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Home Publications Blogs Beat the Press If the Robots Are Putting People Out of Work, Why Doesn't It Show Up in the Data?

If the Robots Are Putting People Out of Work, Why Doesn't It Show Up in the Data?

Monday, 15 July 2013 04:43

A lot of people are making their living these days telling us that we aren't going to have any jobs because robots are going to do all the work. In this great country of ours, many are also making a very good living telling us that we are doomed by demographics, because we will not have enough children to support a growing population of retirees. And then we have those like Robert Samuelson who get paid to do both.

Here he is presenting the argument from Erik Brynjolfsson and Andrew McAfee, two M.I.T. professors who are the main promulgators of the robots will make us all unemployed story. He quotes from an M.I.T. journal:

"The MIT academics foresee dismal prospects for many types of jobs as these powerful new technologies are increasingly adopted not only in manufacturing, clerical and retail work but in professions such as law, financial services, education and medicine,"

He then tells us how this is playing itself out now:

"The digital revolution could stymie job growth.

"Unfortunately, the Great Recession abetted this protective psychology. This keeps unemployment up. Companies didn’t just fire workers; they also went on a hiring strike."

Okay, we have an easy way of testing whether protective psychology is discouraging firms from hiring. Increasing hours and hiring more workers are alternative ways to meet labor demand. If psychology is discouraging firms from hiring workers in contexts where they otherwise would, then they must be increasing hours.

But they aren't. The average workweek was 34.5 hours in June, a hair less than the pre-recession average. So much for the psychology.

Then we get this great line about how the economy is getting less dynamic with slower productivity growth.

"Haltiwanger [University of Maryland economist, John Haltiwanger] sees the economy becoming less dynamic. Young firms less than five years old create a huge number of new jobs, but the rate of business start-ups has declined — and with it, new jobs. In the late 1980s, start-ups’ share of net job creation was nearly half; now, it’s just below 40 percent. The causes of the slump in start-up firms are unclear. Some candidates: an aging society, government regulations, more risk-aversion."

So there you have it, digital technologies are going to replace all the workers at the same time that an aging society will make the economy less dynamic. Now that is a serious set of problems.

Comments (4)Add Comment
How Desktop Computers Destroyed America While No One Was Watching
written by Last Mover, July 15, 2013 6:07
If psychology is discouraging firms from hiring workers in contexts where they otherwise would, then they must be increasing hours.

The robots-are-taking-our-jobs message is not about psychology and expectations. It's about the same moronic zero-sum mindset advanced by the austerity crowd. It's simple when cast as substitution effects between human labor and capitalized robotic labor. Humans are displaced by lower cost factor inputs. Case closed.

Never mind the absurd contradictions associated with this proposition when its proponents are asked why don't real prices fall dramatically with the robotic increase in productivity? Why doesn't consumption and investment increase correspondingly?

In the zero sum world of theirs, this is supposed to happen as the "natural" rate of full employment maintains itself through known substitution effects.

And if it doesn't happen then it's obvious that the inconvenient world of macroeconomics has intervened to undermine the ridiculous zero-sum tradeoff game set up to demonstrate what? That productivity itself at the micro level will necessarily bring down the economy at the macro level?

The robot meme scare is seriously ignorant economics bordering on a level of batsh*t crazy that would have said the same thing about desktop computers.

If robots take jobs and cause massive unemployment, that has nothing to do with robots per se, and everything to with intentional engineered market failure by the economic predators who took over the economy long ago and crippled it along the way to redistribute productivity gains to themselves, away from legitimate producers - robots or otherwise.
Worse Than Robots?
written by H. S. Rockwood III, July 15, 2013 10:45
Customer Service in the U. S. has seriously suffered by the absence of jobs for real people to answer phones and questions at businesses. It seems that 99% of the people who used to do this for a living have been replaced by robotic answering machines that are designed to discourage callers from asking questions. If enough jobs have been lost by this, it would affect employment.
Robot CEOs?
written by Sandwichman, July 15, 2013 11:03
The robot meme is dangerous because there are two ways to fall off wall. The first is to pretend that permanent technological unemployment isn't real -- it can't happen. The second is to believe that because technological unemployment is real, it's huge and explains everything. Both are wrong.

Permanent technological unemployment is both real and historically has been compensated for by other, semi-independent factors. Besides, it isn't the robots who put people out of work; it's the CEOs who decide that the robots enable them to cut their work force to save on labor costs.

All the fuss about robots stealing jobs distracts from the facts that: 1. the productivity gains from robots are grossly exaggerated and 2. much of what appears on the books as "productivity gains" from technology are in fact simply the offloading of social and environmental costs as "externalities."
written by M31, July 15, 2013 11:27
10 PRINT "We aren't going to have any jobs because robots are going to do all the work!"

20 GOTO 10

There. Please fire those bozos since I just did their job for them.

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About Beat the Press

Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.