• Neal Sweeney

We Took Their Jobs: A Look at Automation Abroad

Updated: Dec 4, 2019


Image Credit: Brookfield Institute

Sorry angry mob of Coloradans from South Park, as it turns out, you’ve actually taken their jobs, or at least you automated them. Not you specifically, but companies in the U.S. that are developing technologies that automate the process of mass manufacturing and shipping, by developing artificial intelligence and machinery that enable factories to work themselves.


The number of people affected is preposterous. According to the Harvard Business Review: “In all, 1.2 billion full-time equivalents and $14.6 trillion in wages are associated with activities that are automatable with current technology. This automation potential differs among countries, ranging from 40% to 55%.” With a global population of 7.6 billion, that’s a bit less then every 1 in 6 people whose jobs could be automated with current technology.


But while the total number of jobs will be diminished, there’s a possibility that the quality of the jobs themselves will actually improve. As explained by Tylor Orme, professor at Emerson College: “So if you think of the auto industry as a classic example of this, where you went from having floors full of people, who were fairly well off but were lower-middle class workers, and then automation means that now there’s only 20 people on the floor but they have these insanely high-paying jobs and where they’re computer engineers, repairing robots, and doing things that are more lucrative.”


Taking a step back, there’s actually a very important reason that factories would want to automate their processes: quality. Scott Latham Ph.D. is a professor at UMass Lowell’s Manning School of Business and recently co-authored a report called Four ways Jobs Will Respond to Automation, and he’s heard of several companies dealing with this issue, in particular a medical device company that had to bring its manufacturing operation back domestically, after moving it over to Cambodia. It’s part of a larger trend that he’s noticed: “Amazingly people were going to China and India because of the low cost of human capital, but now because of those quality issues I mentioned they’re going to be bringing automation into those areas first. Then you will also see low-skill factory floors being automated in the US across the economy.”


To revolve back to our crowd of angry Colorado picketers with thick accents, they did lose their jobs; but it seems the people who received those jobs are also going to inevitably lose them. As Latham said: “If you think about it, automation targets a lot of low-skilled labor, and that’s unfortunate. So, the displacement you saw in the US economy in manufacturing over the past 50 years, that dynamic is going to be off-shored to Indonesia, Poland, Costa Rica, you name it.” However, that’s not to say that the US is in the clear; far from it. The Harvard Business Review’s report found that “On a global level, four economies — China, India, Japan, and the United States — dominate the total, accounting for just over half of the wages and almost two-thirds the number of employees associated with activities that are technically automatable by adapting demonstrated technologies.”


Some of this stems from the economic concept of comparative advantage, which is the specific task that a certain body excels at. If person A, who is a soccer-player, gets a job that is physically intensive like a park ranger, and person B, who is a professional chess player, gets a job in strategy or business development, these people are playing towards their comparative advantage. Because of this automation affects different regions differently, as Latham explained: “[developing countries] primary comparative advantage has been low-cost labor, and I think automation is a real threat to those developing countries. Because as it goes over there it displaces a worker that’s going to have economic consequences, detrimental ones; and if a US company says ‘Huh, per unit I’m only saving three cents sending it to Cambodia vs. doing it here in the US in an automated fashion, I’ll keep it here.’ So, I think any developing economy that’s primary comparative advantage has been low-cost human labor… there’s a big issue there”


There is an issue, but it’s not as cut-and-dry as it may seem. For instance, sometimes people don’t actually want those jobs. As Bloomberg reports that’s the case in India, whose yarn and cloth industries have been doubling down on incentives to keep employees. This comes at a time when the country will be adding 138 million people to the workforce over the next decade. So when looked at through certain lenses we can see automation like this, as Orme somewhat does: “it’s really great because people don’t want to be doing these super low-paying, difficult, long hour jobs but you also when you’re dealing with a country of a billion people anything that reduces the number of jobs is potentially scary, even if the jobs that are left are really high quality and high paying.”


But with the rise of automation needs to come something else: a rise in education. The Business Review attempted to quantify the effects of automation on 46 different countries by sorting them into three groups. These were advanced economies like the U.S., emerging economies with aging populations like China, and emerging economies with younger populations like India. Included in the article were outlooks for each, with the latter receiving: “The continued growth of the working-age population in these countries could support maintaining current GDP per capita. However, given their high growth aspirations, and in order to remain competitive globally, automation plus additional productivity-raising measures will be necessary to sustain their economic development.” In other words, if people in India don’t want to work in factories, somewhere else will have to be found for them.


Latham has some ideas as to how this can be accomplished: “In a dream scenario you would hope that technology would provide these people with the ability to get education, so they could improve their skill-sets so that they could participate in what we’re calling the ‘new economy and the future of work,’ that would be idealist.” But once again, it isn’t quite so simple: “Realistically, it’s going to be tough for these developing economies to break out of a cycle of poverty and bring a large percentage of their populations into the middle-class, when that cycle is being undercut by automation.”


Orme shared the sentiment: “That’s the concern; if automation is taking away some jobs, what are the jobs that are emerging to replace them? If they’re tech jobs and outsourced US jobs that are fairly high quality, the stereotype would be tech support, but programing is really cropping up in India and China nowadays, if that’s what’s happening then that’s amazing. It’s like “You can’t work at the shoe factory any more but if you go back to school you can work as a computer programmer” that’s amazing. But, I also kind of suspect that there’s a lot of moving to agricultural farming and other types of labor that are really not what we’d be supporting when we talk about technology replacing the worst jobs.”


Bloomberg’s report found that 195 million people in India work in agriculture, with the second highest category of Other Services employing 58 million.


This is where universal income enters the conversation, which Elon Musk has said is “going to be necessary.” However there are some who disagree that this approach will work, and for one important reason: most people identify with their work. Latham shares that mindset: “If you told me ‘Listen, universal basic income plus education credit’ then you’ll start to get me around, but even then, the question of how people identify around their work are still not answered.”


In the current time, Latham suggests that people critically look at their existing skills: “A couple of weeks ago I was down at the National Counsel for Workforce Education, and it really isn’t coming upon people that help advise on careers and professional training to basically say ‘Mary, yes, you’re a taxi driver, but at some point in the next ten years there won’t be taxis, but what are you skills and can we bring those into the new economy?’”

This is, as put by Latham’s co-author Beth Humberd, assistant professor at UMass, part of a larger change in the workforce: “We know the relationship between workers and their organizations have shifted drastically, people no longer work at the same company for a long time, people no longer get pensions from those companies, lifetime employment is gone. And so, all of that being the prior wave of shifts around the nature of work and people’s relationships to organizations requires that no matter where you’re at in the career ladder/professional sense you have to understand and own you career.” None of this is temporary either, as Latham added: “This ain’t a phase, this is a dramatic shift in the way we live as people, we organize as companies, and we have to be upfront and help people make that transition.”


But that isn’t to say people without access to education are screwed. As Humberd explains, they still have time: “It’s not as doom and gloom as it sounds for the very reason that Scott said. It’s not going away, but it’s also not going to happen as fast as everyone thinks, right? We had this old line in the paper like: “You’d read the newspaper and think a robot’s going to knock on your door and pull you out of your house, steal your job, steal your money, steal your life’ If you read the headlines that’s what you’d think. We’ve been looking back historically, and this is another turn, it may be quicker than previous turns but people have been making these predictions since before the industrial revolution.”


Orme frames the conversation in a way that might help us understand where our picketers from South Park may have come from, and where people in developing countries may be going: “The story has always been [that] you go from 100 really terrible jobs that no one wants to 50 fantastic jobs that everyone wants, and the question is where do the other 50 people go.”


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