False Alarmism: Technological Disruption and the U.S. Labor Market, 1850–2015


Robert D. Atkinson and John Wu over at the Information Technology and Innovation Foundation:

It has recently become an article of faith that workers in advanced industrial nations are experiencing almost unprecedented levels of labor-market disruption and insecurity. From taxi drivers being displaced by Uber, to lawyers losing their jobs to artificial intelligence-enabled legal-document review, to robotic automation putting blue-collar manufacturing workers on unemployment, popular opinion is that technology is driving a relentless pace of Schumpeterian “creative destruction,” and we are consequently witnessing an unprecedented level of labor market “churn.” One Silicon Valley gadfly now even predicts that technology will eliminate 80 to 90 percent of U.S. jobs in the next 10 to 15 years.

As the Information Technology and Innovation Foundation has documented, such grim assessments are the products of faulty logic and erroneous empirical analysis, making them simply irrelevant to the current policy debate. (See: “Robots, Automation, and Jobs: A Primer for Policymakers.”) For example, pessimists often assume that robots can do most jobs, when in fact they can’t, or that once a job is lost there are no second-order job-creating effects from increased productivity and spending. But the pessimists’ grim assessments also suffer from being ahistorical. When we actually examine the last 165 years of American history, statistics show that the U.S. labor market is not experiencing particularly high levels of job churn (defined as new occupations being created while older occupations are destroyed). In fact, it’s the exact opposite: Levels of occupational churn in the United States—defined as the rates at which some occupations expand while others contract—are now at historic lows. The levels of churn in the last 20 years—a period of the dot-com crash, the financial crisis of 2007 to 2008, the subsequent Great Recession, and the emergence of new technologies that are purported to be more powerfully disruptive than anything in the past—have been just 38 percent of the levels from 1950 to 2000, and 42 percent of the levels from 1850 to 2000.

Other than being of historical interest, why does this matter? Because if opinion leaders continue to argue that we are in unchartered economic territory and warn that just about anyone’s occupation can be thrown on the scrap heap of history, then the public is likely to sour on technological progress, and society will become overly risk averse, seeking tranquility over churn, the status quo over further innovation.

More here. The full report can be found here.