Will smart machines mean a world without work?

Changing technology means fewer jobs. What does the future hold in a world of machines?
By PAUL WISEMAN and BERNARD CONDON Published: February 1, 2013

Only World War II restored the U.S. economy to full health. Today only 2 percent of Americans work on farms.

Peter Lindert, an economist at the University of California-Davis, says computers are more disruptive than earlier innovations because they are “general-purpose technologies” used by all kinds of companies. They upend many industries instead of just a few.

The changes are coming much faster this time, too. Lindert says that's showing up in the steep drop in prices for some products this time.

“There is a period of time that is extremely disruptive,” says Thomas Schneider, CEO of the consultancy Restructuring Associates. “If you're 55 years old now and lose your job, the odds of you ever getting hired into what you were doing before is as close to zero as you can imagine. If you are a 12-year-old, you have a very bright future. It's just not doing what your father was doing or your mother was doing.”

• The economy produces jobs, but not enough good ones

Some economists worry that the sluggish, lopsided labor market of the past five years is what we'll be stuck with in the future.

Smarter machines and niftier software will continue to replace more and more mid-pay jobs, making businesses more productive and swelling their profits.

The most highly skilled workers — those who can use machines to be more productive but can't be replaced by them — will continue to prosper. Many low-pay jobs are likely to remain sheltered from the technological offensive.

“Computers can do calculus better than any human being,” says Andrew McAfee, principal research scientist at MIT's Center for Digital Business. But “restaurant bus boy is a very safe job for a long time to come.”

Under this scenario, technology could continue to push economic growth — but only a few would enjoy the benefits. More people would be competing for mid-pay jobs, so pay would shrivel. Many midskill workers would be left unemployed or shunted into low-skill, low-pay jobs.

Most economists say that unequal societies don't prosper; it takes a large and confident middle class to produce the consumer spending that drives healthy economic growth.

• Technology leads to mass unemployment

In a speech last year, former U.S. Treasury Secretary Lawrence Summers declared that the biggest economic issue of the future would not be the federal debt or competition from China but “the dramatic transformations that technology is bringing about.”

Summers imagined a machine called the “Doer” that could make anything or provide any service. Productivity would soar. Wonderful goods and services would emerge. Enormous wealth would go “to those who could design better Doers, to those who could think of better things for Doers to do.” But everyone else would be worthless in the labor market.

Summers said the world is moving in that direction and has completed only 15 percent of the journey, but already we are “observing its consequences.”

Consequences, indeed. ATMs dislodged bank tellers. Microsoft Outlook manages what secretaries used to do. Expedia is replacing travel agents.

Add up the jobs that technology can take across dozens of occupations and the result, Vardi and others warn, is unemployment on a scale we haven't begun to imagine.

“The vast majority of people do routine work. The human economy has always demanded routine work,” says software entrepreneur Martin Ford. He worries that machines will take all those jobs, leaving few opportunities for ordinary workers.

In his book “The Lights in the Tunnel,” Ford foresees a computer-dominated economy with 75 percent unemployment before the end of this century; the vast majority of workers, he predicts, won't be able to develop the skills necessary to outrun job-killing computers and robots.

“People talk about the future, creating new industries and new businesses,” Ford says. “But there's every indication that these are not going to be in labor-intensive industries. … Right from the get-go, they're going to be digital.”

Consider the great business successes of the Internet age: Apple employs 80,000 people worldwide; Google, 54,000; Facebook, 4,300. Combined, those companies employ less than a quarter of the 600,000 people General Motors had in the 1970s. Today, GM employs 202,000 people, while making more cars than ever.

As far back as 1958, American union leader Walter Reuther recalled going through a Ford Motor plant that was already automated. A company manager goaded him: “Aren't you worried about how you are going to collect union dues from all these machines?”

“The thought that occurred to me,” Reuther replied, “was how are you going to sell cars to these machines?”

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