The End of Work
One of the biggest threats to modern society is automation and we should start discussing serious solutions before its too late.
Don’t believe me? Let me explain.
What is automation?
When people think about automation and work, they often imagine robots operating within a manufacturing environment. A key thing to understand, however, is that automation and robotics are two distinctly different things. Yes, crossovers exist between the two, but to appreciate the nuances of the technology, it’s a good idea to keep them separate in your mind.
Automation is the term used when describing a process or task performed by software or a machine, usually undertaken by a human. It can be mechanical or virtual; simple or complicated.
Robotics, on the other hand, is a branch of engineering focused on designing and building robots. While robots may automate some tasks, robotics has proven a very difficult field and most robots have little to do with automation outside of industrial settings. And even within manufacturing facilities, other types of machines are used which don’t come under the robotics banner.
The Past
You‘re probably thinking, “Come on Pete, automation isn’t going to be that bad. People will just switch jobs because new ones will be created. And anyway, I’m safe because I’m a high-skilled worker. My job can’t be automated”.
Well, I’m afraid I have some bad news for you.
Yes, we’ve been through technological revolutions before, and we’ve survived them. But this time, things are very different. Firstly, the pace of technological change during the last two centuries has been much slower than what we see currently. Throughout the first two Industrial Revolutions, people had ample time to react and find new employment opportunities. Secondly, automation has traditionally replaced only the harshest and most damaging forms of manual labor, but today, every job is a target.
We know for a fact that when unemployment increases drastically, what follows isn’t pretty. There are numerous examples in our history of societal discontent, increased crime, famine, riots costing billions and in the worst cases, deaths.
Many researchers believe that the current, “4th Industrial Revolution” is going to be several times more dramatic than the previous ones. If we don’t act now, things can get really bad.
We all know automation changes industries significantly, but what has happened in the past? Let’s look at the numbers and examine the effects.
Manufacturing: Productivity at a Cost
It would surprise a lot of people that the decline in manufacturing jobs doesn’t equate a decline in output.
A survey of over 4 thousand adults in the USA showed that 4 out of 5 Americans know that manufacturing jobs in the US have declined over the past three decades. But only a third of them knew that the manufacturing output has risen over the same period. And out of those 4 thousand, over 47% thought that output had declined.
They couldn’t be more wrong:
In the 1980s, 25 people were employed for every $1 million worth of output made. Today we get the same results by hiring just 5 workers (and this is adjusted for inflation). This is why, despite declining employment numbers, US manufacturing output in the first quarter of this year was more than 80% above its level 30 years ago, according to BLS data.
We have to face reality — manufacturing output is no longer tied to employment numbers.
How does that happen? Simple, through automation at a record rate. Over the last 30 years, robot density per 10 000 employees in the manufacturing and auto industries has increased to 200 and 1200, respectively. If robot adoption continues at the same rate, we’ll have over 18 million industrial robots in 2035 and they will perform work equivalent to approx. 100 million workers. Can you imagine that? Assuming the automation rate stays the same and doesn’t increase, these robots will be able to produce more than the entire current manufacturing output on the planet.
While some politicians benefit from spreading the myth that bad international trade deals are the sole reason for this significant job loss, the real problem continues to escalate. Is trade a factor? Yes, but much less significant than you may think:
Do you believe me now? “Well Pete, this is just the manufacturing industry. I’m sure mine won’t be affected this badly”. Unfortunately, the effects I’ve described above can be seen across many industries.
Retail: Going Online
The retail industry has undergone drastic changes over the last few years, and more is yet to come. Stores and malls around the world keep closing as online shopping with one-day delivery comes around. Our desire for convenience will lead to the elimination of millions of retail jobs.
You’re probably well aware of the big fight happening between Walmart and the “newcomer” Amazon right now. Here are some numbers:
- Walmart’s net income was $9.84 billion in 2018. They have 2.2 million employees.
- Amazon’s net income was $10 billion in 2018. They have 647 thousand employees.
- In just 7 years, robot density at Amazon has reached 3,000 per 10, 000 employees. This is more than twice that of the auto industry.
More income with less than three times the workforce, while revolutionizing several other industries at the same time? A great job to Amazon, but not so good for the workforce.
Gambling: What happens in Las Vegas…
Let’s take a look at a very different market: the casino industry. Nevada’s employment numbers peaked in 2006 reaching 215,041 people. 10 years later, this number had dropped to 166,741. Kiosks, self-check-in, online gambling. The trend is obvious. Casino dealers are on their way out and even bartenders are next.
In Southern Nevada, 38% to 65% of jobs are at risk of automation within the next 15 years. This means somewhere between 500,000 and 860,000 of the 1.3 million jobs in Las Vegas will be substantially changed or displaced by automation by 2035.
The Future
If you’re still hesitant, I implore you to research your industry and see what the trend is. There’s a very high chance that you’re at risk of replacement within the next 10/20 years. Are you highly educated?
Well, positions that require sophisticated thinking, a lot of studying and research are also in danger. Automated software is used by law firms to help conduct document searches, by publishers to write earnings reports, by lenders to process mortgages and by traders to make short-term market predictions. In every single case, these systems have better and faster outcomes than if humans had done the work, according to the UK Government.
Through Business Process Automation (BPA), organizations of all sizes can take basic processes and improve their efficiency by automating. We see the proliferation of software tools across HR, accounting, project management, and contract management. Companies today are essentially creating a back office but without people.
According to McKinsey & Co, 30% of all work is likely to be displaced by 2030. That’s approximately 800 million people.
What will they do then? Start programming? Yeah, sure.
When a company automates and reduces workloads by 30%, the next logical step would be to trim all “unnecessary” employees. Less work for humans = fewer humans.
Those who have told us that AI will create more jobs than it eliminates are wrong. Automation is designed to ELIMINATE jobs. If you’re waiting for robots to appear on the streets to change your skillset and career, don’t. By that time, it would be too late.
Light at the end
I didn’t expect this article to come out so gloomy as I’m actually sure that civilization will benefit greatly from automation. One day, we might reach a point where all necessities for life are abundant and we’re focused on tackling only the toughest problems like space travel, eliminating sickness and death.
But we’re still far off from that. We must think about the impact on people’s lives. How is society going to handle millions of workers losing their jobs in a short timespan? We might have no other choice than to introduce UBI…but that’s a topic for another article.
Automation could change the very way we view ourselves and our purpose in life. Maybe in the future, people won’t identify themselves through their monetary value and success, but through their contributions to community, enlightenment, and arts. Wouldn’t that be fantastic?
For the few of you who stayed till the end, thank you! I’d appreciate your feedback in the comments below.
