The Future of Work: Finding Opportunity in the New Economy
Since President Trump’s inauguration the topic of job creation has dominated political agendas on both sides of the aisle with proposals to reinvigorate a stagnating labor market and create a prosperous economy for all. Central to this conversation has been the role of technology, and more specifically what role emerging technologies like artificial intelligence (AI) will play in the development or decimation of jobs.
Last week, two separate reports were issued offering diverging opinions — one from the National Bureau of Economic Research (NBER) and the other from the Technology CEO Council (TCC).
According to research issued by the NBER – authored by economists Daron Acemoglu of MIT and Pascual Restrepo of Boston University – between 1990 and 2007, the introduction of one or more industrial robots into the workforce within a local area where people commute to work led to the elimination of 6.2 jobs in that area. The report also found that the average wages of workers declined slightly as a result of robots entering the U.S. economy.
But today I would like to focus on a different, more optimistic report issued by the Technology CEO Council and authored by Michael Mandel and Bret Swanson. “The Coming Productivity Boom: Transforming the Physical Economy with Information,” argues that technologies such as AI, mobility, analytics and sensors will actually create more jobs, accelerating economic growth, as long as the government and industry invest in retraining.
I’d like to share some of the key findings of the TCC report and offer my own perspective on the findings, particularly as someone who intersects with emerging technologies on a daily basis.
In summary, the TCC report notes that at 2.7%, annual productivity growth in the digital industries over the last 15 years has been strong. On the other hand, productivity in the physical industries – healthcare, transportation, energy, education, manufacturing, agriculture, retail and urban travel services – grew just 0.7% annually.
The report adds that digital industries make 70% of all private-sector investments in information technology, with physical industries making just 30% of the investments in IT. In fact, the manufacturing sector (excluding the computer and electronics industry) has barely boosted its capital stock of IT equipment and software over the past 15 years. According to the report’s authors, this “information gap” is a key factor in recent economic stagnation in lagging industries and is why so many workers appear to have not benefitted from advances in technology.
However, the TCC report also suggests that physical industries are poised to experience their own kind of information revolution. For example: “Smartphones and wearable devices will make healthcare delivery and data collection more effective and personal,” “robots will increasingly be used for surgery and eldercare” and “autonomous vehicles…will radically improve efficiency and safety in transportation.”
Usually when we hear these kinds of prophecies regarding the future of work, there is immediate concern regarding the loss of traditional jobs as technology takes over, and the recent NBER report is sure to add fuel to that fire. However, the TCC report takes a different perspective, predicting “a more productive physical economy will make American workers more valuable and employable.”
As an example the authors cite the potential of robotics and 3D printing to fuel a re-evaluation of production and design processes and thereby boost productivity and demand substantially. That, in turn, could create a new set of manufacturing-related jobs and allow American factories to compete more effectively against low-wage offshore rivals.
Having worked for over 20 years in close partnership with clients who operate in the fields of AI, analytics and robotics, I lean toward the TCC view in this debate. More than once have emerging technologies been written off as fads and businesses try to resist the forces of change. The technology revolution is not about to retreat and we need a strategy for long-term success.
To read my thoughts on the TCC report, check out my LinkedIn post.