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Is Automation Going to Eat Your Job?

Some data suggests not…

Current common wisdom has it that everyone will be losing their job to automation real soon now. AI is going to eat the world, and the US needs universal basic income because all the truck drivers are all going to lose all the jobs this week, or next week at the latest.

I have my doubts.

I suspect that many readers will be difficult to convince, so before I get to my argument I’ll just put forward a few facts.

In its 2017 executive summary, the International Federation of Robotics informs us that 35% of the world’s industrial robots are purchased by the automotive industry putting it ahead of even the semiconductor and electronics industries. Auto manufacturers’ use of robots has been steadily increasing since 2010. Let’s take a look at what the US Department of Labor has to say about employment in that industry since 2010…

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https://data.bls.gov/timeseries/CEU3133600101?amp%253bdata_tool=XGtable&output_view=data&include_graphs=true

Note that these numbers are for jobs in motor vehicles and parts manufacturing, the jobs that would be most affected by automation. It does not include the jobs that would not be affected by automation: wholesale, retail, or repair and maintenance jobs. In fact, the 2017–2018 State of the Region report by the Detroit Regional Chamber notes that “mechanical and industrial engineers saw the largest growth”.

On the flip side, In the Chinese factory city of Kunshan, Foxconn claims it has reduced its workforce by 60% through automation.

Now let’s turn to South Korea. In its Executive Summary World Robotics, the International Federation of Robotics observes that:

“The countries with the highest robot densities by far are the Republic of Korea (710 robots per 10,000 employees) and Singapore (658 robots). The Republic of Korea has had by far the highest robot density in the manufacturing industry since 2010.

What impact is all this automation having on wages? Has it turned South Korea into a worker’s dystopia with starvation-level wages? It turns out that South Korea’s minimum wage is 8,350 won ($ 7.37 USD) per hour, 12¢ higher than in the USA.

In Singapore, the year over year growth in median income has outstripped western countries (showing US, UK, Germany and Canada for comparison) by a considerable margin since 2010.

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Peter Lindert and Jeffrey Williamson produced a rigorous analysis of Earnings and Cost of Living indices in the United Kingdom pre and post Industrial revolution. Their conclusion is that both wages and standard of living increased dramatically post Industrial Revolution. People made more money, and the essentials of life cost less.

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Even their harshest critics, such as Charles Feinstein, do not dispute the increase, but merely the size or rate of the increase.

Clark Nardinelli, author of Child Labor and the Industrial Revolution, and professor at Clemson University writes:

“The standard-of-living debate today is not about whether the industrial revolution made people better off, but about when”

Interpreting the Facts

The numbers from the US auto industry are unambiguous. Increased automation simply has not resulted in fewer jobs. With the data I have, it is impossible to claim with certainty that automation has increased jobs (I cannot establish a causal link), but since jobs have increased, it is clear that nothing, not automation or anything else, has resulted in job losses.

As for the Foxconn claim, I would remind the reader that this is a PR release by a commercial entity, not statistics from a government agency. What the government stats do show (in the same article from South China Morning Post) is that the number of laptops produced in Kunshan is down to 51 million from a high of 120 million due to declining sales. It is a reasonable possibility that Foxconn may have simply reduced its workforce as a result of lower sales volumes. Of course, framing it as the result of modernization makes for the better press, so I remain skeptical that a 60% labour force reduction is due to automation when a 60% decrease in demand is a much more likely explanation.

I tend to favor the analysis that attributes increased wages and standard of living in Industrial Revolution Era, England to a virtuous circle of automation leading to affordable products of a standard quality leading to increased production, leading to higher wages and increased labor force which in turn leads to greater disposable income and higher demand for the aforementioned affordable quality products.

This latter fact is undeniable. From the first truly automated production — the manufacturing of naval block and tackle in the Portsmouth Naval Yard using machines designed by Samuel Bentham, Henry Maudslay, and Marc Isambard Brunel — automated manufacturing has led directly to lower prices, fewer defects, and better quality-to-price ratios.

I am not trying prove conclusively that automation will always increase employment and improve the standard of living using only two examples.

I am making the point that there reasons to question the current narrative and view it critically. These examples, and many others, are proof that automation does not always create job loss. As to whether it sometimes does, that is too extensive a question to handle in one small article.

So far I have focused on manufacturing. So what about service jobs? Wait staff and drivers?

It is instructive to note that since the introduction of the Airbus 320, modern aeroplanes are entirely capable of automated take-off and landing, and preventing certain types of accidents due to pilot error. Yet the presence of a human pilot is considered essential. And in certain documented cases, the automation causes accidents instead of preventing them.

A commercial airliner takes off and lands in a highly controlled environment. The runways are restricted, only one aeroplane at a time uses them, there are no children, dogs, or other drivers to worry about. Nevertheless “Automatic landings probably account for less than 1% of all landings on commercial flights” according to FlightDeckFriend.com (a website built by Pilots for Pilots). This is the best that can be archived for machines that cost billions of dollars to design and certify, and that sell for hundreds of millions of dollars.

There are roughly 3.5 million commercial truck drivers in the US. They drive in heavy traffic surrounded by unpredictable drivers, and innocent pedestrians. Not only that, but a tractor-trailer cab sells for only $100,000, not $200,000,000. How are we to imagine millions of robotic trucks safely navigating infinitely more complex traffic situations than a runway, using robotic systems that will have to cost a thousand times less than the ones on a commercial jet? I hope the reader will understand my skepticism.

Fred LeFranc, the founder and CEO of Results Thru Strategy, which advises hospitality firms says:

“We are at the place where the most repetitive tasks can be performed by a robot, and they don’t call in sick, they don’t talk back.”

As they used to put it rather quaintly in my hometown of New York: It is to laugh.

Robots = mechanics + computer + programming. How could that possibly go wrong? My computer doesn’t call in sick. Instead it crashes when I am on the last paragraph of a 1000 word essay, and then when I reboot it, my file is corrupt and unusable. My washing machine does not talk back. Instead it just stops working until I call a service tech — who takes two weeks to show up and then does not have the necessary part with him when he does. Yeah, robot employees would be just delightful. At least when human calls in sick you can guess when they will be better, and even if they talk back, at least they on the job… which is more than I can say for my washing machine.

The McKinsey Global Institute claims that fewer than 5% of occupations could be completely automated (A Future That Works: Automation, Employment, and Productivity)

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Obviously I am inclined to believe them, and I think you should too. Politicians are attempting to manipulate the public through fear, and that is not a good thing. Social engineering experiments produce unintended consequences far more frequently than they work out exactly as planned.

I encourage the reader to take heart in the fact that despite the non-stop predictions of the end of the world, civilization, and humankind, the world keeps turning and the overall condition of humanity is increasingly better over time. Some individuals will definitely lose their jobs to automation, and it will be difficult for them, but civilization is not coming to end — not for this reason in any case — and we should not overreact. When someone tries to convince you that it is, I believe you should demand the same kinds of facts and analysis that I have provided here instead of just taking them on faith.

I suggest that the most likely reaction of society and the job market in the face of this latest round of automation will be the same as it has been for millennia: better goods, more affordability, increased overall employment, and a higher standard of living. If you do not believe me; ask yourself if you would rather be living in pre-industrial England with a life expectancy of 40 years and one out ten children dying before they turned one year old.

My book The Chaos Factory: The inside story of corporate IT failure is available here at Amazon.

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