Does automation kill jobs? Yes and No

Does automation kill jobs or create them? The answer is “both”, according to a new study carried out by EMSI (Economic Modeling Specialists International) and CareerBuilder. Twenty-one percent of US companies said they replaced workers with automation in a nationwide survey. Among larger firms, those with 500+ employees, the number was 30%.

Automation refers to the use of electronics and computer-controlled devices to take over certain functions in order to improve efficiency and reliability – in many cases, this occurs through the replacement of human labor.

However, among the companies that replaced employees with automation, 68% said they also hired new employees because of the new technology.

Thirty-five percent of respondents who replaced workers with automation ended up taking on more workers than they laid off.

The nationwide survey was carried out by Harris Poll online from May 12 to June 6, and included 2,188 hiring managers and HR professionals across industries and company sizes.

Job trends over a 12-year period

In another study, EMSI and CareerBuilder looked at the ups and downs of the job market in 786 occupations recognized by the Bureau of Labor Statistics, part of the Department of Labor.

The research team gathered and analyzed information from EMSI’s labor market database, which covers 90 national and state employment resources and includes data on employees and self-employed workers.

A total of 257 occupations experienced a fall in employment since 2002 – approximately one third of all jobs in the US. At the same time, 483 occupations, representing 61% of all jobs, increased by at least 1%.

Average hourly income in the growing occupations was almost $2 higher than in the occupations registering job losses.

While some of the gains and losses were the result of globalization and economic cycles, automation ‘arguably’ also had a considerable impact on employment shifts. Consider the following examples:

  • The Internet: its widespread use had a negative effect on jobs in several areas. Travel agents lost over 38,000 jobs between 2002 and 2014 as a deluge of automated online travel businesses flooded the market. “This represents a 24% decline in a field paying $16.17 per hour,” says CareerBuilder. During the same period, 195,000 new Software Developer and Web Developer jobs were created, paying $43 per hour.
  • Automation of Data: killed thousands of jobs. More than 43,000 data entry keyer jobs were lost between 2002 and 2014, i.e. a 16% drop in a profession that pays $14 per hour. However, over the same period, 99,000 market research analyst jobs were created paying $29.18 per hour.

Matt Ferguson, CEO of CareerBuilder and co-author of The Talent Equation, said:

“Technological advancements have not only increased productivity, but historically have led to an expansion of employment. While automation may eliminate some jobs, it also creates other jobs that are higher paying and lifts the standard of living for the economy as a whole.”

“One of the greatest challenges the U.S. faces today is sufficiently preparing the workforce for the influx of more knowledge-based jobs that will likely result from progress in robotics and other STEM-related fields (science, technology, engineering and math).”

Tesla factory - automation

At the Tesla factory in Fremont, California, robots have taken over the tasks of riveting, welding, bonding and installing components.

Industries most affected

Forty-two percent of information technology companies said they laid off workers in favor of automation, the industry with the highest rate of layoffs, followed by financial services (27%) and manufacturing (23%).

Thirty-one percent of employers across all industries believe that certain jobs within their organizations will probably be replaced by technology during the next ten years. The following areas are most likely to be affected, they say:

  • sales: 17%,
  • shipping/distribution: 25%,
  • assembly/production: 30%,
  • accounting/finance: 32%,
  • information technology: 33%,
  • customer service: 35%.

Automation does not always bring good results. More than one third of respondents said they hired people back after getting rid of workers in favor of technology.

Is technology increasing inequality?

Many economists today fear that a new era of automation enabled by increasingly more powerful and skilled computers may have a strange effect in the world of work.

In the advanced economies, the incomes of the typical worker, when adjusted for cost of living, are not rising.

Over the last forty years, the real wage in the United States has hardly moved. Even in countries like Germany and the UK, where employment is reaching new peaks, real wages have been stagnant for the last ten years.

According to an article published by The Economist in January:

“Recent research suggests that this is because substituting capital for labor through automation is increasingly attractive; as a result owners of capital have captured ever more of the world’s income since the 1980s, while the share going to labor has fallen.”

Even in egalitarian Sweden, inequality among workers has risen steeply, with an increasingly larger share going to the top earners.

A study carried out by the OECD published in May reported that over the last thirty years, growing inequality has persisted in the rich nations. In the US, the wealthiest 1% have captured 47% of overall income growth.

Video – Will automation kill off human jobs?

Technological advances are usually celebrated. They bring medical breakthroughs or newfound conveniences. But will scientific achievement eventually pose a threat to our way of life or our livelihood?

According to this WGBH News video, it is happening already.