Technological Unemployment: Friend or Foe?

Alizeh Hussain, HB

Many people fear what they believe to be a future phenomenon: technological singularity, an era in which technology will advance to a point where artificial intelligence will surpass human intelligence and essentially take over the world. That suggestion may be absurd, or at least very far off in the future, but one cannot deny that rapid technological advancement has and may continue to have large impacts on our way of life. One way that can be seen is in the labor market.

For centuries, human beings were the only source of labor. Then the rise of technology made its way into the market and slowly but surely began to change the way people work. ATMs are faster than bank tellers, gas pumps are faster than attendants, and factories’ “sophisticated robots” are faster than assembly lines.[1] For the most part, this change has been considered positive. Technology is capital, a factor of production. An increase in technology boosts firms’ productivity, pushing the Production Possibilities Frontier graph and the aggregate supply curves to the right, illustrating that “technology makes smart workers more productive.”[2] And for a while, there was proof that technology was indeed improving the economy: between 1875 and 1975, with the progression of industrialization, real wages tripled, and the need for human labor was not eliminated.[3]

But can this good fortune continue? Banks, gas stations, and factories may have gotten richer and more productive, but tellers, attendants, and assembly line workers were put out of a job. Technological unemployment – people losing jobs to advancing technology – is no new concept. During Great Britain’s Industrial Revolution, Luddites took to the new machines with sledgehammers, smashing the technology that replaced them.[4] It is a generally expected fact of economics that this type of structural unemployment will always be present; combined with seasonal unemployment, it makes up the natural unemployment rate, about four to six percent. The reason technological unemployment was accepted was because those workers would simply be able to find different jobs with their skills. But that begs a frightening question…what happens when there are no more or very few jobs that people can do better than the very machines we have created? Will unemployment soar, to thirty, fifty, or even ninety percent (not all jobs can be lost – someone has to run the machines)?

So far, there isn’t much evidence that shows employment being eradicated in the near future by technology. In fact, new technology has consistently opened up opportunities for people. Machines take away jobs from people they replace, but they create jobs for people who have to program them and run maintenance. Technology also tends to eliminate jobs requiring unskilled labor, a factor that incentivizes people to pursue higher education to become skilled workers. Creative destruction seems harsh, crushing small business and eliminating jobs. But in a market economy, “it must happen” in order to promote progress in society.[5] Maybe those who fear technological singularity are on to something; maybe they aren’t. We cannot see the future, so we cannot know for sure whether technology will hurt or help the labor market. I think it will be an even mixture of both. They say when one door closes another opens. Hopefully in the case of technological revolution, that saying holds true.

[1] Charles Wheelan, Naked Economics (New York: Norton, 2010), 142.

[2] Wheelan, Naked Economics, 142.

[3] “The Onrushing Wave,” The Economist, January 18, 2014. Accessed June 22, 2016. http://www.economist.com/news/briefing/21594264-previous-technological-innovation-has-always-delivered-more-long-run-employment-not-less

[4] “The Onrushing Wave,” The Economist, January 18, 2014.

[5] Wheelan, Naked Economics, 47.

Image: “Technological Unemployment.” Digital Image. Penn Political Review. http://pennpoliticalreview.org/archives/5745

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