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A long disruption is ahead, with low-paying jobs

Illustration: Rebecca Zisser / Axios

The last few months have seen a rash of studies on a coming automation apocalypse, and analysts are moving to a few targeted worries about the jobs future:

Their big picture: There may be a long, deep economic disruption lasting decades and taking millions of jobs. The economy will eventually come out of it. But wages for most jobs may be too low to sustain a middle-class lifestyle.

Important background: In the 19th century, it took about six decades for U.S. wages to recover after the first industrial age automation of the 1810s. And the agriculture-to-industrial shift of the 20th century lasted four decades.

Karen Harris, managing director of Bain's Macro Trends Group, forecasts that the new automation wave could displace 2.5 million workers a year. That compares with 1.2 million a year displaced in the agricultural upheaval from 1900 to 1940, after adjusting for population, and 800,000 a year in the onset of the information age from 1970 to 1990.

"The coming disruption may be most disruptive to the work force in a hundred years," Harris said. She sees that potentially leading to an upheaval rivaling the current populism. "We see the kindling accumulating. It's hard to know what the spark is that (starts the fire)," she said. "We expect it to build up over the next decade." Wages, and not jobs themselves, are the key issue, economists seem to agree.

  • MIT's Andrew McAfee, co-author of The Second Machine Age, tells Axios that companies are not creating the middle-class jobs that were the backbone of the economy for more than a half-century. "I'll start to calm down when old-fashioned middle class jobs come back. I'm just not seeing that," he said.
  • "We don't have a job quantity problem," McAfee said, "but a job quality problem."
  • Wage disparity is increasing, said Brookings' Mark Muro: "Automation will effect everyone, but will create more problems for different groups — young people perhaps, those less educated, groups that already receive less training and less education."

The bottom line: "We can stipulate that given human history and adaptability, we can have a phenomenal future," Harris said. "But transitions are always challenging. Given where we are starting today, given inequality, changes in geopolitics, it's hard to see a turbulent-free transition to this brighter future.

Haley Britzky 12 hours ago
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The EU and U.K. want to be front and center on AI research

Theresa May visits an engineering facility.
Britain's Prime Minister Theresa May visits an engineering training facility in Birmingham. Photo: Andrew Yates/AFP/Getty Images

The EU and U.K. both announced major investments in artificial intelligence research this week, with more than 50 tech companies contributing to a £1 billion deal in the U.K., and the European Commission announcing it would be allocating €1.5 billion to AI research until 2020.

The big picture: The U.K.'s deal, as detailed in a government press release, will include funding for "8,000 specialist computer science teachers, 1,000 government-funded AI PhDs by 2025," and development for a "prestigious global Turing Fellowship" program to attract top talent. Per the release, the U.K. will also be developing "a world-leading Centre for Data Ethics and Innovation," to emphasize ethical standards with AI research. The EU's deal also includes laying out clear ethical guidelines by the end of 2018.

Steve LeVine 18 hours ago
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Alibaba is bypassing Amazon in China

In Ganyu, China: Busy on Alibaba Singles Day last November. Photo: VCG / Getty

Alibaba, the Chinese e-commerce gargantuan, says it isn't in a race with Amazon for U.S. customers, but that it is eager to take U.S. merchandise to its 550 million customers in China.

Why it matters: American politicians and technologists are unusually sensitive to what's often perceived as China horning in on American customers, markets and tech. But they may be missing a different game — using an elaborately built system, Alibaba is linking U.S. merchants directly to millions of Chinese customers, bypassing Amazon and other American platforms as an essential way-station to the Chinese market.