Change and the unknown may be the commonest fears, along with public speaking. All of which hold the potential of limiting progress. Perhaps some adhere to a notion of singularity, maybe ignorance, perhaps others are prone to the narratives passed down from parents. I don’t know, and I accept that. What I do know is that we all have the power to educate ourselves, and to choose. For the sake of balance I offer you this.
Many experts would have us believe that robots and other technologies are behind the job drought. That couldn’t be farther from the truth.
The article focuses on MIT scholars Erik Brynjolfsson and Andrew McAfee, authors of the widely cited book Race Against the Machine. For them, workers are “losing the race against the machine, a fact reflected in today’s employment statistics.” They go on to argue that, “As we head … into the period where continuing exponential increases in computing power yield astonishing results—we expect that economic disruptions will only grow as well.”
Brynjolfsson and McAfee rely on a key data point to make their case: “The pattern is clear: as businesses generated more value from their workers, the country as a whole became richer, which fueled more economic activity and created even more jobs. Then, beginning in 2000, the lines diverge; productivity continues to rise robustly, but employment suddenly wilts. By 2011, a significant gap appears between the two lines, showing economic growth with no parallel increase in job creation.”
But the reality is that there is no logical relationship between job growth and productivity. To see why, imagine two nations with annual productivity growth of around 2 percent. Nation A has a declining workforce because more people are retiring than are getting to prime working age. Nation B has a growing workforce because of higher fertility rates workers and immigration. As this example of real nations shows (Japan asnation A and the U.S. as nation B), an economy can have high productivity and low or high employment growth. The reason why job growth slowed after 2000 was largely demographic. The number of adults in the workforce (employed and unemployed) grew 18 percent in the 80s, 13 percent in the 90s but just 8 percent in the 2000s as baby boomers got older and women’s entrance into the workforce peaked.
The data are just as clear on the lack of a relationship between productivity and unemployment. If “robots” really are the cause of today’s sluggish job growth, then productivity growth should be higher since 2008 than before. In fact, from 2008 to 2012 productivity growth was only 1.8 percent while from 2000 to 2008 productivity grew 2.6 percent while we had close to full employment.