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Home Publications Blogs Beat the Press The Job Apocalypse That Is Hiding From The Bureau of Labor Statistics

The Job Apocalypse That Is Hiding From The Bureau of Labor Statistics

Thursday, 27 March 2014 05:51

There is a growing industry in the United States of people promoting stories about how robots and other technological innovations are going to make us all unemployed. Unfortunately Harold Meyerson seems to have taken these people seriously.

Meyerson cites a study showing that technology is likely to slash employment in large sectors of the economy and then tells readers:

"Eventually, however, as computers pick up more and more skills, we will have to embrace the necessity of redistributing wealth and income from the shrinking number of Americans who have sizable incomes from their investments or their work to the growing number of Americans who want work but can’t find it. That may or may not be socialism; certainly, it’s survival."

The problem with this story is that it is 180 degrees at odds with the data. Robots and computers seem to fascinate people as something new and different, but actually they are just forms of productivity growth. The issue is simply one of how fast we might expect these new technologies to increase productivity and displace workers. The answer we have been getting to date from the Bureau of Labor Statistics (BLS) is not very fast.

Here's what the picture looks like from the latest data.

Productivity 32674 image001

                                   Source: Bureau of Labor Statistics.

As can be seen, the overall rate of productivity growth in the years since the speedup began in 1995 has been less than 2.4 percent annually. This compares to a rate of 3.2 percent in the years 1947-73, when unemployment was low and wage growth was strong. (Due to measurement issues such as the difference between gross and net output and differences in price indices, "usable" annual productivity growth was about 0.3 percentage points higher in the years 1947-73 relative to the official numbers.) In the more recent years since the downturn, productivity growth has fallen off to less than 1.7 percent annually.

If we look to manufacturing alone, there is a bit more of a story, but still not much. Productivity growth in the years since 1995 has averaged 3.4 percent, this is slightly higher than 3.2 percent overall rate of productivity growth in the 1947-1973. That can't be enough to tell a qualitatively different story, especially since manufacturing now accounts for less than 10 percent of total employment. Furthermore manufacturing productivity growth was almost certainly stronger than overall productivity growth in the years 1947-73 golden age also (BLS does not give that series), so that would likely mean that it was faster than the rate we have seen in manufacturing since 1995. As with overall productivity, manufacturing productivity growth has also slowed sharply since 2007.

So why should we think that productivity growth will lead to a problem of too few jobs, as opposed to providing a basis for rising wages and living standards? if there is some huge productivity boom facing us in the near future, it is hiding pretty well from the folks gathering the data at BLS.

This is an important point because socialism or large-scale redistribution are big deals. We don't expect that our politicians in Washington will be likely to embrace either concept any time soon. But much smaller and simpler policies can ensure that workers have jobs and share in the gains of economic growth. If we get the value of the dollar down against other currencies, we will reduce the trade deficit and create millions of jobs. President Obama could negotiate a decline in the value of the dollar against the currencies of our major trading partners as President Reagan did in the mid-1980s. We could also boost demand with increased stimulus and we could give more workers jobs through work sharing policies. (Read the book, it's free.)

Anyhow, the point is that we are not in a brave new world where the basics of economics and technology are destined to screw the vast majority of workers absent major changes in public policy. We are in the vicious old world where the bad guys are actively manipulating public policy in ways that are screwing workers now. If we are going to make any headway in reversing this process we have to keep our eye on the ball.


Comments (23)Add Comment
written by paul, March 27, 2014 7:07
To some extent (I am assuming), HM is worried about the disappearance of (high paid) manufacturing jobs or of the industrial proletariat. That is not just some Marxist arcana, it is about social and political equality as industrial unions have been a tremendous source for social progress in the U.S. Mostly the US poor and working class don't vote (to the extent no one even mentions the fact in political reporting), so the decline of the union movement is a big deal.
Shorten The Work Week?
written by Tyler, March 27, 2014 7:40
Has automation gotten good enough that we can shorten the work week to four days?
Destiny of the Taken, to be Displaced by Robots: As Explained by the Takers
written by Last Mover, March 27, 2014 7:48

Ah yes, as the economic pie expands from robot driven producitivy, there will be less for the takers won't there.

Then America could be in for massive socialist redistribution couldn't it.

You know, from the makers to the takers.

It's another message to the taken from the takers about who is doing the making and taking isn't it.

And every one of these messages has an upstream link to those few concentrated unseen Top Takers high above it all, behind the curtain as they pull the sock puppet strings below.

