Factoring in the Potential of Machines to Take Our Jobs

January 12, 2017; New York Times and McKinsey Global Institute

“The next wave of economic dislocations won’t come from overseas. It will come from the relentless pace of automation that makes a lot of good, middle-class jobs obsolete.”

Is this, as President Obama put forth in his Farewell Address, a real problem to be addressed if we are going to cure the economic malaise that continues to affect the lives of millions of Americans? A recently published report by the McKinsey Global Institute (MGI) evaluates the shape and pace of automation and provides some needed perspective on the challenges it will pose to our labor market and to our economy.

According to the MGI analysis, current technology and expected advancements are capable of changing, and even replacing, most jobs.

Advances in robotics, artificial intelligence, and machine learning are ushering in a new age of automation, as machines match or outperform human performance in a range of work activities, including ones requiring cognitive capabilities.… Almost half the activities people are paid almost $16 trillion in wages to do in the global economy have the potential to be automated by adapting currently demonstrated technology.

But not everyone agrees with McKinsey. Steve Lohr, writing in the New York Times, notes that there’s no consensus among experts on how big a factor automation will actually be. While “Carl Benedikt Frey and Michael A. Osborne, researchers at Oxford University, estimated in a widely cited paper published in 2013 that 47 percent of jobs in the United States were at risk from automation…a report published last year by the Organization for Economic Cooperation and Development concluded that across its 21-member countries, 9 percent of jobs could be automated on average.”

Even at the low end, many people will be affected. The next important question is how quickly. James Manyika, a director of the institute and an author of the report, told the New York Times, “This is going to take decades. How automation affects employment will not be decided simply by what is technically feasible, which is what technologists tend to focus on.

The pace of change is a product of the sheer technological challenges of turning human work over to machines and the high of implementation. “People see advances in self-driving vehicles, and think that the jobs of America’s 1.7 million truck drivers are in imminent peril…replacing America’s truck fleet would require a trillion-dollar investment.” MGI projects:

Half of today’s work activities could be automated by 2055. That threshold could be reached 20 years earlier or 20 years later…depending on economic trends, labor market dynamics, regulations and social attitudes. So while further automation is inevitable, McKinsey’s research suggests that it will be a relentless advance rather than an economic tidal wave. “We have more time than we think to adjust to the world that technology makes possible,” said Matthew J. Slaughter, an economist and dean of the Tuck School of Business at Dartmouth College.

If McKinsey is correct, policymakers have time to adapt to this challenge. And they clearly spell out the work that needs to be done: “They must evolve and innovate policies that help workers and institutions adapt to the impact on employment. This will likely include rethinking education and training, income support and safety nets, as well as transition support for those dislocated. Individuals in the workplace will need to engage more comprehensively with machines as part of their everyday activities, and acquire new skills that will be in demand in the new automation age.”—Martin Levine