(Update) Public policy is failing to address the economic disruption from rapidly advancing technology

Another in a series of posts about the technology tsunami rapidly transforming the labor force.

The Washington Post this week has a couple of interesting reports on jobs affected by the Technology Revolution, and the economic disruption it is having on society.

First, Jef Guo writes at the Wonkblog, We’re so unprepared for the robot apocalypse:

Economists have long argued that automation, not trade, is responsible for the bulk of the six million jobs shed by the manufacturing sector over the last 25 years. Now, they have a put a precise figure on some of the losses.

Industrial robots alone have eliminated up to 670,000 American jobs between 1990 and 2007, according to new research from MIT’s Daron Acemoglu and Boston University’s Pascual Restrepo.

The number is stunning on the face of it, and many have interpreted the study as an indictment of technological change — a sign that “robots are winning the race for American jobs” (Clair Cain Miller, The Upshot at The New York Times). But the bigger takeaway is that the nation has been ill-equipped to deal with the upheaval caused by automation.

The researchers estimate that half of the job losses resulted from robots directly replacing workers. The rest of the jobs disappeared from elsewhere in the local community. It seems that after a factory sheds workers, that economic pain reverberates, triggering further unemployment at, say, the grocery store or the neighborhood car dealership.

In a way, this is surprising. Economists understand that automation has costs, but they have largely emphasized the benefits: Machines makes things cheaper, and they free up workers to do other jobs. For instance, 41 percent of Americans were farmers a century ago, but thanks to tractors and mechanical harvesters, only 2 percent work in the agriculture today. The rest of us now can now aspire to be programmers or anesthesiologists or DJs or drone pilots.

The latest study reveals that for manufacturing workers, the process of adjusting to technological change has been much slower and more painful than most experts thought. “We were looking at a span of 20 years, so in that timeframe, you would expect that manufacturing workers would be able to find other employment,” Restrepo said. Instead, not only did the factory jobs vanish, but other local jobs disappeared too. Acemoglu and Restrepo say that every industrial robot eliminated about three manufacturing positions, plus three more jobs from around town.

If we are to make it through the next wave of automation, which is predicted to upend even more industries, we may have to rethink our policies about work and education — and learn from the industries that have coped the best.

Their research from Acemoglu and Restrepo joins the work of David Autor, David Dorn and Gordon Hanson, who have shown that the harms of trade with China were similarly concentrated in certain communities. The laid-off manufacturing workers couldn’t quickly find new jobs, so the economic pain lingered in their neighborhoods. Experts still believe that trade and automation can benefit Americans overall, contributing to lower prices and creating new kinds of jobs. But this evidence draws attention to the losers — the dislocated factory workers who just can’t bounce back.

The United States does have a program to retrain workers who lost their jobs to overseas competition, but research shows that most of them turn to other parts of the government safety net, such as Social Security, disability benefits and Medicaid. None of these efforts, though, seem to be doing enough for communities that have lost their manufacturing bases, where people have reduced earnings for the rest of their lives.

[T]he new findings bolster the conclusion that these economic dislocations are not brief setbacks, but can hurt areas for an entire generation.

Acemoglu and Restrepo’s paper is also notable for its specificity. It has been difficult to pinpoint the impacts of technology on employment, in part because the effects have been so widespread. “When economists talk about automation, we’re actually talking about a bunch of stuff — we’re talking about capital, software, machinery, robots, artificial intelligence,” Restrepo said.

Many of these changes are invisible, or at least taken for granted, which is why false narratives persist, like the idea that trade with China caused the vast majority of job losses in the past decade. It’s harder to villainize Microsoft Word, or the robotic welders that have quietly replaced humans in many car factories.

How do we even know that automation is a big part of the story at all? A key bit of evidence is that, despite the massive layoffs, American manufacturers are making more stuff than ever. Factories have become vastly more productive. Many factors contributed to these changes and Acemoglu and Restrepo focused on one in particular — the rise of the industrial robot.

