Jason Furman (pdf), Chairman of the U.S. Council of Economic Advisors, gave a speech a couple of weeks highlighting the potential for automation to displace many of today’s workers, even as he insists we need more investment in artificial intelligence.
What they did on the Council is take the numbers produced by Carl Benedikt Frey and Michael A. Osborne, who argue that 47 percent of U.S. jobs are at risk of being replaced by automation (a study I discussed here) and then rank them by wages. What they found is that
83 percent of jobs making less than $20 per hour would come under pressure from automation, as compared to 31 percent of jobs making between $20 and $40 per hour and 4 percent of jobs making above $40 per hour
In other words, automation—which, of course, is deployed by private employers to increase profits—threatens to destroy a massive number of jobs currently done by the American working-class. Displaced workers will be jettisoned from the labor force and join the Reserve Army of the Unemployed and Underemployed.
It is true, over the long run (as long as capitalism continues to grow), new jobs will be created, and some of the displaced workers (and their children) will be forced to have the freedom to take them. But only some of them. In the short run (and, remember, the long run is merely made up of a series of short-runs), as Furman argues, “the process of turnover. . .could lead to sustained periods of time with a large fraction of people not working.”
Within the existing economic institutions, automated technologies are therefore likely to decrease the labor force participation rate, expand the ranks of the unemployed and underemployed, and increase already-high levels of inequality (as workers’ wages continue to stagnate and technology-induced profits soar).
To be clear, that’s not an argument against artificial intelligence and automation. Under other circumstances we might welcome them. It is a caution about the effects of deploying new technologies within the current economy—in which workers and their wages are mostly dependent on private employers, who hire them if and only if it is profitable.
“Is this time different?” Not really, outside of the mythical long-run, full-employment equilibrium offered by mainstream economists. Now as in the past, existing workers—on farms and in factories and offices, especially those who make the average wage or less—are forced to endure the consequences of the decisions their employers take to adopt new technologies.
As even Furman admits,
I see little reason to believe that the economic impact of AI will be very different from previous technological advances. But unlike many of the optimists, I do not find that similarity fully comforting, as technological advances in recent decades have brought tremendous benefits but have also contributed to increasing inequality and falling labor force participation.