Robots have not yet stolen our jobs

Though it is not yet widespread, I encounter more and more people who seem to believe that there is growing unemployment, or falling labor participation rate, due to technology.

It is true that technology has impacted the job market. Simply put, back in 1900, everyone was a farmer. Almost the opposite is true today. And that’s entirely due to technology.

However, some people seem to think that a large fraction of the population cannot find jobs that pay enough to get out of bed because of our ever-increasing reliance on computers.

It is important to set the frame of reference. If we think that computers are having a big effect on employment, it makes no sense to start our analysis 50 years go. Let us narrow it down to the last ten years. After all, it has been a technologically intense ten years. Recall that ten years ago, we did not have the iPhone, YouTube was an ugly site with much smaller traffic, cloud computing did not exist. And so forth.

Being Canadian, I am going to focus on Canada. What? You object that you do not care about Canada? Well. Consider this: the computer revolution is an international phenomenon. Thus, if computers are wiping out jobs in, say, the United States, they should also wipe out jobs in Canada, France, Germany and so forth. After all, we all use the same computers.

There is a nice analysis by Jansen, an economist of the Royal Bank of Canada. He does observe that there has been a decline in the labor participation rate of about 2% during the last ten years, in Canada.

“Ah! Maybe that’s because of the computers!”

I should point out that this decline occurred in Canada, but not in other technologically advanced nations like Germany (where they have more robots than Canada). But I said I’d focus on Canada…

Jansen produces the following chart, where he reports both the actual participation rate and the participation rate you would get if the demography remained constant.

In other words, the participation rate is declining slightly because of demography. If we correct for demography, then the labor participation rate is constant. This means that computers are not wiping out jobs.

I have a more detailed and international analysis if you do not believe this simple analysis.

The facts simply do not fit the theory that computers and robots are wiping out jobs.

Not yet.

3 thoughts on “Robots have not yet stolen our jobs”

  1. Does this take into account the unstable and unfair employment like zero-hours and 1-hour contracts being taken into account in this analysis? These are pretty good in bringing increasing the employment rate, but are done at the detriment of the poor and their rights. Importantly, these numbers could be changing the statistics.

    I think you yourself mentioned in a similar article that there has been an increase in the number of cleaners and waiters etc. There has been some articles discussing how “real wage” has been declining in the last decades. At the end, if you can make the investment and automate, you can capitalise on it.

    The declining real wage goes well with automation. You automate first the jobs that require expensive labour, assuming you can do it. However, as the automation becomes easier and easier with the latest technologies, even the cheap labour can be replaced.

    Of course, with increasing numbers of unemployed, the wage for the unskilled drops, creating temporary low quality employment. How good these jobs are and whether these jobs can be automated is a different matter.

    There is a lot of discussion about the oncoming changes, particularly transport because of the self-driving cars. However, the automation happens in many areas at the same time, and quoting your idea of exponential growth in the pace of research, it is not that difficult to imagine that a high fraction of the population will end up in the servitude areas.

    Obviously I’d rather we distribute the money better and have more researchers. And some rich people “in their benevolence” are investing in research: biotechnology has been highlighted by you previously I think.

    As much as I love the data-driven discussions, I imagine that in some cases, with events in the history yet not seen, data might not show what’s coming.

    1. Numbers do not tell the whole story, but it is hard to believe that there could be a big shift toward technological unemployment that is not reflected in the participation rate.

  2. Not yet.

    Anyway, jobs are gradually more and more related with networking, influences, marketing, agreements, etc. Not really about doing anything, but meeting to discuss stuff.

    So, even if computers do all the work, people will still participate in meetings and get the credit for the work done. We will all become managers of automatic workers.

    No worries. Until computers become managers.

  3. from a god view , the jobs might increase or decrease(in case robot became too good in a short time), but not everyone replaced could turned into the newer high tech tech required worker.

    there’s another problem, can a mexican dish washer became a robot fixer? i think he can if he put lot of money to take a school, but since his job was replaced, how can you ask he/she to got the money for school?

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