Are workplace robots killing the middle class?

A new paper argues that automation is polarizing the labor market, creating more jobs at both ends of the skills spectrum.

By MSN Money Partner Aug 22, 2014 12:38PM
Credit: © Framck Robichon /EPA/Alamy

Caption: A humanoid robot manufactured by FoxconnBy Jon Hilsenrath, The Wall Street Journal

In an essay in The Wall Street Journal last month, Harvard University economist Lawrence Summers envisioned a world in which computers and machines displace a vast new array of human work, creating an economy that produced few opportunities and sources of income for actual people.


Taxis wouldn't need drivers, nor retailers cashiers or banks financial analysts.

 

"The challenge for economic policy will increasingly be generating enough work for all who need work for income, purchasing power and dignity," he argued.


David Autor, a Massachusetts Institute of Technology economics professor, argues in a paper to be presented Friday to central bankers at the Kansas City Fed's Jackson Hole symposium that automation is creating a different kind of problem for the economy. 


Rather than destroying jobs broadly, it is polarizing the labor market. While thinning out the ranks of middle-class jobs easily replaced by machines, he argues automation is increasing the ranks of low-skilled workers who perform tasks that can't easily be displaced by machines -- like cooks or home health workers -- and the ranks of high-end workers with abstract thinking skills that computers can’t match.


In 1979, middle-income jobs in sales, office work, manufacturing and administrative work accounted for 60 percent of U.S. employment. By 2012, these jobs had declined to 46 percent of employment, while the share of high-end and low-end work expanded, Mr. Autor shows. A similar pattern emerges in Europe, where middle-income jobs have declined as a share of total employment.


The biggest beneficiaries are people at the high end. "From 1979 through 2007, wages rose consistently across all three abstract task-intensive categories of professional, technical and managerial occupations," Mr. Autor argued. Their work tends to be complemented by machines, he argued, making their services more valuable.


By contrast, wage growth in the middle has been anemic and pressured at the low end by middle-income workers looking for income at lower-end jobs.


"In the 2000s, employment and wage trends in (low-end) manual task-intensive occupations diverged. While employment growth in these occupations exceeded that in all other categories between 2000 and 2007, wage growth was generally negative -- more so than almost all other categories," he said.


In the long-run, Mr. Autor argues the economy and workforce will adjust.


"There is a long history of leading thinkers overestimating the potential of new technologies to substitute for human labor and underestimating their potential to complement it," he argues.


"The green revolution displaced labor from farming. The industrial revolution replaced skilled artisanal labor with unskilled factory labor. The mass-produced automobile drastically reduced demand for blacksmiths, stable hands, and many other equestrian occupations. Successive waves of earth moving equipment and powered tools displaced manual labor from construction.


"In each case, groups of workers lost employment and earnings as specific jobs and accompanying skill sets were rendered obsolete. Yet, short-term employment losses sparked by rising productivity were eventually more than offset by subsequent employment gains -- in some cases in the innovating sectors, in many cases elsewhere."

119Comments
Aug 22, 2014 2:49PM
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Never assume that just because several Generations of folks were able to find new jobs to work in as technology moves forward, the same will always be the case in enough numbers moving forward.  As we move even deeper towards automation and Computerization it's a huge leap of faith to believe that trend will continue. Here's why.

Corporations don't want to increase head count and they certainly don't want to spend any money nor resources toward training. They expect today's and tomorrow's Workers to do what once took 2 or 3 people. That's even before automation and computers as an aid. With automation and computers, they eventually expect 1 worker to do that of 20 or 30 workers. So explain to me how we deal with that reality.

At some point, robotics will advance to the point that they can fix each other. So as we move ever deeper into this Globalization, the Divide between those that have and those that don't will only worsen. American workers will have to compete with Global Workers in a Wage Race to the bottom. To assume that how things worked in the past is how they will work in the future, that's a dangerous game to play. They keep saying build it and they will come. Well first they have to make a livable wage. That's becoming a rarity these days.

Aug 22, 2014 1:52PM
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I say BS to all of it.  People, especially people with money, need and want services.  Through the economic downturn and to the present, I still find it difficult to get a competent person to show up as scheduled to do any work at my home.  It is not a money issue, as pay / cost never gets discussed.  It is next to impossible to get anyone to even show up to give a quote.  I have a current job, a small one that I would expect to pay $1200 - $1500 for about four to six hours with a dozer.  I have contacted three local contractors and never heard a peep from either of them. 


And service in a restaurant?  Slow servers with little knowledge of the menu, who act like they are doing you a favor!  I think that no one wants to work anymore. 

