fueled housing bubble.
On the other hand, job destruction due to automation is a good thing. It’s a sign of a healthy economy — it creates opportunity.
Separations are divided between Layoffs, Quits and Other. As opposed to Layoffs, a sign of a healthy economy is the number of Quits.
See this chart — it shows that Quits are up, which means that a lot of workers feel empowered to leave their jobs for a better one.
Quits are still job destroyers. Companies may decide to look for a person’s replacement, but they can also change the job requirements or eliminate the job entirely.
And this chart shows that the number of Openings is actually at a post recession high.
You could argue that Quit rates should be higher for where we’re at in the current business cycle( h/t Russ Grote). We may not be seeing the kind of churn we’d expect.
Regardless, we’re doing better, and new technologies are destroying some jobs and creating others.
New technologies make us more productive and allows us to do more with the same resources. Productivity drives wage increases, although that can be altered by other factors — See Mankiw.
Next time you hear how automation is going to destroy millions of jobs, just know that’s a good thing — it means more jobs are being created.
The truth is, we don’t know how many jobs will be created or destroyed in the future, but a market change based on productivity is a lot better than one based on a debt-correction.
No matter what happens, a great use of your time and energy is to gain new skills through technological advances.
If you do that, chances are you’ll be a Quit rather than a Layoff. You can thank the robots for that.
