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01 / 05
Artificial Intelligence Will Kill Jobs – and Create Them

Blog Post | Science & Technology

Artificial Intelligence Will Kill Jobs – and Create Them

The relationship between automation and overall employment growth has been strongly positive over time.

Steven Globerman —

Ever since the Industrial Revolution, the automation of tasks once done by humans has raised fears about machines putting humans out of work and creating mass poverty. Happily, history has repeatedly proven the doomsayers wrong. While automation has certainly led to declines in entire industries (and employment in those industries), the relationship between automation and overall employment growth has been strongly positive over time.

There are sound explanations for this positive relationship. One, automation increases labour productivity and therefore raises the income levels of workers. Resulting increases in income translate into increased demand for all types of goods and services, which obliges businesses to hire additional workers. Second, automation directly increases the demand for labour skills that are complementary to the development and efficient use of new technologies.

For example, consider accounting and spreadsheet software packages that have made labour-intensive bookkeeping and data processing occupations increasingly uneconomical. At the same time, such software has created enormous opportunities for individuals who can use the software to more efficiently perform new tasks or existing tasks such as project and supply chain management.

Notwithstanding historical experience, the latest generation of automation, broadly referred to as Artificial Intelligence (AI), has many sounding the old alarm bells about machines taking jobs away from humans. For example, Elon Musk, the controversial CEO of Tesla, warned that robots will be able to do everything better than humans. Crucially, Musk and others who think like him draw a distinction between automation in the past, which was largely about mechanical power replacing human muscle, and AI, which is about making machines both stronger and smarter than humans.

Many computer scientists including Canadian AI expert Yann Lecun caution it will take decades to build AI systems that are even close to human-level intelligence. Furthermore, even as machine-learning technology advances and enables computers to make increasingly sophisticated decisions, new opportunities will emerge for humans to employ automated intelligence to do wholly new workplace activities and do their existing jobs more effectively.

For example, AI-equipped computers are now being used to identify the likelihood of individuals currently or prospectively experiencing health problems using real-time data transmitted from smartphones and other wearable devices. This technology frees up time for health care providers to develop personalized therapy protocols and educate their patients about how best to use those protocols. In addition, the data collected, which is being used to “train” computers to diagnose and predict health problems, is also facilitating the development of new treatment protocols and techniques for managing patient care. This, in turn, is increasing the demand for biologists, statisticians, computer programmers, and laboratory technicians, among other occupations.

To be sure, leveraging the benefits of automation requires individuals to acquire new skills. However, the extent and urgency of educating and training workers should not be overestimated. A recent study of 32 developed economies estimated that about 14 percent of workers might see their jobs entirely restructured (in terms of tasks) or significantly downsized as a result of computer automation. Furthermore, there’s usually a lengthy period of time between the introduction of an innovation and its widespread adoption. One comprehensive study of 15 major technologies estimated a lag of up to 50 years (on average) between the introduction of the technologies and their broad-based use. Such long lags suggest that new generations of workers will have ample time to equip themselves with the skills needed to use AI technology to their advantage in the job market.

Yogi Berra, the late great New York Yankee, once said, “It’s tough to make predictions, especially about the future.” This is a useful reminder amid the dire predictions from Elon Musk and other doomsayers. History suggests that AI will create more jobs—and higher-paying jobs—for Canadians, which seems a safer guide for policymakers and employers than predictions about human intelligence getting automated out of existence.

This first appeared in The Fraser Institute’s Quarterly publication for Fall 2019.

World Bank | Quality of Government

Côte D’Ivoire’s Land Reforms Are Unlocking Jobs and Growth

“Secure land tenure transforms dormant assets into active capital—unlocking access to credit, encouraging investment, and spurring entrepreneurship. These are the building blocks of job creation and economic growth.

When landowners have secure property rights, they invest more in their land. Existing data shows that with secure property rights, agricultural output increases by 40% on average. Efficient land rental markets also significantly boost productivity, with up to 60% productivity gains and 25% welfare improvements for tenants…

Building on a long-term partnership with the World Bank, the Government of Côte d’Ivoire has dramatically accelerated delivery of formal land records to customary landholders in rural areas by implementing legal, regulatory, and institutional reforms and digitizing the customary rural land registration process, which is led by the Rural Land Agency (Agence Foncière Rurale – AFOR).

This has enabled a five-fold increase in the number of land certificates delivered in just five years compared to the previous 20 years.”

From World Bank.

Curiosities | Trade

The Real Story of the “China Shock”

“The total number of jobs remained largely stable in the U.S.—and even slightly increased—as people adapted to competition from Chinese trade. Trade-exposed places recovered after 2010, primarily by adding young-adult workers, foreign-born immigrants, women and the college-educated to service-sector jobs.

Lost in the alarm over jobs is that trade with China delivered substantial benefits to the U.S. economy. Most obvious are the lower prices Americans pay for everything from clothing and electronics to furniture. One study found that a 1 percentage point increase in imports from China led to about a 1.9% drop in consumer prices in the U.S. For every factory job lost to Chinese competition, American consumers in aggregate gained an estimated $411,000 in consumer welfare. This so-called Walmart effect disproportionately helped middle- and lower-income families, who spend a bigger share of their budget on the kinds of cheap goods China excels at producing.

U.S. businesses also reaped advantages. Manufacturers who use imported parts or materials benefited from cheaper inputs, making them more competitive globally. An American appliance company, for example, could buy low-cost Chinese components to lower its production costs, keep its product prices down and potentially hire more workers.”

From Wall Street Journal.

Reason | Employment

Amazon Warehouses Benefit Local Economies, Study Finds

“In a newly-released research paper, Evan Cunningham, a Ph.D candidate in Economics at the University of Minnesota, studied the effects of Amazon’s continued spread across the country—growing from just a handful of warehouses, or ‘fulfillment centers,’ in 2010, to more than 1,300 today in the U.S. alone. On balance, it turns out that Amazon warehouses provide a net positive to local economies.

‘I find Amazon’s entry in a metro [area] increases the total employment rate by 1.0 percentage points and average wages by 0.7 percent,’ Cunningham writes. ‘The composition of employment shifts from retail and wholesale trade to warehousing and tradeable services, primarily driven by younger workers. Employment gains are concentrated among non-college workers.'”

From Reason.