Technological unemployment is the loss of
jobs caused by technological change. Such
change typically includes the introduction
of labour-saving "mechanical-muscle" machines
or more efficient "mechanical-mind" processes
(automation). Just as horses employed as prime
movers were gradually made obsolete by the
automobile, humans' jobs have also been affected
throughout modern history. Historical examples
include artisan weavers reduced to poverty
after the introduction of mechanized looms.
During World War II, Alan Turing's Bombe machine
compressed and decoded thousands of man-years
worth of encrypted data in a matter of hours.
A contemporary example of technological unemployment
is the displacement of retail cashiers by
self-service tills.
That technological change can cause short-term
job losses is widely accepted. The view that
it can lead to lasting increases in unemployment
has long been controversial. Participants
in the technological unemployment debates
can be broadly divided into optimists and
pessimists. Optimists agree that innovation
may be disruptive to jobs in the short term,
yet hold that various compensation effects
ensure there is never a long-term negative
impact on jobs, whereas pessimists contend
that at least in some circumstances, new technologies
can lead to a lasting decline in the total
number of workers in employment. The phrase
"technological unemployment" was popularised
by John Maynard Keynes in the 1930s, who said
it was a "only a temporary phase of maladjustment".
Yet the issue of machines displacing human
labour has been discussed since at least Aristotle's
time.
Prior to the 18th century both the elite and
common people would generally take the pessimistic
view on technological unemployment, at least
in cases where the issue arose. Due to generally
low unemployment in much of pre-modern history,
the topic was rarely a prominent concern.
In the 18th century fears over the impact
of machinery on jobs intensified with the
growth of mass unemployment, especially in
Great Britain which was then at the forefront
of the Industrial Revolution. Yet some economic
thinkers began to argue against these fears,
claiming that overall innovation would not
have negative effects on jobs. These arguments
were formalised in the early 19th century
by the classical economists. During the second
half of the 19th century, it became increasingly
apparent that technological progress was benefiting
all sections of society, including the working
class. Concerns over the negative impact of
innovation diminished. The term "Luddite fallacy"
was coined to describe the thinking that innovation
would have lasting harmful effects on employment.
The view that technology is unlikely to lead
to long term unemployment has been repeatedly
challenged by a minority of economists. In
the early 1800s these included Ricardo himself.
There were dozens of economists warning about
technological unemployment during brief intensifications
of the debate that spiked in the 1930s and
1960s. Especially in Europe, there were further
warnings in the closing two decades of the
twentieth century, as commentators noted an
enduring rise in unemployment suffered by
many industrialised nations since the 1970s.
Yet a clear majority of both professional
economists and the interested general public
held the optimistic view through most of the
20th century.
In the second decade of the 21st century,
a number of studies have been released suggesting
that technological unemployment may be increasing
worldwide. Oxford Professors Carl Benedikt
Frey and Michael Osborne, for example, have
estimated that 47 percent of U.S. jobs are
at risk of automation. However, their findings
have frequently been misinterpreted, and on
the PBS NewsHours they again made clear that
their findings do not necessarily imply future
technological unemployment. While many economists
and commentators still argue such fears are
unfounded, as was widely accepted for most
of the previous two centuries, concern over
technological unemployment is growing once
again. A report in Wired in 2017 quotes knowledgeable
people such as economist Gene Sperling and
management professor Andrew McAfee on the
idea that handling existing and impending
job loss to automation is a "significant issue".
Regarding a recent claim by Treasury Secretary
Steve Mnuchin that automation is not "going
to have any kind of big effect on the economy
for the next 50 or 100 years", says McAfee,
"I don't talk to anyone in the field who believes
that." Recent technological innovations have
the potential to render humans obsolete with
the professional, white-collar, low-skilled,
creative fields, and other "mental jobs".The
World Bank's World Development Report 2019
argues that while automation displaces workers,
technological innovation creates more new
industries and jobs on balance.
== Issues within the debates ==
=== 
Long term effects on employment ===
All participants in the technological employment
debates agree that temporary job losses can
result from technological innovation. Similarly,
there is no dispute that innovation sometimes
has positive effects on workers. Disagreement
focuses on whether it is possible for innovation
to have a lasting negative impact on overall
employment. Levels of persistent unemployment
can be quantified empirically, but the causes
are subject to debate. Optimists accept short
term unemployment may be caused by innovation,
yet claim that after a while, compensation
effects will always create at least as many
jobs as were originally destroyed. While this
optimistic view has been continually challenged,
it was dominant among mainstream economists
for most of the 19th and 20th centuries. For
example, labor economists Jacob Mincer and
Stephan Danninger develop an empirical study
using micro-data from the Panel Study of Income
Dynamics, and find that although in the short
run, technological progress seems to have
unclear effects on aggregate unemployment,
it reduces unemployment in the long run. When
they include a 5-year lag, however, the evidence
supporting a short-run employment effect of
technology seems to disappear as well, suggesting
that technological unemployment "appears to
be a myth".The concept of structural unemployment,
a lasting level of joblessness that does not
disappear even at the high point of the business
cycle, became popular in the 1960s. For pessimists,
technological unemployment is one of the factors
driving the wider phenomena of structural
unemployment. Since the 1980s, even optimistic
economists have increasingly accepted that
structural unemployment has indeed risen in
advanced economies, but they have tended to
blame this on globalisation and offshoring
rather than technological change. Others claim
a chief cause of the lasting increase in unemployment
has been the reluctance of governments to
pursue expansionary policies since the displacement
of Keynesianism that occurred in the 1970s
and early 80s. In the 21st century, and especially
since 2013, pessimists have been arguing with
increasing frequency that lasting worldwide
technological unemployment is a growing threat.
