David A. Robalino is a Lead Economist and Labor and Youth Team Leader at the World Bank
These last couple of weeks I have been reading about what technology does to jobs and there are a few interesting articles, blogs, and books out there.
Klaus Zimmerman recently had an Op Ed in the Financial Times on robots in China. Apple and Foxconn want to replace workers in Chinese factories – the ones assembling iPads, iPphones, and other products – with 1 million industrial robots over the next three years. You would think that this is going to be a disaster and put workers on the street, but Zimmerman argues that, on the contrary, what is happening is good for workers and China. For workers because the robots will spare them from working on boring, repetitive, and as Carl Marx would say, alienating tasks, and also increase their productivity and wages. For China because workers can then focus on different, higher-value-added tasks, thereby allowing the country to compete in new, more profitable products and markets.
How will China’s transition to this improved equilibrium occur? Zimmerman says little other than that the government now needs to increase investments in education and training so that workers can acquire the skills needed to perform these other, presumably, more analytical, strategic, or creative tasks. A key motivating factor is demographics – as the share of elderly people gets larger in the decades ahead and the share of working-age people soon peaks and begins to fall.
But one should not minimize what these transitions mean for affected workers. David H. Autor and David Dorn in various articles and Erik Brynjolfsson and Andrew McAfee in their book Race Against the Machine write about how automation has undercut the jobs and wages of the middle class in the United States and other high-income countries. Because computers and robots are good at replacing certain manual or repetitive tasks – from the assembly line to accountants, sale clerks, and paralegals – the number of jobs in these occupations and wages have plummeted.
Laura D’Andrea Tyson also has a recent post that talks about the polarization of jobs into very high and very low productivity occupations. Computers are replacing the middle class occupations, but to date we don’t have robots cleaning houses, collecting garbage, or working as janitors – it is easier to teach a robot to play chess or jeopardy than wash dishes – and so the number of these low productivity jobs has continued to grow (check-out the computer Watson winning a jeopardy contest). But it seems to me that this is only a question of time.
So, what happens when all these middle and low productivity jobs disappear? And, not only in developed but also in developing countries – at some point even when you have abundant unskilled, cheap labor, robots might become better and more profitable farmers. In another book worth reading (The New Geography of Jobs), Enrico Moretti provides some hints. The book is really about the decline of the U.S. manufacturing sector (because of automation and outsourcing) and how the “innovation” sector (such as science and engineering, entertainment, marketing, and finance) is taking over – but it also provides a way to think about the problem. Moretti argues that even new jobs in the “innovation sector” (such as digital artists) will eventually be standardized and automated. The hope then is that new products, ideas, and jobs will emerge out of human creativity. The assumption is that innovation comes from human beings, not machines. These jobs will occupy only a minority of the labor force (the average worker today isn’t working at Pixar, Google, or Spotify), but they will be enough to keep other local jobs that are not much affected by innovation (hairdressers, restaurateurs, sommeliers, yoga teachers, and therapists) going. Essentially, the innovation jobs will pay the wages that are needed to buy the goods and services produced by other jobs.
The question that remains is how countries can prepare today's and future workers (our children) to take on the jobs in the innovation sector – whichever shape they might take – and the jobs that follow them. Certainly, better education and vocational training is part of the answer – maybe, even with the help of a friendly robot.