Are Robots Coming for Your Job?

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By Hassan A. Kanu

“Humans,” a drama about people collaborating with robots referred to as “synths,” launched its second season on AMC Feb. 13.

Curiosity, uncertainty and apprehension of the coming age of robots underlie the science fiction series. Similar sentiments were seen in a campaign against the confirmation of President Donald Trump’s former pick for labor secretary, Andrew Puzder, who withdrew his controversial nomination Feb. 15.

The campaign featured robot characters whose catchphrase is: “We’re coming for your job.” The tagline was in response to Puzder’s previous statements expressing a preference for robots and automation over human workers. The former nominee and CEO of CKE Restaurants, Inc., parent company of Hardee’s and Carl’s Jr., also argued against raising the minimum wage. Increasing minimum wages will “result in job losses and accelerate the dawn of automation,” he wrote in his personal blog.

In other words, increasing the minimum wage could kill jobs because employers may lay people off instead of paying them more; employers would then put their efforts into lower-cost alternatives, which would speed up automation—which in turn kills even more jobs!

The fast food CEO was weighing in on long-running policy debates, and many observers view the issues of wages, job-creation and automation similarly. But is that how things would play out?

As it turns out, robots are indeed coming for your job. But that question itself and the related issue of how fast they’ll replace you and me has little to do with the minimum wage, economists and academics in robotics and related fields told Bloomberg BNA.

Automation is already underway, and will continue “whether or not minimum wages are raised,” Michael Kende, chief economist of the Internet Society, told Bloomberg BNA.

Also, the sorts of minimum wage increases that have been proposed, in and of themselves, won’t have much of an effect on overall employment levels either, Guy Michaels, a labor economist and professor at the London School of Economics, said.

‘Modest’ Effect on Employment

Historical evidence doesn’t show that minimum wage hikes increase unemployment, the economists said.

“The cumulative empirical evidence from the last 25 years has been that minimum wage increases have had a quite modest effect on unemployment,” Michaels told Bloomberg BNA.

In other words, the notion that increasing minimum wages will result in a significant loss of minimum wage jobs is not so straightforward. These kinds of arguments seem intuitive—if an employer has to pay someone more, then maybe they’ll just find a way to do without the person—but that’s essentially “knee-jerk economic policy,” Kende said.

“It’s like saying raise taxes and people won’t invest—we’ve seen that disproved in California and Kansas as well,” Kende said. The notion that an increased minimum wage will decrease overall employment has generally been disproved, “and employers just can’t respond that fast in any case,” he added.

“One place to look is the whole west coast, which has raised minimum wages and seems to be doing just fine economically,” Kende said.

“The other point here is that wages have been depressed for quite some time,” Kende said.

According to a Pew study of five decades of government data, “today’s average hourly wage has just about the same purchasing power as it did in 1979, following a long slide in the 1980s and early 1990s and bumpy, inconsistent growth since then,” the research center said.

“There’s kind of this imbalance—somehow corporate profits and executive salaries are going up, but not wages.” Good policies would “align wages to people’s needs in terms of living and getting by,” he said.

So maybe an increased minimum wage generally doesn’t affect overall employment levels much. But would it result in faster adoption of industrialized robots or “accelerate the dawn of automation?”

‘Dawn of Automation’ Already Underway

Minimum wage increases are unlikely to have more than a negligible effect on the rate of automation, economists and technological academics said.

A significant rise in minimum wages “might have an effect” on the rate of automation “on the margins,” Michaels said. “But technology is more the first order determinant. Once the technology for replacing workers is cheap and reliable enough, that’s the first order driving force in the long run toward more automation.”

“I don’t expect that any minimum wage decision would be all that important in the medium-to-long run,” Michaels said. “What matters is the relative price of machines compared to humans, and if you think about the medium-to-long run, what’ll move quicker is the quality-adjusted price of machines more so than humans,” Michaels said.

A 10 percent increase in wages wouldn’t have a meaningful impact on adoption decisions “whereas the fact that technology is really progressing quite fast in some areas, like technological sensing and machine learning, that’s really more important,” he said.

Countries with higher wages have actually adopted automation earlier, Michaels noted. “But you look now and the biggest buyer of robots is China, even though they still have wages way below that of most of the west,” he said. “So the place to focus is really the technology, because even that kind of middle-income country is buying up robots.”

Not a Net Job-Killer, But Some ‘Lose Out.’

But what about automation generally, without regard to its speed? Are those who believe increased use of robots and machines would cause further devastation to the country’s labor force on the right path?

‘Generally, no, but….,’ was the collective answer from economists and technologists.

Michaels in 2015 co-authored the first study on the economic effects of industrial robots. The paper analyzed data from the U.S. and 16 other countries from 1993 to 2007.