=== Compensation effects ===
Compensation effects are labour-friendly consequences
of innovation which "compensate" workers for
job losses initially caused by new technology.
In the 1820s, several compensation effects
were described by Say in response to Ricardo's
statement that long term technological unemployment
could occur. Soon after, a whole system of
effects was developed by Ramsey McCulloch.
The system was labelled "compensation theory"
by Marx, who proceeded to attack the ideas,
arguing that none of the effects were guaranteed
to operate. Disagreement over the effectiveness
of compensation effects has remained a central
part of academic debates on technological
unemployment ever since.Compensation effects
include:
By new machines. (The labour needed to build
the new equipment that applied innovation
requires.)
By new investments. (Enabled by the cost savings
and therefore increased profits from the new
technology.)
By changes in wages. (In cases where unemployment
does occur, this can cause a lowering of wages,
thus allowing more workers to be re-employed
at the now lower cost. On the other hand,
sometimes workers will enjoy wage increases
as their profitability rises. This leads to
increased income and therefore increased spending,
which in turn encourages job creation.)
By lower prices. (Which then lead to more
demand, and therefore more employment.) Lower
prices can also help offset wage cuts, as
cheaper goods will increase workers' buying
power.
By new products. (Where innovation directly
creates new jobs.)The "by new machines" effect
is now rarely discussed by economists; it
is often accepted that Marx successfully refuted
it. Even pessimists often concede that product
innovation associated with the "by new products"
effect can sometimes have a positive effect
on employment. An important distinction can
be drawn between 'process' and 'product' innovations.
Evidence from Latin America seems to suggest
that product innovation significantly contributes
to the employment growth at the firm level,
more so than process innovation. The extent
to which the other effects are successful
in compensating the workforce for job losses
has been extensively debated throughout the
history of modern economics; the issue is
still not resolved. One such effect that potentially
complements the compensation effect is job
multiplier. According to research developed
by Enrico Moretti, with each additional skilled
job created in high tech industries in a given
city, more than two jobs are created in the
non-tradable sector. His findings suggest
that technological growth and the resulting
job-creation in high-tech industries might
have a more significant spillover effect than
we have anticipated. Evidence from Europe
also supports such a job multiplier effect,
showing local high-tech jobs could create
five additional low-tech jobs.Many economists
now pessimistic about technological unemployment
accept that compensation effects did largely
operate as the optimists claimed through most
of the 19th and 20th century. Yet they hold
that the advent of computerisation means that
compensation effects are now less effective.
An early example of this argument was made
by Wassily Leontief in 1983. He conceded that
after some disruption, the advance of mechanization
during the Industrial Revolution actually
increased the demand for labour as well as
increasing pay due to effects that flow from
increased productivity. While early machines
lowered the demand for muscle power, they
were unintelligent and needed large armies
of human operators to remain productive. Yet
since the introduction of computers into the
workplace, there is now less need not just
for muscle power but also for human brain
power. Hence even as productivity continues
to rise, the lower demand for human labour
may mean less pay and employment. However,
this argument is not fully supported by more
recent empirical studies. One research done
by Erik Brynjolfsson and Lorin M. Hitt in
2003 presents direct evidence that suggests
a positive short-term effect of computerization
on firm-level measured productivity and output
growth. In addition, they find the long-term
productivity contribution of computerization
and technological changes might even be greater.
=== The Luddite fallacy ===
The term "Luddite fallacy" is sometimes used
to express the view that those concerned about
long term technological unemployment are committing
a fallacy, as they fail to account for compensation
effects. People who use the term typically
expect that technological progress will have
no long term impact on employment levels,
and eventually will raise wages for all workers,
because progress helps to increase the overall
wealth of society. The term is based on the
early 19th century example of the Luddites.
During the 20th century and the first decade
of the 21st century, the dominant view among
economists has been that belief in long term
technological unemployment was indeed a fallacy.
More recently, there has been increased support
for the view that the benefits of automation
are not equally distributed.There are two
underlying premises for why long-term difficulty
could develop. The one that has traditionally
been deployed is that ascribed to the Luddites
(whether or not it is a truly accurate summary
of their thinking), which is that there is
a finite amount of work available and if machines
do that work, there can be no other work left
for humans to do. Economists call this the
lump of labour fallacy, arguing that in reality
no such limitation exists. However, the other
premise is that it is possible for long-term
difficulty to arise that has nothing to do
with any lump of labour. In this view, the
amount of work that can exist is infinite,
but (1) machines can do most of the "easy"
work, (2) the definition of what is "easy"
expands as information technology progresses,
and (3) the work that lies beyond "easy" (the
work that requires more skill, talent, knowledge,
and insightful connections between pieces
of knowledge) may require greater cognitive
faculties than most humans are able to supply,
as point 2 continually advances. This latter
view is the one supported by many modern advocates
of the possibility of long-term, systemic
technological unemployment.
