Technological unemployment lines

breadline

The debate over technological unemployment — do digital machines kill jobs? — continues to heat up. At Slate, Matthew Yglesias hacks together a chart, from Federal Reserve data, that he claims shows that technological unemployment doesn’t really exist. He plots the country’s economic output (red line) against the hours worked by non-management personnel (blue line) for the last ten years:

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They seem to match up pretty well, with the growth in hours worked lagging a bit behind the growth in output — an indication of a healthy increase in productivity. Comments Iglesias, “The big rise and fall and rise again in output is caused by a big rise and fall and rise again in the amount of time people put on the job. Or alternatively, the big rise and fall and rise again in working time is caused by a big rise and fall and rise again in the amount of demand for goods and services.” It’s the economy, stupid. Employers’ recent investments in fancy new technology don’t seem to be altering the old economic laws. There’s no such thing as technological unemployment, at least not when you look at the big picture.

Some commenters suggested that the “covariance” of the two lines isn’t really as tight as Iglesias makes it out to be, that the blue line may be flattening out. Wrote one: “The problem is not that the red line and blue line are growing apart, the problem is that, while the red line has more than recovered since the recession, the blue line is still below recession levels.” Wrote another: “Matt’s right that there is a lot of covariance between the two curves, but that’s hardly surprising, and even people who believe that technology is displacing workers would agree that large-scale macroeconomic trends will strongly affect labor demand — it would be difficult to believe data that didn’t show a strong relation between the two. But visual inspection also shows that the overall linear trend for GDP (i.e. the regression line) has a clearly larger slope than the trend for aggregate hours.”

Now, Andrew McAfee has responded with some charts of his own. Here’s one that looks particularly at the manufacturing sector, comparing output growth (blue line) and job growth (red line) over a longer period:

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Not much recent covariance there. Writes McAfee: “That really looks like technological unemployment to me, especially when manufacturing employment is also on the decline in Germany and Japan, in China, and around the world. When this is the case, it means that employment changes are not due to jobs moving around the world in search of cheap human labor; they’re due to machine labor becoming at least as capable as and cheaper than humans.”

And here’s a longer term look at the overall economy, comparing output (red line), jobs (green line), and hours worked (blue line).

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Certainly, the economic cycle still matters, but it doesn’t seem to be the whole story. McAfee again: “We are still adding jobs and working more hours in non-recession years, but not as quickly as we used to. Since the end of the 2001 recession real GDP has increased by just about 20%. The number of hours worked, however, has increased by only 2.8% over that same time, and the total number of jobs by 1.9%.”

The economy is a complex beast, and none of these charts shows the actual effect of new technology on employment. But the specter of technological unemployment certainly hovers over McAfee’s charts. Dismissing it as a myth seems at best premature.

SPECIAL BONUS CHART: And just to prove I can create a line chart too, here’s one, made with Google’s Ngram Viewer, showing mentions of the phrase “technological unemployment” in books over the past ninety years or so. (Click to enlarge it.) Ngram doesn’t go beyond 2008, but I bet when you make the chart in the future you’ll see the start of a new spike in 2013.

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 Library of Congress photo.

8 Comments

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8 Responses to Technological unemployment lines

  1. John Schoettler

    I think the source of technological unemployment is centered around the types of tools that have be adopted in the last three decades contrary to types of tools that have not. This is caused by the size of institutions who had access to the required capital and resources to convince the masses via clever marketing campaigns (that are mostly BS). Large institutions make tools and technologies that empower their large size by giving them greater control over large amounts of people in order for them to create their own isolated economic environment. Smaller companies tend to create tools and technologies that maximize their limited resources and empowering small groups to be nimble and quicker to adapt to the ever changing economic landscape. If our economy seems stagnant and slow to adapt, it’s the result of us wrongly empowering too many large corporations which through mergers and acquisitions eventually bestowed too much power to a stagnant few.

    Real progress empowers the individual by elevating a person’s uniqueness and their special role within their community. Much of what gets advertised as technological progress today actually does the opposite (like we really need another thin rectangle screen to play angry birds and watch youtube clips on). Large and inherently fragile institutions (regardless if they’re corporate or governmental) rarely expand individual freedom and create new innovations and genuine opportunities for the development of the middle class. More often than not, large institutions seem systemically biased to only create more effective chains.

  2. RRH

    Bottom line…$. I TOO have have been reading more and more about this topic. Associated Press has a very good 3 part article (part 1 was Wed. Part 2 Thurs and part 3 comes out today) , 60 Minutes had a show 2 or 3 weeks ago ( there is a company making a robot at the cost of about $20-$30k that lasts 3 yrs that does manufacturing that basically be able to do the low cost jobs that were shipped to Mexico then China and now India ,so THEIR unemployment will go up…so much for globalization).

  3. CS Clark

    If you used to be the guy who made the car and now you’re the guy who sweeps up around the machine that makes the car for twice as long and half the money you would represent a number in favour against technological unemployment. Shouldn’t people also look at things like wage growth? And is there such a thing as technological (reasons for a rise in) inequality.

    Technically you could have full employment and at the same time have the bulk of people performing menial tasks for a pittance the better to serve their masters, and the people who program them.

  4. Nick

    Yes, these charts show # of jobs and hours worked, but don’t say anything about wages. It would be interesting to see similar charts that attempt to trace the wage/output relation. There’s technological unemployment, and then there’s technological inequality, as you suggest.

  5. The subtitle of the blog linked here: It’s the Distribution, Stupid

    The first, and most important quote there:
    As mass production has to be accompanied by mass consumption; mass consumption, in turn, implies a distribution of wealth — not of existing wealth, but of wealth as it is currently produced — to provide men with buying power equal to the amount of goods and services offered by the nation’s economic machinery.
    — Marriner Eccles

    The point of it all: the transition from agriculture to early industrialization required the released farm labor. Today, the march of automation (think, Charlie Chaplin) releases labor with no where to go. High wage service labor has been mostly in finance, which is a net zero activity: it doesn’t produce anything, merely sequesters unto itself a growing proportion of the money flow from savers to borrowers. In other words, the collapse of capitalism predicted by Marx is before our eyes. The necessary result, from the point of view of capitalists, is fascism; since only a police state can repel the disemployed from taking subsistence.

  6. Warren

    From TechnologicalUtopia.com
    Our governments should be spending more of our tax-dollars on something many seem to want. I’m for robotics that are owned by all of the citizens of a country. Lot’s of people want to cheer every time a robot puts someone out of work. Fully automated robotics factories, with self replicating robotic arms. Highly automated renewable energy, windmills or underwater water mills. Highly automated steel production. Highly automated chip manufacturing, and Linux. I’ve seen some automated building manufacturing companies starting up as well. Other prerequisite products can eventually be manufactured as well. All source code and blueprints have to be fully owned with rights to an infinite amount of use. All owned by the citizens of the country concerned. Small factories at first, with all of the bugs worked out, so that it largely builds itself in the end. It should be affordable, I’m an economic conservative. Eventually the complex can produce consumer goods besides steel, energy, chips, buildings, and robotics. Charities and the open source community can help as well. I support liberal licensing agreements of source code and blueprints, to allow royalty free replication.