Aug 24, 2014 8:51AM
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One drag on our economy is that the productivity gains from automation have not been shared with the workers. Productivity has more than doubled in three decades and wages have remained constant or worse. The extra money in the working class would be spent and boost the economy. Instead it has all gone to the CEO's and investment houses who still managed to run the economy over a cliff
Aug 24, 2014 12:37AM
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free trade is killing the middle class.our corrupt government knows this so do the rich that own it
Aug 22, 2014 5:56PM
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In the long-run, Mr. Autor argues the economy and workforce will adjust.

Mr.  Autor assumes that the technology is the same as it was 100 years ago. Problem is the machines of today are much smarter than they were in the past. And with the speed that technology is advancing, they are only going to get smarter in the coming decades. Eventually the machines aren't going to need help from ordinary humans, as they will be able to do virtually everything on there own. Past machines always did and that is the difference. 

So the question is what happens to human labor once machines become smart enough that they need pretty much no human assistance at all? As I said below, big changes are coming. You want to talk about income inequality? Just wait. 
Aug 22, 2014 4:52PM
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have a robot fix your car. roof your house,pluming,trim trees,carpenter,drive trucks,t.v. cable,and alot more. I had one hell of of a time to find a contractor to a add a room on to my house.there's plently of work out there if you want to work. Robots do the menial jobs.
Aug 24, 2014 6:52AM
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NAFTA - free trade with Mexico - is killing the middle class.

"Free trade" with communist china is killing the middle class.

Both of these trade agreements have cost MILLIONS of U.S. middle class jobs to be shipped off shore.  A minority of these were union jobs.  MILLIONS of average paying jobs have been lost.   Rather than make what we buy, we now don't make most of what we buy.  Historically, when other countries have done this (Great Britain, for example) they have suffered economically.  Recall that 100 years ago London was the financial center of the world - no more!

"Compete" with Mexico and China we are told - "compete"?  Wages are 1/10 U.S. wages in those areas.  Corporations and our elected "representatives" feed us this B.S. because financially a very few upper level corporate types benefit from these policies.  The rest of us save 25 cents per pair of socks!!  Vote to make goods in the U.S. before it is too late !!!!



Aug 23, 2014 8:22AM
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Globalization's current policy, to pay all real workers the same or less of a Decade ago while continually reducing benefits. They also at the same time want the workers of today to do twice the workload. Last I checked that had very little to do with the Weather nor the ACA, it's all to do with Greed. And here's the proof.

The Wage Gap for Real Workers to CEO types has move from once 40 to 1 to well over 400 to 1 to fast approaching 1000 to 1. CEO types are seeing even better Cadillac healthcare plans while the real workers are seeing just the opposite. Meanwhile we are seeing little done to either replace or repair the ACA with a better deal for workers, just more political bickering. Corporations can spend $500Billion to almost a Trillion Dollars each year in Stock buybacks and dividends increase but they CANNOT spare a Dime to help out workers with healthcare issues.

Concerning service in a restaurants, that has ALWAYS been a crap-shoot. I have had great service as well as just the opposite. I also give great tips, maybe others are known for just the opposite and maybe their total behavior plays a part. Treat folks like you expect to be treated, funny how that many times can make a big difference in life.

Back to robots and computers. People and especially folks with money will need and want services. Well here's the problem with that stance, there has to enough folks with Money here and Globally to make this thing work. Otherwise we will be stuck in this perpetual bigger Debt  and Bubble cycle that's only getting worse. Sure, it's very difficult to find competent folks to fix anything at your home and or anywhere else. We traded Quality for  Globalization so that's only going to get worse. CEO types want to trade in their Workers for Robots. Welcome back, the New, Old World Order.


Aug 22, 2014 2:33PM
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This is correct.  The huge productivity gains in the last few decades has happened mainly due to the rise of computer technology that automates all kinds of tasks, eliminating people; not because of people working harder or more effectively.  