=== Skill levels and technological unemployment
===
A common view among those discussing the effect
of innovation on the labour market has been
that it mainly hurts those with low skills,
while often benefiting skilled workers. According
to scholars such as Lawrence F. Katz, this
may have been true for much of the twentieth
century, yet in the 19th century, innovations
in the workplace largely displaced costly
skilled artisans, and generally benefited
the low skilled. While 21st century innovation
has been replacing some unskilled work, other
low skilled occupations remain resistant to
automation, while white collar work requiring
intermediate skills is increasingly being
performed by autonomous computer programs.Some
recent studies however, such as a 2015 paper
by Georg Graetz and Guy Michaels, found that
at least in the area they studied – the
impact of industrial robots – innovation
is boosting pay for highly skilled workers
while having a more negative impact on those
with low to medium skills. A 2015 report by
Carl Benedikt Frey, Michael Osborne and Citi
Research, agreed that innovation had been
disruptive mostly to middle-skilled jobs,
yet predicted that in the next ten years the
impact of automation would fall most heavily
on those with low skills.Geoff Colvin at Forbes
argued that predictions on the kind of work
a computer will never be able to do have proven
inaccurate. A better approach to anticipate
the skills on which humans will provide value
would be to find out activities where we will
insist that humans remain accountable for
important decisions, such as with judges,
CEOs, bus drivers and government leaders,
or where human nature can only be satisfied
by deep interpersonal connections, even if
those tasks could be automated.In contrast,
others see even skilled human laborers being
obsolete. Oxford academics Carl Benedikt Frey
and Michael A Osborne have predicted computerization
could make nearly half of jobs redundant;
of the 702 professions assessed, they found
a strong correlation between education and
income with ability to be automated, with
office jobs and service work being some of
the more at risk. In 2012 co-founder of Sun
Microsystems Vinod Khosla predicted that 80%
of medical doctors jobs would be lost in the
next two decades to automated machine learning
medical diagnostic software.
=== Empirical findings ===
There has been a lot of empirical research
that attempts to quantify the impact of technological
unemployment, mostly done at the microeconomic
level. Most existing firm-level research has
found a labor-friendly nature of technological
innovations. For example, German economists
Stefan Lachenmaier and Horst Rottmann find
that both product and process innovation have
a positive effect on employment. They also
find that process innovation has a more significant
job creation effect than product innovation.
This result is supported by evidence in the
United States as well, which shows that manufacturing
firm innovations have a positive effect on
the total number of jobs, not just limited
to firm-specific behavior.At the industry
level, however, researchers have found mixed
results with regard to the employment effect
of technological changes. A 2017 study on
manufacturing and service sectors in 11 European
countries suggests that positive employment
effects of technological innovations only
exist in the medium- and high-tech sectors.There
also seems to be a negative correlation between
employment and capital formation, which suggests
that technological progress could potentially
be labor-saving given that process innovation
is often incorporated in investment.Limited
macroeconomic analysis has been done to study
the relationship between technological shocks
and unemployment. The small amount of existing
research, however, suggests mixed results.
Italian economist Marco Vivarelli finds that
the labor-saving effect of process innovation
seems to have affected the Italian economy
more negatively than the United States. On
the other hand, the job creating effect of
product innovation could only be observed
in the United States, not Italy. Another study
in 2013 finds a more transitory, rather than
permanent, unemployment effect of technological
change.
=== Measures of technological innovation ===
There have been four main approaches that
attempt to capture and document technological
innovation quantitatively. The first one,
proposed by Jordi Gali in 1999 and further
developed by Neville Francis and Valerie A.
Ramey in 2005, is to use long-run restrictions
in a Vector Autoregression (VAR) to identify
technological shocks, assuming that only technology
affects long-run productivity.The second approach
is from Susanto Basu, John Fernald and Miles
Kimball. They create a measure of aggregate
technology change with augmented Solow residuals,
controlling for aggregate, non-technological
effects such as non-constant returns and imperfect
competition.
The third method, initially developed by John
Shea in 1999, takes a more direct approach
and employs observable indicators such as
Research and Development (R&D) spending, and
number of patent applications. This measure
of technological innovation is very widely
used in empirical research, since it does
not rely on the assumption that only technology
affects long-run productivity, and fairly
accurately captures the output variation based
on input variation. However, there are limitations
with direct measures such as R&D. For example,
since R&D only measures the input in innovation,
the output is unlikely to be perfectly correlated
with the input. In addition, R&D fails to
capture the indeterminate lag between developing
a new product or service, and bringing it
to market.The fourth approach, constructed
by Michelle Alexopoulos, looks at the number
of new titles published in the fields of technology
and computer science to reflect technological
progress, which turns out to be consistent
with R&D expenditure data. Compared with R&D,
this indicator captures the lag between changes
in technology.
== History ==
=== 
Pre-16th century ===
According to author Gregory Woirol, the phenomenon
of technological unemployment is likely to
have existed since at least the invention
of the wheel. Ancient societies had various
methods for relieving the poverty of those
unable to support themselves with their own
labour. Ancient China and ancient Egypt may
have had various centrally run relief programmes
in response to technological unemployment
dating back to at least the second millennium
BC. Ancient Hebrews and adherents of the ancient
Vedic religion had decentralised responses
where aiding the poor was encouraged by their
faiths. In ancient Greece, large numbers of
free labourers could find themselves unemployed
due to both the effects of ancient labour
saving technology and to competition from
slaves ("machines of flesh and blood"). Sometimes,
these unemployed workers would starve to death
or were forced into slavery themselves although
in other cases they were supported by handouts.
Pericles responded to perceived technological
unemployment by launching public works programmes
to provide paid work to the jobless. Conservatives
criticized Pericle's programmes for wasting
public money but were defeated.Perhaps the
earliest example of a scholar discussing the
phenomenon of technological unemployment occurs
with Aristotle, who speculated in Book One
of Politics that if machines could become
sufficiently advanced, there would be no more
need for human labour.Similar to the Greeks,
ancient Romans, responded to the problem of
technological unemployment by relieving poverty
with handouts. Several hundred thousand families
were sometimes supported like this at once.
Less often, jobs were directly created with
public works programmes, such as those launched
by the Gracchi. Various emperors even went
as far as to refuse or ban labour saving innovations.
