The technology and jobs debate raises complex questions

Doug Hill, James Bessen and Jim Stogdill continue discussing the impact of automation.

Editor’s note: Doug Hill and I recently had a conversation here on Radar about the impact of automation on jobs. In one of our exchanges, Doug mentioned a piece by James Bessen. James reached out to me and was kind enough to provide a response. What follows is their exchange.

JAMES BESSEN: I agree, Doug, that we cannot dismiss the concerns that technology might cause massive unemployment just because technology did not do this in the past. However, in the past, people also predicted that machines would cause mass unemployment. It might be helpful to understand why this didn’t happen in the past and to ask if anything today is fundamentally different.

Many people make a simple argument: 1) they observe that machines can perform job tasks and 2) they conclude that therefore humans will lose their jobs. I argued that this logic is too simple. During the 19th century, machines took more than 98% of the labor needed to weave a yard of cloth. But the number of weavers actually grew because the lower price of cloth increased demand. This is why, contrary to Marx, machines did not create mass unemployment.

Is something like that happening today? Yes, in some areas of white collar automation. The ATMs did not eliminate bank tellers, word processing software did not eliminate secretaries, etc. As I explain, ATMs increased the demand for bank tellers. In other cases, the work shifts to new occupations: there are fewer switchboard operators, but more receptionists; there are fewer typographers, but more graphic designers. As a whole, the number of jobs in office and sales occupations using computers has grown, not shrunk.

But that is not the whole story. First, new jobs require new skills. This was true in the past, too. I argued that the textile mills also hired workers who were adept at learning new skills and that they invested significantly in worker-learning on the job. You cites Dublin, but my research has corrected Dublin on this point (see Bessen, James (2003), “Technology and Learning by Factory Workers: The Stretch-Out at Lowell, 1842“, Journal of Economic History, 63, pp. 33-64 and also “Was Mechanization De-skilling?).” Moreover, my view is that the mill owners sought educated workers because it was in their business interests to do so, not for philanthropic reasons. And the mill girls saw the educational amenities of Lowell as an important attraction. For example, Lucy Larcom, who later taught college, compared the early years at Lowell to women’s colleges later in the century. I believe skills are also important for the new jobs being created today, and the difficulty of developing new skills and new labor markets is one reason wages are stagnant.

Second, the effect of technology in office occupations is very different from what is happening today in manufacturing occupations. As I noted, technology worked to reduce textile jobs during the 20th century, and for the last decade the number of manufacturing jobs has been shrinking. More than technology is at work here, but technology is not creating jobs on net in manufacturing. So, yes, there are two sides to technology’s effect on jobs, but it is far from obvious that the effect of technology is to eliminate jobs overall.

DOUG HILL: Thank you, James, for your response to the conversation Jim Stogdill and I have had over the last few weeks on the relationship between automation and jobs. I’ve read the two papers you referred to in your email, and they were quite helpful in fleshing out points you made in your article in the Washington Post. My conviction that your arguments overlook some crucial questions, however, hasn’t changed.

Two points and a quibble to mention:

  1. The quibble: Contrary to what you suggest in your email, I never claimed it’s “obvious” that the effect of technology is to eliminate jobs overall. To the contrary, I specifically said that technology can be counted on to cut both ways, and that we don’t know what will happen as automation evolves.
  2. All skills aren’t created equal. The gist of your argument is that new technologies require new skills and that having those new skills creates new opportunities for employment. Your example is the growth of textile manufacturing in Massachusetts over the course of the 19th century, an industry in which women workers played a substantial role.You say that the owners of the Massachusetts mills made significant investments in “human capital,” that is, they trained the women they hired so they acquired new skills needed in the mills. You never fully explain, though, exactly what those new skills were. Rather, you use increases in employee productivity (and some fancy equations) as prima facie evidence that new skills were acquired.This is looking at the situation from management’s perspective; it tells us nothing about what life was like for the women actually doing the work. That’s an important omission, I think, both in this specific case and in the general discussion regarding automation and jobs. By far, the bulk of that discussion has concerned the jobs automation might eliminate. What isn’t talked about nearly as much is the quality of jobs automation might leave behind.

    The fundamental method of industrial production is the breaking down of a given process into a series of discreet, repetitive tasks. This doesn’t necessarily mean they’re easy tasks, but by definition, they’re not complex. It’s an efficient way to make a commodity but not an especially satisfying way to make a living. I think of the worker Jim Stogdill met at the Ford electronics plant, who stood at his work station and shoved a capacitor into a circuit board all day. He seemed satisfied with the job, but the vast literature on the degradation workers experience on assembly lines (not to mention the suicides at Foxconn) shows that many, many workers feel otherwise, even when they’re well paid. See, for example, Ely Chiony’s Automobile Workers and the American Dream.

    Your analysis shows what “skill” often means where automation is concerned. The gains in productivity you celebrate came mainly from management’s demands that mill workers steadily increase their work load. Where they once tended two looms, “stretch-outs” required them to tend three, then four. “Speed-ups” periodically accelerated the speed of the machines as well. Experienced workers learned to handle the pace. At what cost, you don’t say.

