Advancements in technology and automation in the workforce has transformed the labor market and economy; some say for the better, some say for the worse. Since the time of the Industrial Revolution, machine has assisted workers in many ways and has improved the productivity levels of factories, businesses and farms all over the world.
Larry Summers, former Treasury Secretary under the Clinton administration and economic adviser to President Obama, told the Wall Street Journal on Monday that one of the biggest economic problems of the future will be technology and the abundance of employment opportunities, or lack thereof.
Summers noted that technology has already eviscerated jobs in the agriculture and manufacturing sectors. In the future, the service sector will also be impacted as he predicts taxis will be driven by robots, while retailers will use automated systems to make transactions. However, these individuals can transition to a different sector and learn new skills.
“This time around, change will come faster and affect a much larger share of the economy. There are more sectors losing jobs than creating jobs. And the general-purpose aspect of software technology means that even the industries and jobs that it creates are not forever,” stated Summers. “The challenge for economic policy will increasingly be generating enough work for all who need work for income, purchasing power and dignity.”
In the meantime, however, public officials, economists and financial analysts will still keep their eyes on every month’s labor report. Markets were ecstatic last week when it was learned that 288,000 jobs were added to the labor market in the month of June.
Over the years, it has been believed that technology has ruined the amount of jobs available, but there has yet to be any empirical studies suggesting that the machine has taken away jobs from man. Economists adhering to the School of Austrian Economics posit that technology can actually improve the job market conditions.
Technology has made some jobs obsolete, and thus enhanced the overall standard of living for millions of people all over the world. It has also allowed individuals to have a lot more free leisure time: if it weren’t for the washer and dryer, the dishwasher and other appliances the average household would have to allocate more of their time to clean the dishes and laundry instead of television binge-watching.
Essentially, what economists hypothesize is that if technology replaces workers in one area of the economy then those workers would transfer over to another sector of the economy that suffers a labor shortage, though they would perhaps need to attain the proper skills to do so.
One argument that is regularly presented by libertarian economists and authors is that if something has to be blamed upon rising unemployment it would be the minimum wage. Since many states and cities have adopted a higher minimum wage, retailers and restaurants have reacted by accelerating their automation efforts.
An example of this is the latest burger-preparation machine that can produce 360 burgers per hour. Called the Momentum, it can slice toppings for burgers, offer customers the option to customize their meat grinds and provide more sanitary conditions. Meanwhile, Pizza Hut might be eliminating the need for waiters and servers as it is introducing a touch screen table that allows the customer to choose the type of dough, sauce and toppings for their pizza.
Here is what economist Murray N. Rothbard wrote in 1959:
“More specifically on automation, it is expected to increase the demand for skilled workers in industry, and decrease demand for the unskilled, who can shift (thus continuing recent pro-automation trends) into the service trades, which cannot be automated. Halsbury estimated that practically no unemployment, even temporarily, need be involved in such shifting, since there is a 2% “natural” turnover in industry per annum, due to retirement of old and recruiting of young workers, and that the redeployment of labor caused by automation will not be nearly as heavy as this rate. The retirement-recruitment process will therefore be a good buffer against even temporary unemployment. Argyle adds that there is even greater room for mobility, for in addition to this process, about 10% of workers leave per annum for other reasons and that these too will buffer against forced unemployment.”
