Chart of the Week: The Automation Job Destruction/Creation Cycle

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SEPTEMBER 8, 2015 — ARLINGTON, MASSACHUSETTS
Figure 1 -- The automation job destruction/creation cycle.

 

Do we need to be concerned about automation destroying jobs in the long term? The answer to that question is complicated, according to Cutter Fellow Bob Charette. "... while our investment in automation may indeed do short-term localized harm, it eventually creates a lower-risk business environment that encourages the formation of new businesses and the expansion of current ones, spurs investment in even newer automation technology, and creates new jobs all around.0 Multiply this situation by tens of thousands of businesses big and small, and you can understand why technology optimists counsel patience whenever automation looks as though it might cause massive job losses."

Charette continues "The march of automation will not be stopped. Is it poised to put everyone out of work? If one looks at history, the answer seems to be a resounding 'no,' and that fact is the rationale given by many technology optimists who dismiss all concerns about a future of massive technology-driven unemployment. It hasn't happened in any major way in the past, ergo it won't happen in the future either. There are always more human wants than available resources, this argument goes, so there is always more work to be done."

"That may be valid," opines the author, "but it may not be work that pays very well. Interestingly, only 20% of economists polled by the University of Chicago felt that IT and automation were not a central reason why wages have been stagnant for the past decade. This situation is not likely to change anytime soon. In addition, while investments in automation may indeed create a greater number of jobs than in the past, they will also no doubt require higher educational skill levels on the part of workers to perform them. Given that the average cost of higher education at a US public university has nearly doubled in the past 20 years, how to afford to gain those skills is becoming the question."

* Excerpted from "Technological Unemployment: An Absurd Worry or Valid Concern?," (Login RequiredCutter IT Journal Vol. 28 No. 7