By James Pethokoukis

Leading into the coronavirus pandemic, there was considerable conversation about automation and the “future of work.” That, even though the jobless rate was at a half-century low and wages were rising fastest for lower-income Americans. But given the plethora of news stories about big advances in AI machine learning and robotics, automation concerns were hardly surprising. A 2018 Pew Research poll found that 82 percent of US adults said that “by 2050, robots and computers will definitely or probably do much of the work currently done by humans.” (Interestingly, just 37 percent of employed adults said say robots or computers will do the type of work they do by that year.)

Now as the pandemic lingers on, those concerns are creeping back, as exemplified by this New York Times story last summer “Pandemic Wave of Automation May Be Bad News for Workers.” From the piece:

An increase in automation, especially in service industries, may prove to be an economic legacy of the pandemic. Businesses from factories to fast-food outlets to hotels turned to technology last year to keep operations running amid social distancing requirements and contagion fears. Now the outbreak is ebbing in the United States, but the difficulty in hiring workers — at least at the wages that employers are used to paying — is providing new momentum for automation.

And to be sure, there is something really happening here. As Goldman Sachs noted in a recent report (bold by me):

The sheer scale of pandemic-driven changes to the workforce and to company business models also argues for a large and long-lasting productivity inflection. These changes include 600 million fewer hours spent commuting every month, as well as possibly 1.4 million fewer cashiers, in-person salespeople, and office maintenance staff. . . . For example, the composition of retail employment has evolved along these lines, with five fewer cashiers and salespeople per hundred workers in the industry. The leisure sector has moved in a similar direction, in part reflecting the rise of mobile ordering, online check-in/check-out, and housekeeping service on request. These business model changes have outlasted — or in the case of the leisure sector, occurred after — the spring 2020 lockdowns, and they have not reversed in 2021 despite a sharp rebound in retail traffic and dining, hotel, and recreation services consumption.

But are we looking at widespread technological unemployment, especially as AI and robotics continue to improve? Three thoughts or observations:

First, GS assumes that many of those fewer cashiers, in-person salespeople, and office maintenance staff and their hours “will be reallocated to more productive uses — especially at a time of labor shortages and near-record job vacancies.”

Second, it’s always worth noting the history of labor markets suggests that those markets eventually adapt to changing technology. As AEI economist Michael Strain recently told me: “I don’t think these advances should have a lasting impact on unemployment, but I am concerned about their effect on workforce participation. These advances are coming whether we want them to or not — and I want them to — so the task for public policy is to make sure that people have the skills to compete in the labor market of the future.”

Third, an intriguing bit of recent research should also tamp down concerns. From “The Effects of Automation on Labor Demand: A Survey of the Recent Literature” by Philippe Aghion, Celine Antonin, Simon Bunel, and Xavier Jaravel (bold by me):

In this article, we survey the recent literature and discuss two contrasting views on the impacts of automation on labor demand. A first view predicts that firms that automate reduce employment, even if this may ultimately result in job creations taking advantage of the lower equilibrium wage induced by job destructions. A second approach emphasizes the market size and business stealing effects of automation. Automating firms become more productive, which enables them to lower their quality-adjusted prices, and therefore to increase the demand for their products. The resulting increase in scale translates into higher employment by automating firms, potentially at the expense of their competitors through business stealing. Drawing from our empirical work on French firm-level data and a growing literature covering multiple countries, we provide empirical support for this second view: automation has a positive effect on labor demand at the firm level, which remains positive at the industry level as it is not fully offset by business stealing effects.

This time might be different, of course. Maybe machines will take all the jobs. But a reasonable case can be made that it won’t and they won’t.

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