No, Robot Skeptics, the Sky Isn't Falling

Saying “the robots are coming” is not the same as saying “the sky is falling.” A recent nuanced report by McKinsey & Company made that clear. The study found that demand for workers could grow – largely fueled by technological progress. But based on much of the reporting of the study, one would think it had forecast a coming Depression.

Consider the lead the report was greeted with on the BloombergTechnology site: “As many as 800 million workers worldwide may lose their jobs to robots and automation by 2030, equivalent to more than a fifth of today’s global labor force.”

Now, BloombergTechnology, like most Bloomberg vehicles, is an excellent site. Anyone interested in the tech economy could learn a lot from it. But if one were actually trying to twist the full meaning of the McKinsey report, it would be hard to imagine how. Yes, the report did estimate that between 400 million and 800 million individuals around the world could be displaced by automation by 2030. But it concluded that in fact only 75 million to 375 million workers will need to change occupations. (By comparison, consider that the U.S. economy alone shed more than five million jobs in just the first quarter of this year.) The job elimination that McKinsey forecasts comes to 3-14 percent of the global workforce, or less than had to shift from farming to manufacturing as a result of agricultural technologies and the industrial revolution in the 19th century.

Moreover, the report also stated: “Even with automation, the demand for work and workers could increase as economies grow, partly fueled by productivity growth enabled by technological progress. Rising incomes and consumption, especially in developing countries, increasing health care for aging societies, investment in infrastructure and energy, and other trends will create demand for work that could help offset the displacement of workers.” (Emphasis added.)

What McKinsey is describing is not so much a world hit hard by sudden unemployment, as a global economy in which many jobs are shed as others are created. Another word for that is progress. Getting the sense that this was where the report was headed isn’t difficult. The title pretty much says it all: Jobs Lost, Jobs Gained: Workforce Transitions in a Time of Automation. 

In fairness to BloombergTechnology, their story about the report did mention there will be new jobs for those who lose theirs – in the second-last paragraph of the story.

It’s easy to see why the article focused on the extreme downside risk. Bad news sells. Or, as they say in local television, if it bleeds it leads. But rather than simply accept the most fear-inducing angle on the report, it makes sense to look at its entirety. When one does that, the news is good. The report points out that automation technologies, including AI and robotics, will generate significant benefits, improving productivity and growing the economy. While about half of all work functions around the world have the technical potential to be automated through existing technologies, the proportion of work actually displaced by 2030 will likely be lower.

Probably most importantly, the very automation that will eliminate some jobs will stimulate the creation of others, partly by fueling enhanced productivity.

The report does raise some additional concerns. Major economic transitions lie ahead. All workers will need to adapt, sharpening their workplace and social skills. Income polarization could continue in fully industrialized economies due to the growth of high-wage occupations and the decline of middle-wage ones. But China and other emerging economies will experience growth in service and construction jobs, boosting the emerging middle class.

Most importantly, McKinsey calls on policy makers and business leaders to embrace automation’s benefits, while addressing the necessary worker transitions. The priority, as the report states, is to ensure economic dynamism. Only expanding economies generate more jobs.

In other words, even the concerns raised by the study constitute primarily good news. Without economic transitions, we would see no economic improvement. Economic changes that induce improved work skills are at the very least a nice problem to be presented with. If we wanted to cling to what we have, we would still be serfs. And income polarization will diminish in emerging economies.

Yet another study makes it clear that economic change should be embraced, rather than shunned.

No, the economic sky isn’t falling. And while there are some clouds on the horizon, the forecast regarding AI offers a lot more good news than bad.