The rise of artificial intelligence and robotics, and such things as autonomous autos and automatons, has given rise to fears of mass unemployment in the U.S. and across the globe that everyone will be out of jobs besides people like Mark Zuckerberg who will have us work as indentured servants on his click farms.
To consider if these concerns have any real basis, Goldman Sachs examined two key data – unemployment rates and productivity growth – and concluded that the fears are irrational, and any impact could be limited to retail and transportation.
“The technological advances of recent decades do not appear to have resulted in faster productivity growth or more intense disruption across occupations and industries, much less mass unemployment,” the investment bank concluded in a research note titled, “Driverless Cars and the End of Work? Not So Fast.”
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Unemployment rate has dipped to 4.4% and measured productivity growth has been very weak, it pointed out.
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Goldman analyzed employment data for 22 occupations from the Occupational Employment Statistics and for 121 private industries from the current employment statistics. During 1990-2003, the biggest job losses occurred in textile and durables manufacturing and in the period 2004 to present, they occurred in varied sectors hit by digitization including department stores and publishing. But the main takeaway, the bank said, was that “job market disruption has been lower recently than at any previous point since at least the early 1990s.”
On labor productivity growth, Goldman pointed out “systematic understatement” in official data, estimated by the bank to be up to ¾ percentage points. But even after discounting it, “actual productivity growth has still fallen over the last two decades,” the bank observed.
Having said that, changes in technology and trade have caused significant shifts in the structure of the economy, hitting some workers harder than others. Retail and transportation are the worst affected.
The drive toward to e-commerce is at the heart of the problem of retail. Online retailers require only 0.9 employees per million dollars of sales, compared with 3.5 for brick and mortar stores. Goldman estimates this shift is already costing about 100,000 retail jobs per year. Similarly, the shift to autonomous autos could lower employment growth by about 300,000 per year, but this probably would come only in about 25 years from now, the bank said.
On the positive side, the set of “top-expanding sectors” has been remarkably stable in both time periods 1990-2003, and 2004-2017, Goldman said. In both periods, the top eight included computer system design, and a handful of health care sectors, education services and food services (restaurants, bars, and food delivery).
“We expect these sectors to continue to create many jobs in the next decade,” the bank said. In fact, demand for health care, education and food services is likely to rise further with aggregate income, besides benefiting from broader trends including aging and consumers’ desire for new experiences, it added.
On balance, Goldman said it remained “constructive on the long-run outlook for aggregate employment as broader trends such as aggregate income growth, consumers’ desire for new experiences, new technologies, and care are likely to continue to support job growth in large swathes of the service and technology sector.”
While Goldman has a somewhat cheerful outlook, others disagree.