Wednesday, September 21 2022

The writer is president of Rockefeller International

Not so long ago, authors were churning out disastrous books on how ‘The Rise of the Robots’ would lead to ‘The Jobless Future’, amid authoritative predictions that half of all American jobs would be threatened by automation from now on.

Recent jobs reports, however, raise a different threat: not whether robots will replace human labor, but whether they will arrive fast enough to save the global economy from labor shortages.

The global unemployment rate is 4.5%, the lowest since world records began in 1980. Labor shortages are reaching historic highs in advanced economies, including the UK and the US. United. There are now 11.2 million openings for 5.6 million job seekers in the United States, the largest gap since the 1950s. Millions of workers who resigned during the pandemic are not still returned, which adds to the despair of the bosses.

These pressures are now increasing largely because the growth of the working-age population – those between 15 and 64 – has begun to decline, while the share of older people is swelling. Accelerated aging is in turn a delayed result of societal changes that began decades earlier: women having fewer children and science extending the average lifespan.

The working-age population is declining in nearly 40 countries, including most major economies, down from just two in the early 1980s. The United States is declining less precipitously than most, but is in the same basic situation. More than any other factor, fewer workers guarantee slower economic growth, so most nations will need more robots just to sustain growth.

Techno-pessimists are still sounding the alarm, saying the specter of robots stealing jobs and slashing wages will re-emerge as the pandemic subsides and people who quit their jobs return to work, which they could do. . . or maybe not. Either way, underlying demographic trends predict continued shortages.

Among the hardest hit countries are China, Japan, Germany and South Korea – all of which are expected to see the working-age population fall by at least 400,000 a year until 2030. This is not no coincidence that these countries already host high concentrations of robots and drive more. Japanese manufacturers are deploying nearly 400 robots per 10,000 workers, up from 300 just four years ago.

China, in a top-down fashion, is heavily subsidizing robot makers, aiming to increase production by 20% a year through 2030. Even at this rate, Bernstein analysts predict, robots cannot fill all the gaps in labor force, which China expects to see a decrease of 35 million workers over the next three years.

Governments can respond to labor shortages in other ways – by paying bonuses to parents to have more children, by encouraging women to enter or return to work, by welcoming immigrants or by raising the retirement age. But all of these steps trigger human resistance, especially in an angry populist era.

Robots elicit a different reaction, a vague fear of machines and artificial intelligence that mostly takes shape in books, rarely in protest against job theft. Meanwhile, robots quietly arrive at the loading dock, unhindered.

Like previous innovations, robots kill some jobs and create others. The gasoline engine made the horse-drawn buggy driver obsolete but spawned the taxi driver. About a third of the jobs created in the United States are in fields that did not exist or barely existed 25 years ago. And a third “will fundamentally change over the next 15 to 20 years,” according to the OECD. Technology brings disruption, not destruction followed by nothing, as the “jobless future” implies.

Each robot can replace three or more factory workers, the hardest hit group. But the degree of disruption depends on the often exaggerated rate of change. Forecasters have been predicting since the 1950s that full-fledged AI would arrive in 20 years, but it’s not here yet. Grim warnings that self-driving vehicles would eliminate one of America’s most common jobs – truck driving – have given way to a shortage of truckers.

Today, recession is looming, but unemployment is unlikely to rise as high as in previous recessions, again due to a shrinking labor force. Fewer workers will leave the tighter-than-usual labor market throughout the economic cycle, even as robots continue to proliferate.

They can’t come too soon. Due to an unexpected drop in birth rates, the UN recently raised its forecast for the pace of population decline from the United States to China. It takes years for births to affect the workforce, but smart governments will act now, bringing more women, immigrants, seniors and — yes — robots into the workforce. The other option is fewer workers, automated or not, and a future without growth.


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