Not Too Shocking – Those High Numbers from AI Job Disruption

Shocked. By Mark Turnauckas.
Shocked. Photo courtesy of Mark Turnauckas.

Can you think of a time you took advantage of a new technology, and in the process got way more work done?  We’re all going to need more stories like this in order to stay ahead of the game.

I’ll never forget my first exposure to a pirated version of Microsoft Excel.  I was in graduate school in 1994 and a young woman in my class, Bev, handed me a stack of eight floppy disks held together with a blue elastic band.  She told me Excel was way better than what I was using.  Six months later I had finished an entire graduate thesis based on clever charts and tables I had created using new software.  Six months after that, I was at a firm in one of the towers in Toronto’s downtown core with experienced consultants lining up at my cubicle, waiting for some solid analysis.  My mind had co-evolved around the technology, and I was valued.

For many months I was the only analyst on a team that had four consultants.  When new technologies are brought in, sometimes one person can do the work of several peers.  And this appears to be a concern today with incoming technologies, such as artificial intelligence, internet of things, and analytics.

There has been some excitement lately about McKinsey’s report that 800 million jobs will be eliminated worldwide by technology.  Reading the content of the report – not just the media coverage – I can assure you that it’s far less dramatic.

First, the 800 million jobs was the upside of a forecasted range, and the authors recommend considering the mid-point of the range, which is 400 million jobs.  Those 400 million jobs are proportional to 15% of current work activities in the global labour market.  These job losses are not expected to be immediate, as this is a forecast into 2030 – twelve years from now.  This means the forecast is closer to 30-35 million jobs lost per year, which seems far more modest on a planet with 7.6 billion inhabitants.

But it gets better.  Of the 400 million jobs lost, only 75 million jobs will be eliminated altogether.  The remaining job losses will be in cases where parts of our jobs will be eliminated.  About 30% of “constituent” work will be automated for 60% of occupations.  That is, there will be bots taking care of the more mundane parts of our jobs.  It remains to be seen whether this shift will result in 30% less employment, or if our outputs will just be more efficient.  There may be a line-up at your own desk, with senior people increasingly reliant on your own unique, human-machine hybrid.

This technological revolution will have more dramatic impacts on industrialized economies such as Canada, the U.S. and Europe.  New technologies have a cost of implementation, and cost savings are needed to justify the investment.  A lot of cost savings can be found in eliminating expensive jobs.  But in the developing world, wages are lower and the gains of the new technology won’t always outweigh the cost.  The trade-offs between hiring people and bringing in new technology often tips towards employing people in those places where wages are low.  It’s in the industrialized world where we will see the most change.

In my opinion (not necessarily McKinsey’s), this will have an impact on political optics.  Jobs will appear to be eliminated in industrialized economies and then magically reappear in the developing world.  But the back-story is that technology allows work to be done with fewer employees and more machines in industrialized countries.  And those western workplaces will have competition from countries where it is not optimal to bring in new technologies.  The jobs created in developing countries will look like the same jobs that used to exist in the West.  But that’s not what’s going on.  Developing economies are just briefly immune to the more-expensive technology, for as long as those countries have low wages.

McKinsey also reviewed the history of technological change and found that there tends to be a net gain from new technologies.  The technology benefits someone — the buyer, investor, or some new profession or trade.  That someone spends money in a manner that creates different jobs, often by taking advantage of yetanother new technology.  Those 400 million lost jobs are likely to be the downside of a net-gain from technology.

This raises the difficult issue of things getting better on average.  As I described in an earlier post, if one million jobs are eliminated and a million-plus-one jobs are created, this is a net gain of one job.  In the minds of economists, this is considered progress.  However, looking at the blow-back from voters in industrialized countries, it appears that we must now pay very close attention to the millions who were on the downside of this net-gain.  And perhaps you know some of these people.

McKinsey was all over this issue:

“Midcareer job training will be essential, as will enhancing labour market dynamism and enabling worker redeployment.  These changes will challenge current educational and workforce training models…  Another priority is rethinking and strengthening transition and income support for workers caught in the cross-currents of automation.” (p. 8)

Within the human resources crowd, we are experienced at either enduring push-back from unions, or anticipating labour’s response with meaningful policies and initiatives.  But regardless of whether you are sympathetic to the underclass, or just trying to implement a new technology as quickly as possible, you can see that society’s success at adapting to this change will hinge on the personal experience of those who have lost.

Looking around us, it seems like we are all trying to get our footing, trying to figure out for that one special thing that sets ourselves apart.  You might not be told ahead of time what that thing should be.  In fact, you might need to figure it out entirely by yourself.  But those who are always working on their angle will have a better shot than those who are relying on prior wins.

Sure, there might be an employer who is loyal enough to set you up for success, or a program or union that will help with the job transition.  But as we take turns eliminating each other’s jobs, you might want to hold onto a dash of selfishness.  If you can bot-boss your way into a superior level of productivity, you might have a shot at being that one valued employee on the upside of a turbulent net-gain.

Either as a society, or as an individual, you need to write yourself into a story where you reached for the power cord and taught the corporate machine to work for you.

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