By Tom Martin
5 February 2017
A study by Oxford professors Michael Osborne and Carl Benedikt Frey estimates that 47 percent of jobs in the U.S. are at risk of being automated in the next 20 years. In his farewell speech, former President Obama spoke of the relentless pace of automation that is making good middle class jobs obsolete. Tom Martin talks about the implications of automation with Dr. Chris Bollinger, professor of economics and director of the Center of Business and Economic Research in the University of Kentucky’s Gatton College of Business and Economics.
Click here to hear the audio version of the interview: http://bit.ly/2jFUpyf
Q: What do you make of the prediction put forward by professors Osborne and Frey?
A: They’ve hit on something that we know is happening. We can see it all around us and it certainly shows up in the economic data that we look at. Technology is evolving at a rapid pace. While I think they probably are right in their idea that a lot of things that we do today will go away as technology continues to change, where I think they fail is looking at what kinds of jobs technology will create.
Q: What are the real implications for the American middle class?
A: The types of jobs that are going to grow in demand will be jobs that have higher skill levels. We call it skill-biased technological change. And it’s the type of change in technology where the jobs in the labor market shift towards things that require more and more skills.
Q: But fewer people employed.
A: But fewer people employed. These kinds of changes do have huge social impacts that we see as we go forward. History teaches us a lot. The industrial revolution, the mass migrations off the farm from the south up to the northern large cities for those early manufacturing jobs in the ’20s and ’30s in the U.S. created huge upheavals in our society.
Q: Isn’t the pace of innovation related to jobs much faster in digital technology than with mechanized technology?
A: The pace of technology waxes and wanes. If you look at what happened in England in the early 1800s, that was a relatively rapid transition from a largely agrarian society to a very industrialized society. The U.S.’s transition was a little slower, but it was pretty rapid too.
Q: And what happened on the social side?
A: People were displaced and you had people who suddenly found themselves not fitting in with society as well.
Q: That’s what I want to focus on here: the implications for people.
A: There are some unique challenges that are new, and it’s not so much the challenge of the speed, although I think that does play a role. It’s the fact that it requires higher skills. One of the things about the industrial revolution is the early factory jobs were still relatively low-skilled jobs. And so, somebody with a farming background who knew a little bit about machinery could probably move into that. Consequently, there were more opportunities for people to move from farming to manufacturing, although there still was tremendous displacement economically. But today, we are seeing job changes coming relatively quickly, but we’ve also seen career lengths grow. Right? So, if you think back to the 1950s and the 1960s, people retired at 55. Today, 65 is the norm, pushing towards 70 and on. That means that back in the 1950s, if you started at 25 and worked to 55, you had a 30-year career. Things change in 30 years, but you’d probably make it work. But now, if you’re going to 65 and 70, we’re talking about 40-year careers and beyond. Lots of changes in 40 years. I think it is important to recognize that, going forward, the people who are going to be most able to handle this are the people with higher education.
Q: We hear a lot about retraining. What if you have a mortgage, a car payment, so forth? What sort of cushion should be created to make it possible to make this transition?
A: We do already have in place a number of programs that do help with these transitions. Unemployment insurance is one. There’s a special category called “displaced workers,” which is for people who had a job and it went away because of the economy, or technology, or whatever. People who are classified as displaced workers are able to avail themselves of a variety of training programs. There’s some evidence that those things helped. But we have to be careful. There’s also some evidence that training programs are not as effective in moving people into good jobs as we would like them to be.
Q: You hear the phrase “teaching an old dog new tricks.” There’s a lot to be said for that after a person has worked in one career for 20 years or so. It’s hard to make that change.
A: People who have a higher base level of education, an associate’s or bachelor’s degree, seem to have an easier time making those transitions at any point in their life. The technology is changing all around us. I had to learn to use a cellphone and all the apps on it. And I’ve had to learn to communicate with students where they are, which is on Twitter and things like that. So, I think you can.
Q: Concerns are being raised about job polarization where middle-skilled jobs are declining, but both low-skill and high-skill jobs are expanding; highly paid skilled workers such as architects and senior managers on one hand, and low paid unskilled workers such as cleaners and burger flippers on the other.
A: I think there is some truth to that. And income inequality has been a big issue, as well. In the United States, we’ve seen growing income inequality over the last 20-30 years. It’s something that economists are concerned about. People with high skills are being rewarded in the labor market and people with medium-to-low skills are not really being rewarded and they’re sort of stagnating.
Q: What happens in this wave of automation to the great many who are out there just chasing a paycheck, just trying to get by week-by-week and when their jobs are eliminated by automation, suddenly find themselves with no income and no ability to learn new skills? So, with autonomous vehicles, taxi and delivery drivers; and with artificial intelligence and robotics, receptionists, security guards, cashiers, counter and rental clerks - all apparently in the crosshairs of automation.
A: It’s really easy to look at a job and say, ‘you know, I might be able to automate that.’ But if I automate that, it’s going to create an entire class— part of the economy that deals with automating it. We’ve had huge increases in people who work in computers, programming. And that’s the problem with predictions. I don’t really know what automating taxicabs is going to do. You don’t need a driver, but you’re going to need programmers and people to maintain all of the systems that go into keeping that taxi cab going where it’s supposed to go. It’s really hard for me to predict how that’s going to affect employment, but those jobs are going to be created.
Q: Do you have a sense of how automation is impacting the workforce in Kentucky?
A: I don’t think Kentucky is particularly different than anywhere else in the country. We’ve had a larger manufacturing base, historically. So, that’s an area where we may get hit a little bit more than other places. I don’t want to minimize the implications of these transitions. They’re very, very difficult. And I do think it’s crucially important that we always keep in mind that there are human beings behind this and that we design government programs so that we can help them move from one job to another, so that we can get them the type of training they need. That really has to start early with getting a good education out of the gate all the way up through high school, college, and beyond.
Tom Martin's Q&A appears every two weeks in the Herald-Leader's Business Monday section. This is an edited version of the interview. To listen to the interview, find the podcast on Kentucky.com. The interview also will air on WEKU-88.9 FM on Mondays at 7:35 a.m. during Morning Edition and at 5:45 p.m. during All Things Considered.