Technology and Job Loss: The Debate Continues

Over the past four years or so, there has been immense interest in the subject of technological unemployment, specifically, if technology will make jobs obsolete. The answer is obvious: technology destroys jobs; however, news jobs always being created. But will there ever come a time, that, thanks to technology, this balance of job destruction and creation becomes so distorted that there will be no jobs or very few jobs? Is a post-job society possible.

Scott ponders this question in his viral post Technological Unemployment: Much More Than You Wanted to Know

Regarding the horse example, the U.S. horse population is 9 million. The demand for horses never went away despite automation, and has remained steady. If one tried to extrapolate the early 20th century horse population trend to the future, there should presently be no horses alive.Although the labor force participation rate is falling, the total labor force size has not (although it has flattened in recent years).

As for the argument that humans will become the equivalent of pets for their AI overlords, that seems unlikely. But it’s impossible to prove it cannot happen. Unlike domesticated cats and dogs, horses provide economic value to justify the high cost and space of raising them.

Rather than the total elimination of jobs, a more probable concern is the bifurcation of the labor force by IQ, with those with an IQ below a certain threshold barely getting by, stuck with low-paying jobs that barely pay ends meet. Due to economic and technological factors, this IQ threshold will likely gradually keep rising.

This is why the decline of manufacturing jobs has not hurt the overall labor market size, because such semi-skilled, medium-IQ jobs are being replaced by service sector jobs. However, the pay for these jobs is not as good.

Another argument is that we’re seeing the rise of ‘BS jobs’–jobs which don’t add economic value and or are unnecessary. The ‘bullshit job’ argument has never made much sense to me, but I see the argument a lot. If companies care about maximizing productivity and profits, and given America’s hyper-competitive economy and super-fickle stock market where the difference between meeting the earnings estimate versus missing it by a penny can make the difference between a stock being up 10% or down 10%, why would a company waste money on jobs that are bullshit. Obviously, they (the company) derive value from these jobs or else such jobs would not exist (or at least not for long). The job may seem like bullshit to whoever is doing it, but to the company it provides some sort of value. Employees are expensive, not just in terms of wages, but also due to comp, regulation, litigation risk and other factors, so a company will only hire when it has exhausted all other options.

Often what happens is the new technology will coexist with the older one, as the bank teller example shows. Other times the implementation is so slow that it is not a concern. I remember in 2007 McDonald’s, Jack in the Box, and other fast-food chains began to install self-order machines, but the adoption was really slow, the machines were often broken, and the machines didn’t replace the role of the cooks and cashiers. People needed help using the machines, necessitating staff. Same for those food store self-checkout machines. Rather than the machines eliminating the cashiers, they coexist. Some people like machines, but others don’t. Machines break and someone has to supervise the machines in case someone needs help or tries to fool the machine by imputing the incorrect weight or item.

Sometimes the pattern is u-shaped, meaning that there is a temporary depression in jobs, only for the jobs to return due to unforeseen circumstances. For example, in the early days of the internet, most spam was done by hand. Later, coders, using scripts created in php, C++, perl, or python, automated the process, making manual spamming unnecessary. But then bulletin boards and blogs, starting around 2004, implemented increasingly advanced anti-spam tools, such as captcha codes, which rendered a lot of these scripts ineffective. But also, this necessitated forum moderators to remove the spam (hence, jobs). Due to these spam counter-measures, but also thanks to the rise of micro-freelancing in countries such as India and China, human-generated spamming saw a huge resurgence, because it’s cheaper and easier to hire foreigners to post the messages than it is to code a script that is sophisticated enough to evade the plethora of anti-spam measures.

Overall, I am not too worried but I can see some cause for concern. Regarding post-scarcity and UBI, entitlement spending has been on an unstoppable rise for the past 50 years. We’re already headed in that direction. SNAP, medicaid, disability, and section 8 housing is pretty close to a UBI and post-scarcity. The future is one where the government assumes a greater paternal role in helping those who are unable to keep up with an increasingly competitive economy.