In one instance, the introduction of a labor-saving
invention was blocked, when Emperor Vespasian
refused to allow a new method of low-cost
transportation of heavy goods, saying "You
must allow my poor hauliers to earn their
bread." Labour shortages began to develop
in the Roman empire towards the end of the
second century AD, and from this point mass
unemployment in Europe appears to have largely
receded for over a millennium.The medieval
and early renaissance period saw the widespread
adoption of newly invented technologies as
well as older ones which had been conceived
yet barely used in the Classical era. Mass
unemployment began to reappear in Europe in
the 15th century, partly as a result of population
growth, and partly due to changes in the availability
of land for subsistence farming caused by
early enclosures. As a result of the threat
of unemployment, there was less tolerance
for disruptive new technologies. European
authorities would often side with groups representing
subsections of the working population, such
as Guilds, banning new technologies and sometimes
even executing those who tried to promote
or trade in them.
=== 16th to 18th century ===
In Great Britain, the ruling elite began to
take a less restrictive approach to innovation
somewhat earlier than in much of continental
Europe, which has been cited as a possible
reason for Britain's early lead in driving
the Industrial Revolution. Yet concern over
the impact of innovation on employment remained
strong through the 16th and early 17th century.
A famous example of new technology being refused
occurred when the inventor William Lee invited
Queen Elizabeth I to view a labour saving
knitting machine. The Queen declined to issue
a patent on the grounds that the technology
might cause unemployment among textile workers.
After moving to France and also failing to
achieve success in promoting his invention,
Lee returned to England but was again refused
by Elizabeth's successor James I for the same
reason.Especially after the Glorious Revolution,
authorities became less sympathetic to workers
concerns about losing their jobs due to innovation.
An increasingly influential strand of Mercantilist
thought held that introducing labour saving
technology would actually reduce unemployment,
as it would allow British firms to increase
their market share against foreign competition.
From the early 18th century workers could
no longer rely on support from the authorities
against the perceived threat of technological
unemployment. They would sometimes take direct
action, such as machine breaking, in attempts
to protect themselves from disruptive innovation.
Schumpeter notes that as the 18th century
progressed, thinkers would raise the alarm
about technological unemployment with increasing
frequency, with von Justi being a prominent
example. Yet Schumpeter also notes that the
prevailing view among the elite solidified
on the position that technological unemployment
would not be a long term problem.
=== 19th century ===
It was only in the 19th century that debates
over technological unemployment became intense,
especially in Great Britain where many economic
thinkers of the time were concentrated. Building
on the work of Dean Tucker and Adam Smith,
political economists began to create what
would become the modern discipline of economics.
While rejecting much of mercantilism, members
of the new discipline largely agreed that
technological unemployment would not be an
enduring problem. In the first few decades
of the 19th century, several prominent political
economists did, however, argue against the
optimistic view, claiming that innovation
could cause long-term unemployment. These
included Sismondi, Malthus, J S Mill, and
from 1821, Ricardo himself. As arguably the
most respected political economist of his
age, Ricardo's view was challenging to others
in the discipline. The first major economist
to respond was Jean-Baptiste Say, who argued
that no one would introduce machinery if they
were going to reduce the amount of product,
and that as Say's Law states that supply creates
its own demand, any displaced workers would
automatically find work elsewhere once the
market had had time to adjust.Ramsey McCulloch
expanded and formalised Say's optimistic views
on technological unemployment, and was supported
by others such as Charles Babbage, Nassau
Senior and many other lesser known political
economists. Towards the middle of the 19th
century, Karl Marx joined the debates. Building
on the work of Ricardo and Mill, Marx went
much further, presenting a deeply pessimistic
view of technological unemployment; his views
attracted many followers and founded an enduring
school of thought but mainstream economics
was not dramatically changed. By the 1870s,
at least in Great Britain, technological unemployment
faded both as a popular concern and as an
issue for academic debate. It had become increasingly
apparent that innovation was increasing prosperity
for all sections of British society, including
the working class. As the classical school
of thought gave way to neoclassical economics,
mainstream thinking was tightened to take
into account and refute the pessimistic arguments
of Mill and Ricardo.
=== 20th century ===
For the first two decades of the 20th century,
mass unemployment was not the major problem
it had been in the first half of the 19th.
While the Marxist school and a few other thinkers
still challenged the optimistic view, technological
unemployment was not a significant concern
for mainstream economic thinking until the
mid to late 1920s. In the 1920s mass unemployment
re-emerged as a pressing issue within Europe.
At this time the U.S. was generally more prosperous,
but even there urban unemployment had begun
to increase from 1927. Rural American workers
had been suffering job losses from the start
of the 1920s; many had been displaced by improved
agricultural technology, such as the tractor.
The centre of gravity for economic debates
had by this time moved from Great Britain
to the United States, and it was here that
the 20th century's two great periods of debate
over technological unemployment largely occurred.The
peak periods for the two debates were in the
1930s and the 1960s. According to economic
historian Gregory R Woirol, the two episodes
share several similarities. In both cases
academic debates were preceded by an outbreak
of popular concern, sparked by recent rises
in unemployment. In both cases the debates
were not conclusively settled, but faded away
as unemployment was reduced by an outbreak
of war – World War II for the debate of
the 1930s, and the Vietnam war for the 1960s
episodes. In both cases, the debates were
conducted within the prevailing paradigm at
the time, with little reference to earlier
thought. In the 1930s, optimists based their
arguments largely on neo-classical beliefs
in the self-correcting power of markets to
automatically reduce any short-term unemployment
via compensation effects. In the 1960s, faith
in compensation effects was less strong, but
the mainstream Keynesian economists of the
time largely believed government intervention
would be able to counter any persistent technological
unemployment that was not cleared by market
forces. Another similarity was the publication
of a major Federal study towards the end of
each episode, which broadly found that long-term
technological unemployment was not occurring
(though the studies did agree innovation was
a major factor in the short term displacement
of workers, and advised government action
to provide assistance).As the golden age of
capitalism came to a close in the 1970s, unemployment
once again rose, and this time generally remained
relatively high for the rest of the century,
across most advanced economies. Several economists
once again argued that this may be due to
innovation, with perhaps the most prominent
being Paul Samuelson. A number of popular
works warning of technological unemployment
were also published. These included James
S. Albus's 1976 book titled Peoples' Capitalism:
The Economics of the Robot Revolution;David
F. Noble with works published in 1984 and
1993; Jeremy Rifkin and his 1995 book The
End of Work; and the 1996 book The Global
Trap In general, the closing decades of the
20th century saw much more concern expressed
over technological unemployment in Europe,
compared with the U.S.
