The Impact of Technology Automation Over the Last 200 Years

Over the years, we’ve seen numerous inventions that have changed the nature of work and the economy:  fire, tools, wheels, compasses, printing presses, steam engines, telegraphs, cameras, radio, electricity, telephones, light bulbs, batteries, television, railroads, automobiles, robots, planes, computers, email, GPS, the internet, e-commerce, and now AI.

Losing a job is one of the worst things that can happen to a person. It can precipitate a personal crisis, and when people look back on their lives, job loss is often among their most negative experiences.

People losing jobs is also a societal issue. High unemployment in general is a destabilizing force. When capitalistic forces destroy an entire industry segment (e.g., typewriters), this creates displaced workers who need training to find new jobs. Politicians argue back and forth about the best way to provide retraining and a debate on how much, if any, security net should be put in place to support displaced workers and help them get back to work. A McKinsey report points out that, while there may be plenty of jobs in 2030, it is likely that fifteen percent of the workforce will need some sort of retraining. In the US Congress, legislators have introduced several bills proposing funding for various forms of retraining.

While technology automation has improved the quality of life and created jobs, automation has been taking away jobs for over two centuries, and there have always been detractors. The Luddite movement began in the early 1800s and organized textile workers who objected to the loss of jobs in the textile industry due to automation. The Luddites destroyed automation equipment to protest job-destroying automation.

In an essay he wrote for Time magazine, Warren Buffett looked way back in history to 1776, when farms employed eighty percent of workers. He commented that today, that number is two percent as a result of technological progress such as tractors, planters, cotton gins, combines, fertilizer, and irrigation. He notes that, if people had known this in 1776, they would have asked how all those unemployed farmers would find work. One can imagine that futurists circa 1776 might have taken the position that automation would create many more jobs than were lost and that they would be higher-paying, more exciting jobs. But in 1776, Buffet added, no one would have believed them. This cycle has repeated over and over as farm jobs moved to factory jobs, and factory jobs moved to knowledge-based jobs.

Futurist Ray Kurzweil notes that, as recently as 1900, 66% of all jobs were on farms or in factories. By 2015, that number was down to 16%. So, half of all the jobs available in 1900 no longer exist today. Yet, in early 2019 in the US, employment was near an all-time low. Each day, new and exciting jobs emerge in the computer industry, the automotive industry, and many other industries that would have seemed like science fiction in 1900. Moreover, according to Kurzweil, we had gone from 24 million available jobs in 1900 to 140 million jobs in the US in 2019, and the new jobs are paying eleven times higher wages than the jobs in 1900, even after adjusting for inflation.

We produce far more food than we did in 1776 or 1900, but automation has dramatically lowered the percentage of jobs in agriculture. Agriculture jobs are not the only ones lost to technology. In the first two decades of the current century, we’ve seen automation displace large numbers of factory workers. Word processors have replaced many secretaries, ATMs have replaced bank tellers, tax preparation software has reduced the need for accountants, automated toll booths have replaced human toll collectors, internet travel sites have displaced many travel agents, e-commerce (especially Amazon) is taking a toll on brick and mortar retail, and self-checkout technology is threatening the 3.6 million US cashier jobs.

Yet, in early 2020, before the COVID-19 virus struck, unemployment in the US was at an all-time low. That is not to say that automation has not caused problems. It has. People who have worked their whole lives at one job only to see it replaced by automation suffer immensely. Losing one’s livelihood to automation is a terrible thing. Many textile workers who lost their jobs to automation had difficulty finding other jobs and settled for lower-paying, less-satisfying jobs. Automation also has been a primary cause of the widening wealth gap between the rich and the poor. These are all serious social issues that are not going to be solved in this post.

So far, technology has been a job creator. Computer-related jobs employed 4.6 million Americans in 2019. None of these jobs were possible before the invention of computers. People feared ATMs would cannibalize bank teller jobs. Surprisingly, ATM technology increased the number of bank teller positions. While ATMs reduced the number of tellers per branch, more branches opened because ATMs reduced operating costs in each branch. A Deloitte study found that from 2001 to 2015 in the UK, technology automation had displaced 800,000 workers but had created 3.5 million new jobs. AI is expected to add over $13 trillion to the global economy by 2030.

In some industries, technology is creating and destroying jobs at the same time. Uber and Lyft are displacing jobs in the taxi industry but increasing the number of people hiring rides, thus increasing the demand for drivers. That said, if self-driving car technology ever matures, those same drivers may be displaced.

Over the course of history, technology automation has created some jobs and destroyed others.  However, it has never caused widespread unemployment.  That said, it is also true that job displacement creates significant human suffering, and as a society, we have never done a great job mitigating that suffering with retraining programs, and we need to do better.