Theoretically, workers have been on the path to obsolescence ever since the Luddites took sledgehammers to industrial looms in the early nineteenth century.
In 1790, 90% of all Americans lived as farmers; today that figure is less than 2%. Did those jobs disappear? Not exactly. The agrarian economy transformed — first into an industrial economy, then a service economy, and now an information economy.
Automation produces the replacement of human labor by machines and software; however, this increase in productivity leads to lower production costs. A company can either reduce the price of its goods — which opens a window of opportunity for those working with the product (read: job creation) — or it can expand (because it generates more profit) and, once again, create more jobs.
And even when automation takes over multiple professional functions, it does not always produce the dire outcomes we expect.
Consider ATMs: when they were first introduced in the 1970s, there were serious concerns about layoffs among bank tellers. Between 1995 and 2010, the number of ATMs in the US jumped from 100,000 to 400,000 — yet the predicted wave of teller unemployment never materialized.
Because ATMs made bank operations cheaper, the number of bank branches grew by 40%. More branches meant more jobs for human tellers, and teller employment actually increased during that period.
The same applies to textiles. Although 98% of fabric manufacturing is automated today, the number of weaving-related jobs has increased since the nineteenth century. Lower fabric costs boosted clothing sales, generating more jobs in the sector.
And this pattern still holds in law firms. Lawyers appear on lists of professions predicted to suffer job losses with the advent of AI. Yet legal software, introduced into law firms in the 1990s, produced the opposite effect. It turns out that AI is so effective at research that lawyers now need more human staff to evaluate the large volume of material it uncovers. The result? A rise in paralegal employment.
Human and Machine Collaboration
Productivity is the primary reason companies want to automate their workforce.
It is also worth noting that every time a technology becomes exponential, we find an opportunity the size of the Internet hidden within it. Seizing those opportunities requires adaptation, which demands workforce retraining — but the overall balance appears to be positive, with a net gain in jobs.
Look at the Internet itself. According to a study conducted by McKinsey across thirteen countries spanning from China and Russia to the US, the Internet created 2.6 new jobs for every 1 it eliminated.
Text by Peter Diamandis