For the most part, other than during the periods
of intense debate in the 1930s and 60s, the
consensus in the 20th century among both professional
economists and the general public remained
that technology does not cause long-term joblessness.
=== 21st century ===
==== Opinions ====
The general consensus that innovation does
not cause long-term unemployment held strong
for the first decade of the 21st century although
it continued to be challenged by a number
of academic works, and by popular works such
as Marshall Brain's Robotic Nation and Martin
Ford's The Lights in the Tunnel: Automation,
Accelerating Technology and the Economy of
the Future.Since the publication of their
2011 book Race Against The Machine, MIT professors
Andrew McAfee and Erik Brynjolfsson have been
prominent among those raising concern about
technological unemployment. The two professors
remain relatively optimistic however, stating
"the key to winning the race is not to compete
against machines but to compete with machines".Concern
about technological unemployment grew in 2013
due in part to a number of studies predicting
substantially increased technological unemployment
in forthcoming decades and empirical evidence
that, in certain sectors, employment is falling
worldwide despite rising output, thus discounting
globalization and offshoring as the only causes
of increasing unemployment.In 2013, professor
Nick Bloom of Stanford University stated there
had recently been a major change of heart
concerning technological unemployment among
his fellow economists.
In 2014 the Financial Times reported that
the impact of innovation on jobs has been
a dominant theme in recent economic discussion.
According to the academic and former politician
Michael Ignatieff writing in 2014, questions
concerning the effects of technological change
have been "haunting democratic politics everywhere".
Concerns have included evidence showing worldwide
falls in employment across sectors such as
manufacturing; falls in pay for low and medium
skilled workers stretching back several decades
even as productivity continues to rise; the
increase in often precarious platform mediated
employment; and the occurrence of "jobless
recoveries" after recent recessions. The 21st
century has seen a variety of skilled tasks
partially taken over by machines, including
translation, legal research and even low level
journalism. Care work, entertainment, and
other tasks requiring empathy, previously
thought safe from automation, have also begun
to be performed by robots.Former U.S. Treasury
Secretary and Harvard economics professor
Lawrence Summers stated in 2014 that he no
longer believed automation would always create
new jobs and that "This isn't some hypothetical
future possibility. This is something that's
emerging before us right now." Summers noted
that already, more labor sectors were losing
jobs than creating new ones. While himself
doubtful about technological unemployment,
professor Mark MacCarthy stated in the fall
of 2014 that it is now the "prevailing opinion"
that the era of technological unemployment
has arrived.At the 2014 Davos meeting, Thomas
Friedman reported that the link between technology
and unemployment seemed to have been the dominant
theme of that year's discussions. A survey
at Davos 2014 found that 80% of 147 respondents
agreed that technology was driving jobless
growth. At the 2015 Davos, Gillian Tett found
that almost all delegates attending a discussion
on inequality and technology expected an increase
in inequality over the next five years, and
gives the reason for this as the technological
displacement of jobs.
2015 saw Martin Ford win the Financial Times
and McKinsey Business Book of the Year Award
for his Rise of the Robots: Technology and
the Threat of a Jobless Future, and saw the
first world summit on technological unemployment,
held in New York. In late 2015, further warnings
of potential worsening for technological unemployment
came from Andy Haldane, the Bank of England's
chief economist, and from Ignazio Visco, the
governor of the Bank of Italy. In an October
2016 interview, US President Barack Obama
said that due to the growth of artificial
intelligence, society would be debating "unconditional
free money for everyone" within 10 to 20 years.Other
economists, however, have argued that long-term
technological unemployment is unlikely. In
2014, Pew Research canvassed 1,896 technology
professionals and economists and found a split
of opinion: 48% of respondents believed that
new technologies would displace more jobs
than they would create by the year 2025, while
52% maintained that they would not. Economics
professor Bruce Chapman from Australian National
University has advised that studies such as
Frey and Osborne's tend to overstate the probability
of future job losses, as they don't account
for new employment likely to be created, due
to technology, in what are currently unknown
areas.General public surveys have often found
an expectation that automation would impact
jobs widely, but not the jobs held by those
particular people surveyed.
==== Studies ====
A number of studies have predicted that automation
will take a large proportion of jobs in the
future, but estimates of the level of unemployment
this will cause vary. Research by Carl Benedikt
Frey and Michael Osborne of the Oxford Martin
School showed that employees engaged in "tasks
following well-defined procedures that can
easily be performed by sophisticated algorithms"
are at risk of displacement. The study, published
in 2013, shows that automation can affect
both skilled and unskilled work and both high
and low-paying occupations; however, low-paid
physical occupations are most at risk. It
estimated that 47% of US jobs were at high
risk of automation. In 2014, the economic
think tank Bruegel released a study, based
on the Frey and Osborne approach, claiming
that across the European Union's 28 member
states, 54% of jobs were at risk of automation.
