Technology Creates and Destroys Jobs

Populist themes examined in the previous two blog posts expressed opposition to immigration, globalization, and international trade in both the U.S and the U.K. Similar sentiments are heard in several European countries heading into elections in the coming months. A common denominator in these movements is loss of jobs. Globalization and international trade have resulted in well-paying jobs being moved to lower-cost production countries, while immigrants are seen as competitors for the jobs that remain.

Yet, promises to bring jobs “back home” do not ring true. Both manufacturing jobs and service jobs that have been “off-shored” have been subject to automation, as have jobs that never moved but have just disappeared. A recent George Will column reported on a study that looked at the 5.6 million manufacturing jobs lost in the U.S between 2000 and 2010. Trade accounted for 13% of jobs lost while increased productivity accounted for over 85%. This trend is far from over, as technology finds ways to reproduce processes in algorithms that can be programmed for learning by machines.

A frequently-cited study from Oxford University examined steps involved in different jobs to assess their susceptibility to automation. That 2013 study looked at 700 detailed occupations from a list compiled by the U.S. Department of Labor. The Oxford study concluded that about 47 percent of total U.S. employment is at risk of being automated.

The study assigned a probability to each of the occupations for its likelihood of automation. The breadth of the analysis is evident in the specificity of the occupations. For example, chefs and animal trainers were each assigned a probability of 10 percent. Telemarketers were determined to be 99 percent likely for automation. Construction laborers were rated 88 percent probable for automation as prefabrication enables a greater share of construction work to be performed under controlled conditions in factories. Construction supervisors, on the other hand, scored only a 17 percent probability of automation.

Although technology also promises to create myriad new occupations not currently envisioned, it is likely that work in the future will require fewer hands to produce the goods and services to satisfy people’s needs. This prospect has driven much speculation as to how to address an increasing number of unemployed persons, in particular how to assure they can obtain adequate food, shelter, and clothing. These concerns are shared by governments, which are often the last resort for meeting human needs, and by businesses, which must have buyers for the goods and services they so efficiently produce.

Some people in the information technology sector find assurance in the assumption that new technology always creates more jobs than it destroys. As Kevin Maney wrote in a recent Newsweek article, “Nobody’s grandmother was a search engine optimization specialist.” Others are examining the concept of a universal basic income. The basic income is envisioned as a minimum guaranteed government payment to all citizens regardless of their private wealth. Some history of the concept is contained in an August 2, 2015 blog post ( An update with recent research will be posted next on Fifty Year Perspective.   

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