“The basic findings are that labor productivity increased due to automation, and that there was no significant overall effect on employment,” Michaels told Bloomberg BNA.

Notably, there was “a significant negative effect on low scale employment.”

In other words, increased automation has increased the productivity of factories and business, and the overall economy. It doesn’t doom countries to permanently low employment levels, but certain categories of low-skilled work will be lessened or even eliminated.

“There’s always some group of people that loses out, but it’s a gain overall for society,” Michaels said.

Kende, a dual citizen of the U.S. and Switzerland, used the Swiss as an anecdotal example. Most McDonald’s restaurants in Switzerland give customers the choice of a fully-automated experience or going to a cashier.

Supermarkets are almost fully automated as well. “You use a scanning gun, fill up your cart, and they charge you on your way out—there’s like a 5 percent chance they’ll audit your bag,” Kende said.

There are also hardly any parking attendants in Switzerland, Kende said. “Almost all lower-end jobs like working in retail, parking, gas stations, are basically automated, and there’s been no large increase in unemployment—it’s in the low single digits,” he said.

This example indicates that the view that an increased minimum wage kills jobs may be accurate as applied to businesses like fast food restaurants, which involve less-specialized tasks. But the notion doesn’t apply to workers outside the lowest brackets of the workforce, or to the economy as a whole.

“I can’t say displacing conventional restaurant workers will produce a net job loss,” Marjory Blumenthal, senior policy analyst and director of RAND’s Science, Technology, and Policy Program, told Bloomberg BNA. Blumenthal previously served as executive director of the President’s Council of Advisors on Science and Technology (PCAST) under President Barack Obama.

New Categories of Work

People now do lots of jobs that didn’t exist 100 years ago, or even 25 years ago—think programmers, coders and social media managers, for example.

“New opportunities and occupations arise because of technological change,” Michaels said. “The reason why there’s less focus on this generation of new jobs is because these things are hard to measure and they just don’t generate as much attention as job destruction.”

Robots and automation are also responsible for job creation with regard to certain kinds of “human-machine collaboration”—like in the AMC show—“and work in hazardous areas, or search and rescue operations,” Blumenthal said.

“It’s easy to identify what’s displaced, and always harder to identify where the new job growth comes from,” she said.

More Jobs at Risk in New Wave of Automation?

Most of the economists and other academics took care, though, to mention that the current wave of automation could be different from those of the past.

“The question everyone has is whether this is different from textile mills, assembly lines, the first wave of robots, and I think people are starting to think it might be,” Kende said. “If you buy into the Moore’s law theory,” which says that computer chips are doubling in speed every 2 to 3 years, “what that really says is as more time goes by these machines will be able to do things that really approach what humans are capable of, and will start taking over a lot more jobs.”

For this reporter, robots that can write news articles using an algorithm immediately come to mind. Self-driving cars are another innovation that threatens more and more kinds of workers. Truckers hold the most common job in many states, numbering around 3.5 million overall, according to estimates from the American Trucking Association. There also are drivers of taxis, buses and, of course, Ubers, to think about.

“The first jobs to go are typically the most routine ones,” Michaels said. “But I do think there’s some white collar kind of middle-skilled jobs, and to some extent even higher-skilled ones, that are now being threatened.”

As machines keep becoming ‘smarter,’ more capable and cheaper, there will be “new ways for computer-based technologies to do not only the work of people with lesser skills but even those who do more sophisticated work,” Blumenthal said.

“This is not some deterministic process—society has some role to play in terms of support for the job market as a whole,” Michaels said.

Reconditioning and retraining people for higher-skilled jobs are useful options, “but they tend to be harder for older workers, so we shouldn’t pin huge hopes on everybody being able to make a transition,” he said.

Another option is to identify the “specific losers” during a technological change, and to “compensate them.” Kende also pointed to the idea of a basic minimum wage—paying everyone a set amount whether or not they hold a job.

Blumenthal seemed more optimistic about future effects on employment and less pessimistic about the level of job-destruction possible, even in the new wave of automation.

“There are many possibilities given the way technologies are being developed—there’s the incorporation of AI for decisional support, possibilities for human-robot collaboration, and possibilities for working in areas or circumstances where a human alone couldn’t,” she said. “I think it’s important to maintain a balanced view of how technology affects work and how that affects economics. There’re a lot of unknowns, but I do think there’s a lot of good that can come out of contemporary technological developments.”

To contact the reporter on this story: Hassan A. Kanu in Washington at hkanu@bna.com

To contact the editors responsible for this story: Peggy Aulino at maulino@bna.com; Terence Hyland at thyland@bna.com; Christopher Opfer at copfer@bna.com

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