A long list of pundits are blaming our high tech society for America’s sustained unemployment with the Associated Press, Recession, Tech Kill Middle-class Jobs, and 60 Minutes, Are Robots Hurting Job Growth?, among others arguing that automation, faster computers and robots are replacing humans and that whole industry sectors, from secretaries to travel agents are disappearing.
The reality however is quite different. Technological growth has been principally responsible for the development of new industries, products and processes that have created better paying jobs, cheaper goods and a higher standard of living for society. Where would our economy be without information technology, advanced manufacturing and biotechnology? These industries were initially feared because they were seen as reducing workforce and leading to large scale unemployment. Given the number of Americans employed by Google, Microsoft and Monsanto alone I guess this theory was proven wrong.
In addition, productivity gains through increased technology use have actually enhanced job growth. Savings from more efficient industry flow back to the economy in three ways: lower prices, higher wages for the remaining employees, and higher profits. Consumers use this enhanced disposable income to go out to dinner, travel, and buy more goods from clothes to iPads. This economic activity stimulates demand that other companies (e.g., restaurants, hotels and Apple) respond to by hiring more workers.
Numerous studies have further enhanced this view. For example, a report by the Federal Reserve noted that, “The empirical evidence presented here shows that a positive technology shock leads to a reduction in the unemployment rate that persists for several years.” Further, in an analysis of the effects of productivity on employment, the OECD states, “Historically, the income-generating effects of new technologies have proved more powerful than the labor-displacing effects: technological progress has been accompanied not only by higher output and productivity, but also by higher overall employment.”
This is not to say that productivity-enhancing technologies don’t sometimes result in short-term job loss. But, rather than make misguided arguments, pundits should embrace technology-led productivity, while at the same time promoting policies that can assist workers in adjusting to the changing environment. This includes stronger investments in retraining and applied technology programs and reforms to our current unemployment safety net, which is full of holes.
Fundamentally, the continued expansion of technology and innovation is necessary for the growth and expansion of 21st century society. By embracing the machine we are all better off.
Robert Atkinson, is the president and founder of the Information Technology and Innovation Foundation, an economic and technology think tank based in Washington.