Media Alarmists Misunderstand McKinsey Report, and Robots
Despite considerable concern that the development of artificial intelligence will serve as a chainsaw, mowing down jobs in its path, AI is actually just another step in a journey we have been on for hundreds of years: The shift from upper body strength to cognitive skills as the basis for earning a continually improving living.
Instead of being obsessed with the part of the glass that seems to be empty, we need to focus more on the part that is rapidly filling up.
A recent report by the McKinsey Global Institute has been seized on by many, including several media outlets, as a warning that 800 million jobs face the threat of extinction. In fact, McKinsey estimated that between 75 million to 375 million among the displaced will need to switch occupational categories and learn new skills. To get a sense of what that level of change in the composition of jobs would actually entail, consider that the U.S. economy sheds about 20 million jobs a year right now.
If you’re worried about jobs being displaced by the development of improved technologies, you’re worrying about a ship that has already started to sail. It wasn’t that long ago that over 100,000 people worked at video stores across the United States. Almost 70,000 worked for Blockbuster alone. Now, Netflix, Amazon and other streaming services have eliminated those jobs, leaving a few people still working at boutique video stores. But even as video chains were shedding tens of thousands of jobs, the unemployment rate has declined. Because as a robust economy sheds jobs, it simultaneously generates even more.
In fact, an economy can’t generate jobs unless it engages in creative destruction – the process frees up the capital, markets and potential workers that are needed to create new goods and services.
AI, like any other form of technological progress, does not eliminate work. It just changes its nature – just like the invention of tractors and other technologies changed the nature of agriculture. Far fewer workers were needed to grow our food – which just freed up the labor needed to manufacture goods. Technologies have allowed us to manufacture more, using fewer people. That frees them up to perform other tasks, using other skills. As the McKinsey report concluded: “With sufficient economic growth, innovation, and investment, there can be enough new job creation to offset the impact of automation. We also note that if history is any guide, we could expect eight to nine percent of 2030 labor demand will be in new types of occupations that have not existed before."
To believe that new job creation will not offset automation’s impact, one must also believe that human beings are not capable of doing what they have always done – trade up in their skills and jobs. To believe that AI will leave massive numbers of people permanently unemployed or under-employed, one must also believe that human beings are not capable of doing things that robots cannot. In fact, human beings have skills that far surpass robots, and will for a long, long time. As the McKinsey report pointed out, the jobs of the future will be jobs that demand the ability to apply logic and reasoning, and explain it to others. They require the ability to interact and communicate with customers and fellow workers.
It is certainly true that fields that don’t intensely require these intrinsically human skills will shed large numbers of jobs, as the the McKinsey study concluded. By 2030, physical laborers, such as repair workers, dishwashers, food prep workers, and general mechanics, will see the elimination of 31 percent of jobs. Office support workers, such as administrative assistants, office support workers and data collection workers, will see a 20 percent decline.
However, we will also see big increases in jobs that require specialized skills and communications ability. Jobs for technology specialists, such as computer engineers, will increase by 34 percent by 2030. Builders, including engineers and architects, will increase by 35 percent. Jobs for managers and executives will increase by 15 percent, and for professionals, such as scientists and lawyers, by 11 percent. Creative fields such as arts, design and entertainment, will see an 8 percent increase. Teachers, 9 percent.
We can see the shape of the workforce tomorrow by looking at job boards today. So far this year, more than 30,000 jobs requiring AI skills have been listed on Monster.com – almost three times as many as for all of last year, Axios reports. According to the Department of Labor, there are more than a half-million open technology-related jobs in the United States. Between 2010 and 2020, the department forecasts, the U.S. economy will see a 30 percent increase in jobs for software developers and database administrators, 25 percent for computer systems analysts, and more than 20 percent for information security analysts, web developers and computer network architects.
The common characteristics of jobs of the future is that they demand the ability to reason and communicate, and they pay well. The more you learn, the more you earn.
It’s difficult to predict exactly what jobs the future will bring. After all, many people today have jobs we couldn't have imagined just a few years ago. How many had grandparents who were web designers or information security analysts? But many have grandchildren who will be. In a dynamic economy, work doesn't disappear, it just changes form.