The upstream link is not obvious, not clear at all, carefully disguised behind a myriad of legal power and ownership ties to disguise who controls what. The invisible structure easily defers accountability and advances mass brainwashing at the same time.

This time it's not even government that is cast as doing the taking intially. It's the robots, which will cause government to go about the usual taking role later.

When attacked, sock puppets for the Top Takers casually dismiss it as silly conspiracy theories as in: How could so few possibly control so much? Here, just look at the spending numbers to prove it, won't you? For example the top ten unions spent more than the two Koch Bros in one year.

What more proof do you need about who is really running the country? It's the stupid liberals of course, the takers.

What, you think two individuals could actually control mainstream media to that extent compared to millions of others who outspend them?

Who do you think the Koch Bros are anyway, a couple of out of control robots on the loose to take down democracy and replace it with an aristocracy? Nobody could be that efficient as a robot, not even the Koch Bros.

Stupid liberals.
Drumbeat of the Boomers
written by Larry Signor, March 27, 2014 8:37
The landscape is going to change rapidly. As Boomers, our time is almost gone. We lived in a time of zero upward mobility and have become consequently very pessimistic and dismissive of participating in our faux democracy. But it was not the robots that victimized an entire generation, it was "...bad guys...actively manipulating public policy in ways that are screwing workers now...". An awareness of American plutocracy is emerging in our younger folks, much to their potential benefit. Like first aid, the pressure must be maintained.
written by DJB, March 27, 2014 8:53
"So why should we think that productivity growth will lead to a problem of too few jobs, as opposed to providing a basis for rising wages and living standards?"

its a continuous struggle against an upward distribution of wealth
written by dick c, March 27, 2014 9:43
"So why should we think that productivity growth will lead to a problem of too few jobs, as opposed to providing a basis for rising wages and living standards?"

That would be nice, but... It seems that the reason we need to constantly push for redistribution via government policy is because the distribution of gains we see at the creation of those gains is so inequitable. It all seems to go to capital with labor, more and more, receiving just enough to get by.
Robert Shiller ties inequality to technology
written by Richard Genz, March 27, 2014 11:45
Thanks for this well-argued post.

What's a non-economist to do? Robert Shiller makes good sense on many subjects. However I'm at a loss to reconcile this post w/ Shiller's comments in a Jan. 30, 2014 interview at Yale.

In response to a question about the general state of the economy, Shiller said he's "anxious," and gets "sweaty palms" contemplating the 50-year future, citing rising income inequality as his first concern, and arguing that "rising income inequality is largely connected to rising technology, artificial intelligence replacing people."

One of the crowd? He was just back from Davos, so maybe so.

Interview video online at http://www.youtube.com/watch?v=4l-3uRgP5nQ Comment begins around 5:45.

written by fresno dan, March 27, 2014 11:46

"So why should we think that productivity growth will lead to a problem of too few jobs, as opposed to providing a basis for rising wages and living standards"

Uh, the above link?
written by A Populist, March 27, 2014 12:26
Re: "As can be seen, the overall rate of productivity growth in the years since the speedup began in 1995 has been less than 2.4 percent annually. This compares to a rate of 3.2 percent in the years 1947-73, when unemployment was low and wage growth was strong."

So, higher productivity seems to have coincided with higher wages and low unemployment.

Can't you make arguments for causation:

- Lower unemployment drives up wages (as do unions and rising minimum wage laws).

- Higher wages can increase productivity, through making lower productivity jobs disappear, and incentivizing increases in efficiency.

- Higher wages can reduce unemployment, both through increased consumption demand, and allowing workers to work fewer hours.

- Higher productivity allows higher wages, and higher consumption, without running into supply problems. (Also allows each of us to consume more, and work fewer hours).

Productivity is lower than before, but still high enough to more than compensate for aging workforce.

The real problems are high unemployment, and low wages.

Why not build infrastructure and raise the minimum wage, and see what happens?

I know why. Because if we try that, it will work.

Just like Obamacare. The urgency for killing it, is not due to the fear that it will NOT work, but the knowledge that it WILL work.
"Productivity" should be "Productivity *Growth*"
written by A Populist, March 27, 2014 12:46
Important point - productivity continues to increase. Even the present (reduced) level of productivity growth, should allow each of us to work ever fewer hours, and/or consume more per capita. If that is not happening, it is a failure of our economic and political systems.
written by medgeek, March 27, 2014 2:10
*Off topic*

Dean, Abby Huntsman promises to answer critics of her views on cutting entitlements on today's Cycle show. I think she's going to need a dentist again (to extract her foot from her mouth).
Large scale redistribution
written by Loser Liberal, March 27, 2014 7:52
I think Dean underestimates both the effectiveness of redistribution and its political viability. Unlike the United States, the Scandinavian countries don't suffer to nearly the same degree from an overvalued currency, dismantled unions, a bloated financial sector, corrupt corporate governance, heavy handed government enforcement of intellectual property, or selectively protectionist immigration (under 3% of Finland is foreign born). But the Nordic countries all have pre-tax inequality levels that are just as bad as America's. It's only through progressive taxation that these places are more economically equal.