These are what people typically envision as robots — the autonomous sleds that carry parts across the factory floor, or the programmable arms that can weld, paint and even operate heavy machinery. The researchers obtained new data on the spread of this new technology, which is what enabled them to estimate how many jobs it displaced. Theirs is not a full accounting of the costs of automation, but a precise look at one component of this trend.

Since industrial robots still represent just a fraction of what we think of as automation, the claim that they caused 670,000 lost jobs is all the more surprising. As the researchers mention, some consultants believe that the number of industrial robots will quadruple in the next decade, which could mean millions more displaced manufacturing workers.

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In the past, machines did automate many jobs out of existence, but new technology always created new opportunities — new kinds of desires, and new kinds of jobs to fulfill them. The recent anxieties about technological change are hardly new: Writing in the 1930s, the economist Maynard Keynes counseled patience, promising that any jobs lost to technology marked only a “temporary phase of maladjustment.”

The question, now, is what to do if the period of “maladjustment” that lasts decades, or possibly a lifetime, as the latest evidence suggests. Some say the time is nigh for a universal basic income. Bill Gates recently offered another provocative suggestion: Perhaps robots should pay taxes to compensate the workers that they replace.

Guo nevertheless remains optimistic “that someday there will be more than enough work for both humans and robots and artificial intelligence routines, as long as we are prepared for it to look different than we’re used to. We just have to muddle through the meanwhile.”

Next, Jeff Green writes, There is a jobs crisis brewing that the Trump administration should not ignore:

Everyone has heard the old anecdote about the frog in a pot of water. If the temperature is raised slowly, the frog won’t react, eventually allowing itself to get boiled. That’s where we’re heading as a country when it comes to technological advances and the threat they pose to millions of jobs.

Seemingly every day there are new stories in the media about artificial intelligence, data and robotics — and the jobs they threaten in retail, transportation, carrier transport and even the legal profession. Yet no one is jumping out of the pot.

Let’s be clear: This is not science fiction. In just the past few days, there have been articles on Amazon’s automation ambitions, described by the New York Times as “putting traditional retail jobs in jeopardy,” and on the legal profession bracing for technology taking over some tasks once handled by lawyers. (This has already happened.)

As reported in Recode, a new study by the research firm PwC found that nearly 4 out of 10 jobs in the United States could be “vulnerable to replacement by robots in the next fifteen years.” Many of those will be truckers, among the most common jobs in states across the country.

Yet when President Trump hosted truck drivers at the White House last week, he dedicated his remarks to the threat of health care without uttering a word about the advanced driverless semi fleets that will soon replace them. His Treasury Secretary Steven Mnuchin shockingly said in an interview last week that we’re “50 to 100 years” away from artificial intelligence threatening jobs.

It’s easy for sensationalist headlines about A.I. to dominate, like those about Elon Musk’s warning that it poses an existential threat. Yet the attention of people such as Musk, Bill Gates and Stephen Hawking should be a signal to Trump and Mnuchin that A.I. and related robotics and automation are moving at a far faster clip than they are acknowledging. It should be on the administration’s radar screen, and they should be jumping out of the boiling water.

Solutions won’t come easy. Already some experts suggest a Universal Basic Income will be necessary to offset the job losses. We also have to transition our workforce. Educational institutions such as Miami-Dade College and Harvard University have introduced advanced programming courses that take students from zero to six programming languages on a fast track. More needs to be done. This should be the most innovative decade in human history, and it has to be if we’re going to avoid a Mad Max dystopia in favor of a Star Trek future.

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Technological advances could greatly reduce the cost of living, make housing more affordable and solve some of the biggest challenges whether in energy or long-term care, an issue painfully familiar to so many families. It may also help improve quality of life in the long term, as men and women gain greater flexibility to spend time with loved ones rather than dedicating 40 or more hours a week to working and so many others commuting.

In the near-term, however, the job losses that are possible could inflict tremendous economic pain. We are far from where we need to be. That will continue to be the case until policymakers, educators and innovators come together to address the reality before us. We won’t solve this overnight, but we can’t afford to wait until it’s too late.

Our elected leaders are not even addressing this complicated issue. They are either unaware, uninformed, or uninterested in addressing jobs affected by the Technology Revolution, and the economic disruption it has on society.