Axios Future

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July 15, 2019

Welcome to a special edition of Future. Six years ago, two little-known researchers from Oxford University came out with a startling and controversial paper: By their calculations, 47% of American jobs were vulnerable to automation. With their frightening outlook, Carl Frey and Michael Osborne ignited everything from robot hysteria to outraged denunciation, the latest in a cycle of visceral emotion that has accompanied every wave of new technology since before the Industrial Revolution.

Frey's new book: "The Technology Trap: Capital, Labor, and Power in the Age of Automation" pivots off of the now-famous 2013 paper to answer whether the hysteria he and Osborne kindled is justified.

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Today's Smart Brevity count: 1,368 words, a five-minute read.

Okay, let's start with ...

1 big thing: The future began 40 years ago

Illustration: Aïda Amer/Axios

If you're an optimist about the robotic future, you likely hear talk that we're all going to lose our jobs or suffer a big pay cut, and tell friends to relax — the new technology revolution is going to turn out like all the others since the dawn of the Industrial Age.

But if history is your best hope, you should probably think again: The pessimists have a strong case.

The big picture: For the last half-dozen years and longer, one of the most hotly debated questions on the planet has been the fate of employment in a future of AI and robots. It is a central issue in current U.S. and European political campaigns — and was a core factor in President Trump's 2016 election victory.

But in his new book, Carl Frey, the Oxford automation researcher, suggests that the "future" is already here — and has been for three decades. The only question is how much longer it will last.

  • Since 1979, 6.6 million people have lost their middle-income jobs in U.S. manufacturing, a third of the total number in the sector.
  • Many took pay cuts, other lower-paid work, or simply left the labor force.
  • These factors — resulting in blight, a hollowing out of the middle class, and politically destabilizing anger — replicate the early Industrial Age.

"If we extrapolate from the past, we shouldn't be assured," Frey tells Axios.

To see how much longer this could go on, consider the genesis of the Industrial Age: It unofficially began about 250 years ago, when James Watt invented the first workable steam engine and, in what Frey calls the "classic" Industrial Age, ran seven decades through 1840.

A key thread running through both the classic age and now is the nature of new commercial technology: In both periods, it generally replaced workers, rather than helping them work better.

  • In the steam engine's first factory use, the owners of power looms and spinners hired hundreds of thousands of British children, bypassing adults, since they could pay youths a fraction of the wages and hear fewer complaints.
  • Textile worker wages stagnated, growing by just 12% from 1780 to 1840, while output per worker soared 46%. The top 5% of the population captured 37% of total income by 1867, up 75% from 21% in 1759, a mark of sharply growing inequality.
  • Total company profits and the labor share of the total financial pie only began to grow in tandem at the end of the classic period.

By that time, most of the original rural artisans and their dependent kin were long dead.

What's next: Frey argues that many of the new technology prototypes in the pipeline look like they, too, will be the worker replacement type:

  • Among them: AmazonGo cashierless stores (a threat to the 3.5 million U.S. cashiers); Google's AI Assistant (potentially imperiling 2.2 million call center jobs); and autonomous cars (a future threat to 3.5 million truck, bus and taxi drivers).

The bottom line: Frey argues that that pipeline and the lack of government reaction so far puts us at severe risk. Already, the entire post-war Western system is in jeopardy because "governments chose to overlook the costs of globalization and focus on the benefits."

  • “Governments must avoid making the same mistake with automation.”

2. The dormant potential backlash

Illustration: Aïda Amer/Axios

Domestically, automation is often viewed with trepidation for its potential to kill jobs and bring on social unrest. But when you are talking tech competition among nations, political leaders suddenly become nationalists. Right now, the latter is the commanding position, writes Kaveh.

What's going on: Trump has made a policy cornerstone out of his trade war with China, elevating the automation-breeds-competitiveness argument. Companies could be propelled toward faster automation and accelerate a coming topsy-turvy future of work.

This could set up Western countries for a massive popular backlash.

  • If huge numbers of jobs are lost in the coming decade or two, everybody could be caught by surprise, says Vivek Wadhwa, a Carnegie Mellon University professor.
  • "The backlash will be so great that political leaders will have to resort to populism; they will make every excuse in the book and blame whoever they can," Wadhwa tells Axios.

The other side: Pro-automation experts argue that domestic fears are holding the U.S. back from much-needed competitive moves.

  • They welcome the renewed focus on China.
  • "If we don't automate faster and better, we're going to lose global marketshare and competitiveness," says Robert Atkinson, founder of the Information Technology and Innovation Foundation, a D.C. think tank.
  • "If we don't raise productivity up to 2.5 or 3% we're really going to be in a crisis," Atkinson tells Axios.

3. A threat to $100k-a-year tekkies

Illustration: Aïda Amer/Axios

Much of the discussion around the future of work focuses on what is already disappearing: jobs in factories, on farms, and in restaurants, Erica writes.

  • But coming automation-fueled job losses and changes will reverberate far beyond — and eventually reach seemingly safe workers in Silicon Valley and on Wall Street.
  • And those in-demand workers may not be prepared for what's coming, since the bulk of government and company reskilling efforts are targeted toward the lower end.

What's happening: A number of companies are trying to prep their high-skilled workers for the future. Google for instance has put a third of its engineering workforce through AI training, and Amazon's new $700 million upskilling effort will target its Seattle workers as well as warehouse employees.

  • "Some of the top firms are realizing that a lot of their folks who are making six figures are in the bullseye," says Erik Brynjolfsson, director of MIT's Initiative on the Digital Economy.

The big picture: But the impact may be larger than the response thus far.

Per a recent report from Brookings, around 40% of the tasks done by computer programmers and web developers are susceptible to automation. For information security analysts, the number is 65%. For computer network architects, it's 52%.

  • Jobs outside of tech, like radiologists, financial analysts and lawyers, are also at risk.
  • "Everyone is going to have to learn new skills — even the most sophisticated technologists themselves," says Susan Lund of the McKinsey Global Institute.

4. From the Axios archive

Illustration: Rebecca Zisser/Axios

The problem with automation: Worsened inequality, stagnated wages, low productivity

How to not replace humans: Developing AI that's as unlike people as possible

Automation breeds inequality: Only a few dozen cities are ready for the future of work

The Heartland will be hit hardest — again: That's where the vulnerable jobs are

For struggling Americans, nowhere to go: Even when beaten down, we aren't moving

Robots are solving the worker shortage: Help for the aging, shrinking population

5. 1 harbinger thing: Back to the future

Black and white photo of a broken-down Ford truck in an abandoned factory

Detroit, 1984. Photo: Barbara Alper/Getty

From about 1920 until the 1970s, the U.S. was on an economic roll. New technologies were killing jobs with abandon, pulling people off the farm, and away from work in crafts. But they were being pulled into jobs often paying more in the cities — like car plants, and factories making unnumerable consumer goods. The middle class swelled — especially after WWII.

But in the 1970s, a combination of factors including soaring oil prices and manufacturing automation drew an unofficial line under the American heyday. Manufacturing employment peaked at 19.4 million in 1979, and wages across industries — except for the very top — have been flat or declined since.

In the 1980s, I watched this implosion as a young reporter based in West Virginia, including steel workers in the Ohio River town of Weirton making a last, ill-fated lurch to save the old life by buying their plant from National Steel. In those years, the United Mine Workers went on strike like usual, but the old fire just wasn't there.

It turns out I was watching the future begin. Only, no one knew it.

Thanks for reading!