The countries where jobs were least vulnerable
to automation were Sweden, with 46.69% of
jobs vulnerable, the UK at 47.17%, the Netherlands
at 49.50%, and France and Denmark, both at
49.54%. The countries where jobs were found
to be most vulnerable were Romania at 61.93%,
Portugal at 58.94%, Croatia at 57.9%, and
Bulgaria at 56.56%. A 2015 report by the Taub
Center found that 41% of jobs in Israel were
at risk of being automated within the next
two decades. In January 2016, a joint study
by the Oxford Martin School and Citibank,
based on previous studies on automation and
data from the World Bank, found that the risk
of automation in developing countries was
much higher than in developed countries. It
found that 77% of jobs in China, 69% of jobs
in India, 85% of jobs in Ethiopia, and 55%
of jobs in Uzbekistan were at risk of automation.
The World Bank similarly employed the methodology
of Frey and Osborne. A 2016 study by the International
Labour Organization found 74% of salaried
jobs in Thailand, 75% of salaried jobs in
Vietnam, 63% of salaried jobs in Indonesia,
and 81% of salaried jobs in the Philippines
were at high risk of automation. A 2016 United
Nations report stated that 75% of jobs in
the developing world were at risk of automation,
and predicted that more jobs might be lost
when corporations stop outsourcing to developing
countries after automation in industrialized
countries makes it less lucrative to outsource
to countries with lower labor costs.The Council
of Economic Advisers, a US government agency
tasked with providing economic research for
the White House, in the 2016 Economic Report
of the President, used the data from the Frey
and Osborne study to estimate that 83% of
jobs with an hourly wage below $20, 31% of
jobs with an hourly wage between $20 and $40,
and 4% of jobs with an hourly wage above $40
were at risk of automation. A 2016 study by
Ryerson University found that 42% of jobs
in Canada were at risk of automation, dividing
them into two categories - "high risk" jobs
and "low risk" jobs. High risk jobs were mainly
lower-income jobs that required lower education
levels than average. Low risk jobs were on
average more skilled positions. The report
found a 70% chance that high risk jobs and
a 30% chance that low risk jobs would be affected
by automation in the next 10–20 years. A
2017 study by PricewaterhouseCoopers found
that up to 38% of jobs in the US, 35% of jobs
in Germany, 30% of jobs in the UK, and 21%
of jobs in Japan were at high risk of being
automated by the early 2030s. A 2017 study
by Ball State University found about half
of American jobs were at risk of automation,
many of them low-income jobs. A September
2017 report by McKinsey & Company found that
as of 2015, 478 billion out of 749 billion
working hours per year dedicated to manufacturing,
or $2.7 trillion out of $5.1 trillion in labor,
were already automatable. In low-skill areas,
82% of labor in apparel goods, 80% of agriculture
processing, 76% of food manufacturing, and
60% of beverage manufacturing were subject
to automation. In mid-skill areas, 72% of
basic materials production and 70% of furniture
manufacturing was automatable. In high-skill
areas, 52% of aerospace and defense labor
and 50% of advanced electronics labor could
be automated. In October 2017, a survey of
information technology decision makers in
the US and UK found that a majority believed
that most business processes could be automated
by 2022. On average, they said that 59%
of business processes were subject to automation.
A November 2017 report by the McKinsey Global
Institute that analyzed around 800 occupations
in 46 countries estimated that between 400
million and 800 million jobs could be lost
due to robotic automation by 2030. It estimated
that jobs were more at risk in developed countries
than developing countries due to a greater
availability of capital to invest in automation.
Job losses and downward mobility blamed on
automation has been cited as one of many factors
in the resurgence of nationalist and protectionist
politics in the US, UK and France, among other
countries.However, not all recent empirical
studies have found evidence to support the
idea that automation will cause widespread
unemployment. A study released in 2015, examining
the impact of industrial robots in 17 countries
between 1993 and 2007, found no overall reduction
in employment was caused by the robots, and
that there was a slight increase in overall
wages. According to a study published in McKinsey
Quarterly in 2015 the impact of computerization
in most cases is not replacement of employees
but automation of portions of the tasks they
perform. A 2016 OECD study found that among
the 21 OECD countries surveyed, on average
only 9% of jobs were in foreseeable danger
of automation, but this varied greatly among
countries: for example in South Korea the
figure of at-risk jobs was 6% while in Austria
it was 12%. In contrast to other studies,
the OECD study does not primarily base its
assessment on the tasks that a job entails,
but also includes demographic variables, including
sex, education and age. It is not clear however
why a job should be more or less automatise
just because it is performed by a woman. In
2017, Forrester estimated that automation
would result in a net loss of about 7% of
jobs in the US by 2027, replacing 17% of jobs
while creating new jobs equivalent to 10%
of the workforce. Another study argued that
the risk of US jobs to automation had been
overestimated due to factors such as the heterogeneity
of tasks within occupations and the adaptability
of jobs being neglected. The study found that
once this was taken into account, the number
of occupations at risk to automation in the
US drops, ceteris paribus, from 38% to 9%.
A 2017 study on the effect of automation on
Germany found no evidence that automation
caused total job losses but that they do effect
the jobs people are employed in; losses in
the industrial sector due to automation were
offset by gains in the service sector. Manufacturing
workers were also not at risk from automation
and were in fact more likely to remain employed,
though not necessarily doing the same tasks.
However, automation did result in a decrease
in labour's income share as it raised productivity
but not wages.A 2018 Brookings Institution
study that analyzed 28 industries in 18 OECD
countries from 1970 to 2018 found that automation
was responsible for holding down wages. Although
it concluded that automation did not reduce
the overall number of jobs available and even
increased them, it found that from the 1970s
to the 2010s, it had reduced the share of
human labor in the value added to the work,
and thus had helped to slow wage growth. In
April 2018, Adair Turner, former Chairman
of the Financial Services Authority and head
of the Institute for New Economic Thinking,
stated that it would already be possible to
automate 50% of jobs with current technology,
and that it will be possible to automate all
jobs by 2060.
