The Surprising Way Robots Cut Jobs

Some people believe that robots will take over human jobs and throw millions of people out of work. Other people believe that robots will increase productivity, allowing growth and creating new jobs. Turns out they’;re all right — but not in the way you might think.

Dr. Lynn Wu of the Wharton School lays it out: “It turns out it’s not the robot displacing people directly. It’s the robot non-adopters who are no longer competitive, and they are laying off people.”

Some studies have shown that an increase in the number of robots in a city leads to an increase in unemployment. But it is not that robots took over the jobs of the unemployed people. As the Economist puts it, “Disruption… is at a ‘system level’, says Mr Bresnahan—as Amazon’s sales displace those of other firms, say.”

Mr. Bresnahan here is Timothy Bresnahan of Stanford University, author of a paper that the effects of AI show up in deepening capital rather than in the displacement of human workers.

“’Good’ automation generates large productivity increases, and its transformative nature leads to the creation of many new tasks (and therefore jobs) for humans,” the Economist claims, suggesting that policies should encourage employers to go with good automation rather than replacing workers.

They consider the example of self-checkout lines, which don’t appear to save much time and money — but alienate some customers and may encourage pilfering.

Big changes

Dr. Wu pointed out that management jobs are the ones to go when companies go all-in with automation. Data on workers can be captured automatically and data on what the robots are doing can also be captured, so there isn’t much direct management required. Automation reduces the amount of quality control humans need to undertake.

Humans are needed for thought leadership and problem solving, not the day to day. And humans are also needed for specialized tasks that require dexterity and empathy.

So companies that automate can end up needing different skill sets from those they needed before, but not necessarily fewer workers. People who can retrain or step up for new tasks end up staying. Companies that don’t automate can’t continue to compete, so they lay off workers.

If the robots are coming for us, it’s better to be on their side.

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