May 15, 2013 at 7:04 pm
Check out this Wonkbook interview with Kevin Drum on the question of whether there’s been an acceleration of labor saving technology in the workplace. I think “maybe.” Drum thinks “definitely.”
WaPo: The obvious economic story is that AI reduces the need for human labor, so the demand for it falls and wages fall in turn. Do you buy that?
…People are being put out of work because of automation and we don’t notice it, so we argue about other stuff. We argue that education levels are too low, or that we’re coddling people on unemployment and we just need to cut them loose. These are all old issues that aren’t ultimately about what’s really happening. This is all going to happen slowly enough that we’ll keep arguing until we realize that something new is going on.
…the best explanation [for declining employ employment rates since 2000], I think, is that automation is starting to put people out of work, and make the economy more capital and less labor-intensive than it used to be.
The challenge for Drum and others, including myself, is that there’s not really much in the way of evidence. Most of the weak employment outcomes with which we’re currently stuck are cyclical. The structural problem of robots and software replacing workers is largely at the level of anecdote. True, the plural of anecdote is data, but we’re not there yet.
What about productivity growth and its split with employment growth, as featured here? Yep, I think that’s important and has led me to believe that this question of automation and employment bears close watching. But as Dean Baker likes to point out, productivity growth has slowed in recent years (though not as much as employment).
The figure plots annual productivity growth with a HP filtered trend in there to smooth out bips and bops. The post 1995 acceleration is clear, but so is the recent deceleration. This would seem to challenge at least simple linkages between accelerating labor-saving technology (I also looked at total factor productivity, which nets out not just labor inputs but capital inputs as well, so what’s left over represents technological advances in production—it’s jumpy but, if anything, has also slowed of late—see John Fernald’s work on this). Neither is there evidence of much capital deepening in terms of firms’ investments over the period when productivity and employment diverged.
As I like to stress, history is littered with Luddite predictions of labor-saving technology displacing workers. Instead, it has typically come to pass that the new technology, while often deeply disruptive, brought its own new labor demands along with it. As Drum stresses, and I agree, there’s reason to believe that this time might be different, but at this point the evidence is largely anecdotal.
Source: BLS, my calculations (HP trend, lamda=100)
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