Oxford Economics on the Rise of the Robots

We keep an eye on the news about robots as threats to jobs. Depending who you listen to, you’ll usually find one of these claims:

      • Robots will take our jobs. Or at least a lot of our tasks.
      • Robots will free us for new, more interesting jobs.

Oxford Economics released a report titled “How robots change the world,” exploring the current effects of robots, and the likely future changes they’ll bring about. The number of robots in use has tripled over the past decade, and the blokes at Oxford Economics have studied the data.

One thing certainly stands out: how each of us will be affected depends on our geography.  Oxford Economics lists a different set of U.S. states as the likely losers — Oregon, not Nevada, will be most strongly affected — but the general conclusion is the same. Low income places will suffer more than high income places, and low income people will be more likely to lose their jobs.

The average effect of one robot is to displace 1.6 workers — but that works out to 1.3 workers in prosperous places and 2.25 in low-income areas. And “displace” doesn’t mean that the workers become unemployed. “Robotization tends to boost productivity and economic growth,” the report explains, “generating new employment opportunities at a rate comparable to the pace of job destruction.”

But the new jobs may not be the best jobs for the displaced workers. The report points out that factory workers displaced from manufacturing went into jobs in transportation, construction, and office work, which are now themselves vulnerable to automation.

The “robotics dividend”

Increasing automation brings increased tax base and lower consumer product prices along with it. That’s what the report calls the “robotics dividend.” Overall productivity increases, and everyone might benefit from that. At the same time, the report’s authors acknowledge that increased automation tends to increase the gap between the “haves” and the “have nots.”

In many cases, the things they have or have not come down to: robots.

Since robots are becoming less expensive than human workers, business owners may benefit from increased automation even as some workers lose their jobs.

One of the big questions is how much robots will threaten service jobs. Success in these areas has not equaled the success of robots in manufacturing. The authors point out that service jobs are often in unstructured environments, where compassion, creativity, and problem solving are more valuable than the ability to perform repetitive tasks. It therefore may not make sense to talk about robots in service jobs broadly.

The report concludes that there is no reason to resist increasing automation, but there is every reason to prepare for it. We might need a stronger social network to help displaced workers, for example, or better training and placement for them.

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