The Impact of AI in the Workforce

The Impact of AI in the Workforce

Ask ten people what effect AI will have on the job market and you’ll probably receive ten different answers. In the widely noted 2014 study, The Future of Employment: How Susceptible are Jobs to Computerization? authors Carl Benedikt Frey and Michael A. Osborne state: According to our estimate, 47 percent of total US employment is in the high risk category, meaning that associated occupations are potentially automatable over some unspecified number of years, perhaps a decade or two.

It’s a sobering figure, but as the report itself notes this is only one aspect of the impact.

Warnings of technology being harbinger of death for the job market are nothing new. MIT Economist David Autor in Why Are There Still So Many Jobs? The History and Future of Workplace Automation notes that the Luddite movement of the early 19th century was one of the earliest examples, in which a group of English textile artisans protested against the automation of textile production by seeking to destroy some of the machines.

But in actual fact that wasn’t the case, basic economics intervened. Automation made it cheaper to produce fabric, which in turn led to more customers, which drove demand for more product. The job might have changed, but during the industrial revolution there was no shortage of work for semi-skilled labour.

James Bessen, an economist at Boston University School of Law looks at more modern examples in his blog post Automation Paradox. Software made it cheaper and faster to trawl through legal documents, so law firms searched more documents and judges allowed more and more-expansive discovery requests. Likewise, ATMs made it cheaper to operate bank branches, so banks dramatically increased their number of offices.

While many people warn that this time is different, that jobs are being sacrificed to AI in a much shorter timescale than with previous industry changing events, so far the figures don’t add-up. Rather than wiping out jobs, AI is actually increasing the skill sets of workers, and therefore remuneration, across a wide range of industries from healthcare to clerical.

However, computerized automation does potentially put low skilled workers whose jobs could be easily automated at risk. But conversely this may be a short term effect while the labor market re-adjusts. As Carl Benedikt Frey and Michael A. Osborne say: findings thus imply that as technology races ahead, low-skill workers will reallocate to tasks that are non-susceptible to computerization – i.e., tasks requiring creative and social intelligence. For workers to win the race, however, they will have to acquire creative and social skills.

One of the auxiliary effects of the industrial revolution was how it changed education.

By the 1830s the British government started to fund education through charitable organizations. The newly introduced Factory Act meant that children working in factories attended school for at least 2 hours every day. By early 1900s civic or “red brick” universities were introduced to deliver vocational training covering areas from medicine and science to mechanics and engineering. Indeed, such was the change brought on by the industrial revolution that other countries following suit found that their success rate in capitalizing on the opportunity correlated directly to the standard of education within the region.

Perhaps the answer to the impact of AI in the workforce is not to give dire warnings, but to look how re-educating and re-skilling workers will develop technology to take us beyond AI to the next big revolution.


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