Politically, addressing inequality is going to be a huge uphill struggle with any strategy. The Democrats were too corrupt to end even the most obvious symptoms like the carried interest loophole when they controlled the presidency, the House, and a filibuster proof Senate. But the average person has absolutely no idea how a 10% drop in the dollar relative to the renminbi will affect prices or employment. Polls have consistently shown support for higher taxes on the wealthy. Most reasonable people would also become mad as hell when learning many big companies pay minimal taxes by filtering money through Ireland or Puerto Rico. Progressive taxation is the way to attack inequality that people can actually understand.
My Westinghouse dishwashing machine is named Rosie.
written by Capt. J Parker, March 27, 2014 11:08
Yahoo! There actually exists a progressive who's not spouting the "robots will take all our jobs fallacy." Too bad all Bakers fans here don't agree. On that dollar thing though, I'd get rid of the budget deficit first and let the dollar and trade deficit take care of themselves. BTW, am I the only one who noticed that the era of wage stagnation coincides nicely with the era of true fiat money?
I think I can help
written by Dave, March 28, 2014 2:46
I should probably put together something to help clear this up. That is one of the strangest bar charts I've ever seen. I don't understand why anyone would group the data that way. Was it labeled wrong? Or were they trying to cover something?

I've addressed this multiple times and nobody was listening. I shall put this on my list of things to address.

Conventional Periods
written by Dean, March 28, 2014 5:04

The periods I put in the bar chart are conventional dating among economists. The golden age ran to 1973 and the speedup began in 1995. Those are not years I chose arbitrarily.
Quality of Jobs Matter
written by George, March 28, 2014 6:35
To fully assess the impact of technology, one needs to review carefully the impact by level of jobs. For instance, technology has replaced countless good-paying jobs in manufacturing and even has replaced many high paying legal jobs (both areas where I have personal experience). Meanwhile, the low-paid service sector has expanded. The bottom line: technology's impact has definitely reduced the number of good-paying jobs in some sectors. I'm skeptical that the increases have off-set the decreases yet leave it to others to run the numbers. But one thing is clear: those new jobs aren't available to many of the displaced blue-collar workers whose jobs have been rendered obsolete.
written by Dave, March 28, 2014 2:16
I understand. I'll lend you a hand on this. It will take me some time to gather the right data. My mind works really fast, but my data gathering skills, given my lack of experience with the tools, is in need of improvement.

I have so many things to do right now. I need to prioritize this.
It will have to wait
written by Dave, March 28, 2014 2:38

Wasn't able to get this on the schedule. I'm sorry. I don't have the proper tools either.

written by Dave, March 28, 2014 9:29
Can anyone show proof that this chart has anything to do with robots?

I can't be the only one that understand what the cause is, can I?
Rather than address this
written by Dave, March 29, 2014 8:09
Dean, I can't even post what I want to post here without being afraid of being accused of something. I was going to become all philosophical, but I don't want anyone to misread what I'm saying. My lessons come from my own life, not anyone else. Nobody influenced me to say the things I say. These are just things I know.

You can take them or leave them.

We're messing up. This problem I want to analyze for you is not hard to figure out. It isn't hard at all. The problem is that I need to use much more complex models than necessary simply because the right data isn't available. We need to ask why the data isn't available.

You need to figure out which people have decided that this is the proper kind of productivity information and the proper way to display it.

This is garbage. The answer is so obvious. It is so obvious it makes me afraid.
BLS Data
written by Dave, March 29, 2014 1:19
Can anyone tell me where to get raw BLS data?
Yes, I figured this out a long time ago
written by Dave, March 29, 2014 2:18
Yes, it was me. I figured this out a long time ago. I knew I was right, and I couldn't get any answers. Everyone was ignoring me.

If I win something, I'm fine with that. Just please do it in person.
written by DH, April 01, 2014 9:35
COMPUTERIZATION?" (Carl Benedikt Frey and Michael A. Osborne 2013).

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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.