The robot paradox

“You can see the computer age everywhere but in the productivity statistics,” remarked MIT economist Robert Solow in a 1987 book review. The quip became famous. It crystallized what had come to be called the productivity paradox — the mysterious softness in industrial productivity despite years of big corporate investments in putatively labor-saving information technology.

I think the time has come to start talking about the robot paradox. So let me offer a new twist on Solow’s words:

You can see the robot age everywhere but in the labor statistics.

In an echo of the hype surrounding IT in the 1970s and 1980s, we’ve heard over the last decade a stream of predictions about how robots, algorithms, and other automation technologies are about to unleash an unemployment crisis. Not only will most factory jobs be handed over to automatons, but the ranks of white-collar workers will be decimated by artificial intelligence programs powered by Big Data. The end of work is nigh.

In the wake of the Great Recession, when hiring stayed stagnant for years, such predictions seemed reasonable. But recent economic statistics flat-out belie the claims. As Grep Ip, the Wall Street Journal economics columnist, wrote last week, predictions of an impending job apocalypse “would be more plausible if the evidence weren’t moving in exactly the opposite direction.” Business employment has been going up for 86 straight months, pushing the U.S. unemployment rate down to just 4.4 percent, a level many economists see as representing full employment. It’s true that a lot of workers have dropped out of the labor force, but the sustained, robust job growth makes it awfully hard to argue that advances in computer automation, which have been accelerating for a long time, are poised to create an unemployment explosion.

Even more telling is the persistently weak growth in productivity. As Ip explained: “If automation were rapidly displacing workers, the productivity of the remaining workers ought to be growing rapidly. Instead, growth in productivity — worker output per hour — has been dismal in almost every sector, including manufacturing.” You can argue that our methods of measuring productivity are imperfect, but if computers were going to obliterate workers, you should by now be seeing a strong upswing in productivity. And it’s just not there.

I’m convinced that computer automation is changing the way people work, often in profound ways, and I think it’s likely that automation is playing an important role in restraining wage growth by, among other things, deskilling certain occupations, shifting employees to more contingent positions, and reducing the bargaining power of workers. But the argument that computers are going to bring extreme unemployment in coming decades — an argument that was also popular in the 1950s, the 1960s, and again in the 1990s, it’s worth remembering — sounds increasingly dubious. It runs counter to the facts. Anyone making the argument today needs to provide a lucid and rational explanation of why, despite years of rapid advances in robotics, computer power, network connectivity, and artificial intelligence techniques, we have yet to see any sign of a broad loss of jobs in the economy.

Image: DARPA.