==== Policy ====
In 2017, South Korea became the most automated
country on earth with one robot for every
19 employed humans. This caused the government
to consider changing the tax laws to hinder
future automation increases.
== Solutions ==
=== 
Preventing net job losses ===
==== Banning/refusing innovation ====
Historically, innovations were sometimes banned
due to concerns about their impact on employment.
Since the development of modern economics,
however, this option has generally not even
been considered as a solution, at least not
for the advanced economies. Even commentators
who are pessimistic about long-term technological
unemployment invariably consider innovation
to be an overall benefit to society, with
JS Mill being perhaps the only prominent western
political economist to have suggested prohibiting
the use of technology as a possible solution
to unemployment.Gandhian economics called
for a delay in the uptake of labour saving
machines until unemployment was alleviated,
however this advice was largely rejected by
Nehru who was to become prime minister once
India achieved its independence. The policy
of slowing the introduction of innovation
so as to avoid technological unemployment
was however implemented in the 20th century
within China under Mao's administration.
==== Shorter working hours ====
In 1870, the average American worker clocked
up about 75 hours per week. Just prior to
World War II working hours had fallen to about
42 per week, and the fall was similar in other
advanced economies. According to Wassily Leontief,
this was a voluntary increase in technological
unemployment. The reduction in working hours
helped share out available work, and was favoured
by workers who were happy to reduce hours
to gain extra leisure, as innovation was at
the time generally helping to increase their
rates of pay.Further reductions in working
hours have been proposed as a possible solution
to unemployment by economists including John
R. Commons, Lord Keynes and Luigi Pasinetti.
Yet once working hours have reached about
40 hours per week, workers have been less
enthusiastic about further reductions, both
to prevent loss of income and as many value
engaging in work for its own sake. Generally,
20th-century economists had argued against
further reductions as a solution to unemployment,
saying it reflects a Lump of labour fallacy.
In 2014, Google's co-founder, Larry Page,
suggested a four-day workweek, so as technology
continues to displace jobs, more people can
find employment.
==== Public works ====
Programmes of public works have traditionally
been used as way for governments to directly
boost employment, though this has often been
opposed by some, but not all, conservatives.
Jean-Baptiste Say, although generally associated
with free market economics, advised that public
works could be a solution to technological
unemployment. Some commentators, such as professor
Mathew Forstater, have advised that public
works and guaranteed jobs in the public sector
may be the ideal solution to technological
unemployment, as unlike welfare or guaranteed
income schemes they provide people with the
social recognition and meaningful engagement
that comes with work.For less developed economies,
public works may be an easier to administrate
solution compared to universal welfare programmes.
As of 2015, calls for public works in the
advanced economies have been less frequent
even from progressives, due to concerns about
sovereign debt. A partial exception is for
spending on infrastructure, which has been
recommended as a solution to technological
unemployment even by economists previously
associated with a neoliberal agenda, such
as Larry Summers.
==== Education ====
Improved availability to quality education,
including skills training for adults and other
active labour market policies, is a solution
that in principle at least is not opposed
by any side of the political spectrum, and
welcomed even by those who are optimistic
about long-term technological employment.
Improved education paid for by government
tends to be especially popular with industry.
Proponents of this brand of policy assert
higher level, more specialized learning is
a way to capitalize from the growing technology
industry. Leading technology research university
MIT published an open letter to policymakers
advocating for the "reinvention of education",
namely a shift "away from rote learning" and
towards STEM disciplines. Similar statements
released by the U.S President's Council of
Advisors on Science and Technology (PACST)
have also been used to support this STEM emphasis
on enrollment choice in higher learning. Education
reform is also a part of the U.K government's
"Industrial Strategy", a plan announcing the
nation's intent to invest millions into a
"technical education system". The proposal
includes the establishment of a retraining
program for workers who wish to adapt their
skill-sets. These suggestions combat the concerns
over automation through policy choices aiming
to meet the emerging needs of society via
updated information. Of the professionals
within the academic community who applaud
such moves, often noted is a gap between economic
security and formal education —a disparity
exacerbated by the rising demand for specialized
skills—and education's potential to reduce
it.
However, several academics have also argued
that improved education alone will not be
sufficient to solve technological unemployment,
pointing to recent declines in the demand
for many intermediate skills, and suggesting
that not everyone is capable in becoming proficient
in the most advanced skills. Kim Taipale has
said that "The era of bell curve distributions
that supported a bulging social middle class
is over... Education per se is not going to
make up the difference." while an op-ed piece
from 2011, Paul Krugman, an economics professor
and columnist for the New York Times, argued
that better education would be an insufficient
solution to technological unemployment, as
it "actually reduces the demand for highly
educated workers".
=== Living with technological unemployment
===
==== 
Welfare payments ====
The use of various forms of subsidies has
often been accepted as a solution to technological
unemployment even by conservatives and by
those who are optimistic about the long term
effect on jobs. Welfare programmes have historically
tended to be more durable once established,
compared with other solutions to unemployment
such as directly creating jobs with public
works. Despite being the first person to create
a formal system describing compensation effects,
Ramsey McCulloch and most other classical
economists advocated government aid for those
suffering from technological unemployment,
as they understood that market adjustment
to new technology was not instantaneous and
that those displaced by labour-saving technology
would not always be able to immediately obtain
alternative employment through their own efforts.