    In one of his earlier emails, Stogdill cited the famous I Love Lucy episode where Lucy finds herself struggling to keep up with the conveyer belt in a chocolate factory. As funny as that bit is, it’s also evocative of the sorts of pressures faced by workers the world over who struggle to keep pace with machines. And, as I mentioned in my earlier email, getting more from less is a philosophy that isn’t limited to factories. A wide variety of automation techniques are widely and aggressively used to boost productivity in the knowledge and service industries as well.

  3. If it all depends on demand, we’re screwed. Increasing productivity in the Massachusetts mills meant it took fewer employees to produce the same amount of cloth, or more. Yet the number of jobs the mills provided steadily increased, as did the pay earned by the workers, at least for a while. Why? Because greater efficiencies of production and increased competition lowered the price of cloth, and demand for cheap cloth products grew. “This is why,” you say, “contrary to Marx, machines did not create mass unemployment.”The problem with this, as also mentioned in my earlier email, is that we’ve reached a point where we can no longer afford to base our national and global economies on an ever-increasing demand for an ever-increasing supply of consumables. That model is well on its way to killing the planet. Another model must be found, and quickly. I’m hoping some of those seeking to exploit the potential of automation might be taking that into consideration.

BESSEN: You raise some important issues about work satisfaction/alienation and environmental sustainability. I fail to see how the ATM machines have “degraded” bank tellers, subjected them to unwarranted “speed up” and are killing the planet. Nevertheless, my points are simply limited to the topic at hand, namely, whether technology creates more jobs than it destroys.

HILL: Here is what the Bureau of Labor Statistics currently says about bank tellers:

Job Outlook:

Employment of tellers is projected to show little or no change from 2012 to 2022.

Past job growth for tellers was driven by a rapid expansion of bank branches, where most tellers work. However, the growth of bank branches is expected to slow because of both changes to the industry and the abundance of banks in certain areas.

In addition, online and mobile banking allows customers to handle many transactions traditionally handled by tellers. As more people use online banking, fewer bank customers will visit the teller window. This will result in decreased demand for tellers. Some banks also are developing systems that allow customers to interact with tellers through webcams at ATMs. This technology will allow tellers to service a greater number of customers from one location, reducing the number of tellers needed for each bank.

The Bureau adds that tellers make an average of $11.99 an hour. A high school diploma and “short-term, on-the-job training” are required. Job prospects are expected to be excellent “because many workers leave this occupation.”

Number of bank tellers employed nationally, 2010: 556,310

Number of bank tellers employed nationally, 2012: 541,770

Jim Stogdill wrap-up

I want to thank James and Doug for engaging in this question and giving us the opportunity to publish it. However, if you read this carefully you’ll see that James and Doug might not have been having the same argument. Last week at Strata in Santa Clara, I moderated an Oxford Style debate on the proposition that automation creates more jobs than it destroys, and the same thing happened there. Our two teams of debaters squared off and promptly began arguing different questions. I hope to post some material from that discussion soon. It was super thought-provoking.

It’s not hard to see why this happens. It’s a complicated topic, really complicated in fact. Economists are the most unfortunate of scientists in that they are usually trying to answer some of the most complex questions we can pose with only the most rudimentary mathematical approximations to support their task.

When we ask the question, “does automation create more jobs than it destroys?” we might as well ask, “Are you an optimist or a pessimist?” Given the nearly unanswerable complexity of the question, it becomes a stand-in for a question of optimism.

But there’s another more fundamental problem, and this is where we start talking past each other. The question as posed is based on an assumption of scarcity. But if you think in terms of growing and/or future abundance, the question becomes either less important or moot. This is how the nano-techy singularists see it. “Lack of jobs aren’t the problem — figuring out what to do with your free time when everything is provided by your fabber is.”

We certainly haven’t answered any of these questions here, nor did we expect to. That was never my point in asking them either here or in the debate at Strata. I hope we have gotten a few people talking about it, though.

I’ve been dismayed by the “religion of disruptionism” in our industry. Creative destruction is how it works, but it seems like sometimes we are attracted to the destruction part of it for destruction’s sake. There is a whiff of schadenfreude in the valley’s approach to innovation that I find a bit sad.

There was a telling moment in our debate at Santa Clara when the “con” team looked out at the audience and said something like, “None of you need to worry about losing your jobs to automation; we’ve cleanly distinguished between the populations that represent the creative and destructive sides of Shumpeterian economics.”

In the end, we don’t know if history repeats itself forever and the creatively displaced can be retrained and find new jobs (or if it repeats itself and they can’t), but we do know that the pace of change matters. That an economy and a society can only absorb change so quickly and that pace can be affected by policy.

“Let them eat cake” isn’t policy.

If you are interested in the collision of hardware and software, and other aspects of the convergence of physical and digital worlds, subscribe to the free Solid Newsletter — and to learn more about the Solid Conference coming to San Francisco in May, visit the Solid website.

tags: ,