AI Shatters The Facade Of Job Security

It is a known fact that AI and automation will bring massive structural changes to economies all over the world. However, along with the promise of lower costs and higher productivity comes the fears of an exponential increase in workers losing their jobs to their superior machine counterparts.

The fears are not unfounded. Throughout history, as technologies have advanced firms have substituted capital for labour due to the lower costs. An example of this is in the agricultural industry, Traditionally the whole process of planting seeds, watering them, applying fertilisers and harvesting the crop was done by hand. The first change was in Egypt thousands of years ago with the ox-drawn plow, which allowed for faster harvests with fewer farmers. More recently technology, such as combine harvesters, have magnified this to the point were one farmer can tend to large pieces of land by themselves.

The below graph shows these structural changes in the Australian economy. From 1910 to 2010 the share of people employed in agriculture fell from 25% to around 4%. One of the key factors was that there was less demand for labour in the industry due to less labour being required thanks to more efficient capital.

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However, how is this relevant to AI and automation today? Similar to Egyptian farmers, firms today are driven by the profit motive. Whether the company in question is Amazon striving to optimise its delivery infrastructure or Nvidia’s latest “Clara”  initiative providing more efficient medical software, these firms are constantly looking to cut costs therefore the moment a worker becomes irrelevant in the productive process this same profit motive will lead to the workers being fired and an increase in technological unemployment.

Until now only the lowest skilled jobs, such as factory assembly line jobs, have been the victims of automation however the rise of AI means that increasingly fewer jobs are safe, with several white-collar jobs potentially going extinct in the near future.

An industry previously thought untouchable by technological unemployment was lorry driving and transportation but the advancements in AI-powered self-driving vehicles have lead many to speculate this may not be the case. Truck Driving is one of the most common jobs in the US, show in the graph below.

Most common jobs per state- Source:  https://www.marketwatch.com/

Most common jobs per state- Source: https://www.marketwatch.com/

On November 16, 2017 Tesla announced the “Tesla Semi“, the first self driving all-electric battery-powered Class 8 semi-trailer truck, although this was met with a lot of positive sentiment as electric vehicles have a smaller carbon footprint the flip-side is that it could lead to firms replacing the traditional truck drivers with self driving trucks, and as the technology continues to advance the costs will fall leading to further investments in self driving trucks.

However it is argued that although some jobs may be lost, this may be countered by the creation of new jobs, for example AI software developers at Tesla. Gartner research has recently surveyed many firms who have AI ‘efficiency targets’ in order to see the chances of layoffs due to the rise of AI.

In the current economic climate in western Europe and US, my experience from talking to clients is that they’re asking how I can achieve [with AI] the levels of customer service I’m expected to achieve with the people I’ve got,” he said. “Most organisations are going to look at AI and say that efficiency means I can accomplish more things than I could ever do before.
— Whit Andrews, Vice President at Gartner

Andrews also spoke to many firms int he healthcare industry, he summarises the feedback below:

I’ve never spoken to any healthcare player which has characterised any decision they were going to make as being promising because it would allow them to have fewer workers

Although these finds seem promising, Andrews also says in the report that he occasionally met with firms that did not see their employees as valuable and inevitable will fire them the moment its cheaper to use AI in the productive process. However meeting a firm with this mindset was rare according to Andrews. Andrews also goes on to explain how efficiency targets could translate to different implementation strategies in different firms.

Companies who say they’re aggressive in adoption strategies were much more likely instead to say they were seeking improvements in customer engagement.
— Whit Andrews, vice president at Gartner

Overall, the report predicts there will be a net addition to jobs due to the AI expansion. This will be due to the number of non-automated tasks increasing relative to the jobs now performed by AI. However certain groups in society are more vulnerable than others. Blue-collar jobs that are already disappearing at an alarming rate, with China being at the forefront of automating factory assembly jobs. Lower-income households are more likely to have blue-collar workers and due to the difficulty of retraining for a job that is in demand (a lorry driver may find it costly to retrain as an AI software engineer) and so, this could lead to decreases in income for poorer households and increased inequality.

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