===== Basic income =====
Several commentators have argued that traditional
forms of welfare payment may be inadequate
as a response to the future challenges posed
by technological unemployment, and have suggested
a basic income as an alternative. People advocating
some form of basic income as a solution to
technological unemployment include Martin
Ford,
Erik Brynjolfsson, Robert Reich and Guy Standing.
Reich has gone as far as to say the introduction
of a basic income, perhaps implemented as
a negative income tax is "almost inevitable",
while Standing has said he considers that
a basic income is becoming "politically essential".
Since late 2015, new basic income pilots have
been announced in Finland, the Netherlands,
and Canada. Further recent advocacy for basic
income has arisen from a number of technology
entrepreneurs, the most prominent being Sam
Altman, president of Y Combinator.Skepticism
about basic income includes both right and
left elements, and proposals for different
forms of it have come from all segments of
the spectrum. For example, while the best-known
proposed forms (with taxation and distribution)
are usually thought of as left-leaning ideas
that right-leaning people try to defend against,
other forms have been proposed even by libertarians,
such as von Hayek and Friedman. Republican
president Nixon's Family Assistance Plan (FAP)
of 1969, which had much in common with basic
income, passed in the House but was defeated
in the Senate.One objection to basic income
is that it could be a disincentive to work,
but evidence from older pilots in India, Africa,
and Canada indicates that this does not happen
and that a basic income encourages low-level
entrepreneurship and more productive, collaborative
work. Another objection is that funding it
sustainably is a huge challenge. While new
revenue-raising ideas have been proposed such
as Martin Ford's wage recapture tax, how to
fund a generous basic income remains a debated
question, and skeptics have dismissed it as
utopian. Even from a progressive viewpoint,
there are concerns that a basic income set
too low may not help the economically vulnerable,
especially if financed largely from cuts to
other forms of welfare.To better address both
the funding concerns and concerns about government
control, one alternative model is that the
cost and control would be distributed across
the private sector instead of the public sector.
Companies across the economy would be required
to employ humans, but the job descriptions
would be left to private innovation, and individuals
would have to compete to be hired and retained.
This would be a for-profit sector analog of
basic income, that is, a market-based form
of basic income. It differs from a job guarantee
in that the government is not the employer
(rather, companies are) and there is no aspect
of having employees who "cannot be fired",
a problem that interferes with economic dynamism.
The economic salvation in this model is not
that every individual is guaranteed a job,
but rather just that enough jobs exist that
massive unemployment is avoided and employment
is no longer solely the privilege of only
the very smartest or highly trained 20% of
the population. Another option for a market-based
form of basic income has been proposed by
the Center for Economic and Social Justice
(CESJ) as part of "a Just Third Way" (a Third
Way with greater justice) through widely distributed
power and liberty. Called the Capital Homestead
Act, it is reminiscent of James S. Albus's
Peoples' Capitalism in that money creation
and securities ownership are widely and directly
distributed to individuals rather than flowing
through, or being concentrated in, centralized
or elite mechanisms.
==== Broadening the ownership of technological
assets ====
Several solutions have been proposed which
do not fall easily into the traditional left-right
political spectrum. This includes broadening
the ownership of robots and other productive
capital assets. Enlarging the ownership of
technologies has been advocated by people
including James S. Albus John Lanchester,
Richard B. Freeman, and Noah Smith.Jaron Lanier
has proposed a somewhat similar solution:
a mechanism where ordinary people receive
"nano payments" for the big data they generate
by their regular surfing and other aspects
of their online presence.
==== Structural changes towards a post-scarcity
economy ====
The Zeitgeist Movement (TZM), The Venus Project
(TVP) as well as various individuals and organizations
propose structural changes towards a form
of a post-scarcity economy in which people
are 'freed' from their automatable, monotonous
jobs, instead of 'losing' their jobs. In the
system proposed by TZM all jobs are either
automated, abolished for bringing no true
value for society (such as ordinary advertising),
rationalized by more efficient, sustainable
and open processes and collaboration or carried
out based on altruism and social relevance
(see also: Whuffie), opposed to compulsion
or monetary gain. The movement also speculates
that the free time made available to people
will permit a renaissance of creativity, invention,
community and social capital as well as reducing
stress.
=== Other approaches ===
The threat of technological unemployment has
occasionally been used by free market economists
as a justification for supply side reforms,
to make it easier for employers to hire and
fire workers. Conversely, it has also been
used as a reason to justify an increase in
employee protection.Economists including Larry
Summers have advised a package of measures
may be needed. He advised vigorous cooperative
efforts to address the "myriad devices" – such
as tax havens, bank secrecy, money laundering,
and regulatory arbitrage – which enable
the holders of great wealth to avoid paying
taxes, and to make it more difficult to accumulate
great fortunes without requiring "great social
contributions" in return. Summers suggested
more vigorous enforcement of anti-monopoly
laws; reductions in "excessive" protection
for intellectual property; greater encouragement
of profit-sharing schemes that may benefit
workers and give them a stake in wealth accumulation;
strengthening of collective bargaining arrangements;
improvements in corporate governance; strengthening
of financial regulation to eliminate subsidies
to financial activity; easing of land-use
restrictions that may cause estates to keep
rising in value; better training for young
people and retraining for displaced workers;
and increased public and private investment
in infrastructure development, such as energy
production and transportation.Michael Spence
has advised that responding to the future
impact of technology will require a detailed
understanding of the global forces and flows
technology has set in motion. Adapting to
them "will require shifts in mindsets, policies,
investments (especially in human capital),
and quite possibly models of employment and
distribution".
== See also ==
Autonomous car
Disruptive innovation
Emerging technologies
Futures studies
Humans Need Not Apply
Industrial society
Player Piano
Technological revolution
Technological transitions
Technophobia
The Future of Work and Death
The Triple Revolution
Working time
== Notes