Soon we will see automated fast food places, where a couple of humans support the machines but the customers will largely interface with machines.  Bank branches and human tellers are nearly dead due to the increase in speed and types of transactions that the bank ATMs can handle.  I went in the branch the other day to do something that the ATM could have handled, just to interface with a human, and it took probably 20x longer.  So, another job category is being eliminated.  Multiply that by all the professions and companies and the effect becomes very clear. 
Aug 22, 2014 4:06PM
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The problem with technology today is that it is killing jobs faster than it can create them. in the past new technologies may have put an end to certain jobs in certain industries, but new jobs were created to work with these technologies. Today, and in the near future, every job in almost every industry is at risk. From blue collar to white collar. In the coming decades there is going to be a huge shift in the way people live their lives, what that may be is an unknown as of now, but big change is coming. 
Aug 24, 2014 12:33PM
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Corporate greed is killing the middle class. They don't like workers period and have shopped the world for those who will work for peanuts. Toss in an education system that has been failing us for decades and you have a continuing growth of unqualified people competing for less and less jobs.
Aug 22, 2014 2:31PM
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Just like a previous poster mentioned, at one time most Americans farmed. As technology improved, in equipment as well as techniques, chemicals etc. many workers lost jobs in agriculture. What happened? They were forced to educate themselves and find new, relevant career paths. This was not easy for them, but this simply how the world has progressed as technology has progressed. Should we halt technology so that people can continue to do irrelevant work? Or should we continue to further educate ourselves, refine our education systems and trade schools to guide people down relevant career paths, and embrace that technological innovation is making those at the top richer, but also improving quality of life for the poorest in the world?
Aug 22, 2014 2:58PM
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It's easy for those who sit in ivory towers to say that people will adapt and all will be well. Yes, people may adapt, but the transition will be slow and painful. Individuals and families will suffer, while those higher on the food chain profit even more form that pain and suffering. The social safety net must be greatly strengthened before disruptive technologies are widely deployed. This means that those who are displaced by technology must be taken care of. Kicking them to the curb and lecturing them on the importance of education and training is not the way to go. 
Aug 22, 2014 1:38PM
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Automation and globalization have already decimated the middle class.

 

Programmers are now being paid to write games for everybody as real software is developed in India.

Aug 24, 2014 9:31AM
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ONE PLUS FOR ROBOTS - - - - -    THEY DON'T LIE!!!!!!!!!!!!!!!!!!!!!!

The world is a safer place.
AL Qaeda has been decimated.
I heard about it from a media report.
And - - as an American.
I'm mad as hell!!!!!!!!!!
I'm the President - - I can do whatever I want.
I will have the most transparent administration in history.
There is not a SMIDGEON of corruption in the IRS!!!!!
The stimulus will fund shovel-ready jobs.
I am focused like a laser on creating jobs.
The IRS is not targeting anyone.
It was a spontaneous riot about a movie.
If I had a son.....
I will put an end to the type of politics that "breeds division, conflict and cynicism".
You didn't build that!
I will restore trust in Government.
The Cambridge cops acted stupidly.
The public will have 5 days to look at every bill that lands on my desk
It's not my red line - it is the world's red line.
Whistle blowers will be protected in my administration.
We got back every dime we used to rescue the banks and auto companies, with interest. 
I am not spying on American citizens.
ObamaCare will be good for America 
You can keep your family doctor.
Premiums will be lowered by $2500.
If you like it, you can keep your current healthcare plan
It's just like shopping at Amazon
I knew nothing about "Fast and Furious" gun-running to Mexican drug cartels
I knew nothing about IRS targeting conservative groups
I knew nothing about what happened in Benghazi
I have never seen my Uncle from Kenya who is in the country illegally and that was arrested and told to leave the country over 20 years ago
And, I have never lived with that uncle. (He finally admitted today, [12-05-2013] that he DID know his uncle and that he DID live with him.)
 
And the biggest one of all:
"I, Barrack Hussein Obama, pledge to preserve, protect and defend the Constitution of the United States of America."



Aug 22, 2014 10:10PM
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Now we're blaming the destruction of the middle class on robots?  Last month it was the weather.  I think if you look at our current economic policies, and Obamacare, you'll find what's killing the middle class. Just my opinion..
Aug 24, 2014 8:02AM
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  What it comes down to is demand side economics, if a human doesn't have a good paying job and isn't able to purchase the product or service provided by the machine, the machine won't have a job to do.

  Purchase power drives and expands the economy, no jobs, no machines.

Aug 24, 2014 9:46AM
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...and the class war begins.

the poor will have no option but to come together and fix prices for the rich. You a Dr., Lawyer, or other skilled professional? You better get ready to buy plumbing insurance because that new water main is going to cost you about $100,000.00...unless you want to get a shovel and do it yourself. That leaky roof...1/2 a million. Yard maintenance, $1000.00 a month for a modest home, we have to eat you know.

A two tier system for services and costs of services, one for the rich and another for the rest of  the U.S.  It is going to get ugly if this continues.

That "nice part of town", it will be the location of all burglaries, home invasions, carjacking and violent crime because, well, the middle class will no longer be there to act as a buffer between the gangs and the rich.

Moral fiber of the people will break down under pressure of starvation, religion will be lost within survival and then there will be nothing left to keep the poor from killing the rich...we have to eat you know.

 

Aug 24, 2014 11:47AM
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This is news?  My 'human capital" classes in graduate school in the early 1970s covered this in great detail and foresaw the rise in STEM (science, technology, engineering and mathematics) as the "in demand" fields  for the future.  Instead, students are permitted to run up $20,000 + worth of student loan debt in useless fields.
Aug 22, 2014 11:34PM
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"The biggest beneficiaries are people at the high end". Sign sealed and delivered!
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