Home » Artificial Intelligence » Bank of England’s Andy Haldane warns Smart machines could take 15 million UK jobs and 80 million in the US

Bank of England’s Andy Haldane warns Smart machines could take 15 million UK jobs and 80 million in the US

Haldane probability of job automation

In an important new paper based on a speech at the trade union congress in London, Andy Haldane Chief Economist at the Bank of England and Executive Director of Monetary Analysis and Statistics has examined the history of technological unemployment in which he gave a thorough review of the literature and implications for public policy. The media will likely focus on the number of jobs that can be displaced (as I did in the title) and not necessarily Haldane’s points on new jobs being created – both of which are highly important as is ‘skilling-up’.

Andy notes that arguments about “technological unemployment” – the idea that technological advance puts people out of work and bears down on wages – have been raging for centuries. According to Andy, most evidence shows that over the broad sweep of history technological progress has not damaged jobs but rather boosted wages: “Technology has enriched labour, not immiserated it.”

However, he also notes that this broad pattern obscures the fact that there has an increasing skills premium has emerged with each passing wave of technological progress. This was especially the case in the late 20th century, as new machines such as computers began replacing not only physical but cognitive labour. He finds that each phase has eventually resulted in a “growing tree of rising skills, wages and productivity”. But they have also been associated with a “hollowing out of this tree”. Indeed, this hollowing-out of jobs has “widened and deepened with each new technological wave”. This has resulted in a widening income gap between high- and low- skilled workers.

Andy states: “By itself, a widening distribution of incomes need not imply any change in labour’s share of national income: in the past, technology’s impact on the labour share appears to have been broadly neutral. But this time could be different.”

Skipping the history parts I’ve highlighted some key points of robot and automation that will displace jobs and I agree with:

Haldane writes:

Viewed over the sweep of history, then, there is essentially no evidence to suggest technology has damaged jobs and plenty to suggest it has boosted wages.  Technology has enriched labour, not immiserated it.  Mill was right;  Ricardo was wrong.  Labour is not dead wood to be carved up between tasks.  It is a tree whose trunk and branches have lengthened and thickened with time.  The “lump of labour” fallacy is just that.

Or is it?

Looking more closely at past phases of rapid technological change paints a more nuanced picture.  Each phase has eventually resulted in a growing tree of rising skills, wages and productivity.  But they have also been associated with a “hollowing out” of this tree.  Indeed, this hollowing-out has widened and deepened with each new technological wave.

Further going on to indicate:

Based on past patterns, it is argued that information technology may be poised for exponential growth, as its full fruits are harvested.  Indeed, we may be on the cusp of a fourth Industrial Revolution or Second Machine Age (Brynjolfsson and McAfee (2014), Ford (2015)).

Its defining feature would be that new-age machines will be thinking as well as doing, sensing as well as sifting, adapting as well as enacting.  They will thus span a much wider part of the skill distribution than ever previously.  As robots extend their skill-reach, “hollowing-out” may thus be set to become ever-faster, ever-wider and ever-deeper.  Or that, at least, is the picture some have painted.

How much wider and deeper?   Research by Carl Benedikt Frey and Michael Osborne has tried to quantify this hollowing-out, by assigning probabilities to certain classes of job being automated over the course of the next few decades.  Their work was initially done for the US, but has recently been extended to the UK (Frey and Osbourne (2013), Deloitte (2015b)).

Using this methodology, the Bank has recently done its own exercise for the UK and US.  Table 3 classifies jobs three ways in the US and UK – high (greater than 66%), medium (33-66%) and low (less than 33%) probability of automation.  It also shows the fraction of employment these jobs represent.  Chart 27 provides a more granular breakdown of these jobs.

For the UK, roughly a third of jobs by employment fall into each category, with those occupations most at risk including administrative, clerical and production tasks.  Taking the probabilities of automation, and multiplying them by the numbers employed, gives a broad brush estimate of the number of jobs potentially automatable.  For the UK, that would suggest up to 15 million jobs could be at risk of automation.  In the US, the corresponding figure would be 80 million jobs.

Will we have robot hairdressers and elder care robots?

No-one anytime soon is I think going to choose a robot to cut their hair – I told you the hairdressers were safe.  Nor are they likely to choose a robot to look after their young children or elderly parents (tempting as that can sometimes sound).  When it comes to forecasting the economy, I can quite believe a thinking machine might over time displace me.  But it is less likely an “Andy Robot” will be giving this lecture to the TUC even a decade from now.

However he does clarify his vision:

Even if this diagnosis is right, it nonetheless may suggest a fundamental reorientation in the nature of work could be underway.  We may already be seeing early signs of that in the move towards more flexible working, with an increased incidence of part-time working, temporary contracts and, in particular, self-employment.  Some have speculated that these seismic shifts could result in the emergence of a “new artisan” class :  micro-businesses offering individually-tailored products and services, personalised to the needs of customers, from healthcare and social care, to leisure products and luxuries.  This really will be Back to the Future.

Yet the smarter machines become, the greater the likelihood that the space remaining for uniquely-human skills could shrink further.   Machines are already undertaking tasks which were unthinkable – if not unimaginable – a decade ago.  The driverless car was science fiction no more than a decade ago.  Today, it is scientific fact.  Algorithms are rapidly learning not just to process and problem-solve, but to perceive and even emote (Pratt (2015)).

As digital replaced analogue, perhaps artificial intelligence will one day surpass the brain’s cognitive capacity, a tipping point referred to as the “singularity” (Stanislaw (1958))).  Brad Delong has speculated that, just as “peak horse” was reached in the early part of the 20th century, perhaps “peak human” could be reached during this century (Delong (2014)).

Read the full text here.

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6 Comments

  1. bb says:

    The future will have to be a communism society where machines work and peoples live their lives. Or it will never be at all.

  2. truemore says:

    Good article I would just disagree with one part. Professional Occupations, Doctors/Lawyers are squarely in the cross hairs of automation right now.

    Watson and tele-medicine are already radically changing the medical profession. Plus automated cars will do a lot for reducing the cost of medicine since emergency room care is the most expensive part of medicine and the majority of emergency room visits in a large parts of the world are car/motorcycle/truck accidents. Another reason for the reduction in accidents is tele-commuting, less people on the road equals less accidents.Secondary effects of other types of automation are what people keep missing. It’s not an X = Y equation more of web of overlapping feedback loops.

    For Lawyer that ship has sailed. Many law firms in the US are debating eliminating 1/2 year lawyers and most paralegals for a Watson like system. Heck most of the jobs got shipped to India in the last decade. Since law, except for the judgement and arguments is basically just a flow chart, forms and research, most of law is perfect for automation.

    What I see as the big job killer is how this will hollow out the need for civil servants and construction which is a large sector of employment in the US.. Just think about it, they give and take forms for the major parts of the government. Really? Besides inspectors, cops, judges, and a few others 99% of those jobs are just a smart programmer from removal. Construction – see any number of Youtube videos on that, except for some very specialized tasks and remodels humans will be removed from the majority of new construct. Teachers, DONE Heck some schools already call them “facilitators”, lessons are canned, video and learning are done at home, class time is quizzes, tests and some Q/A. No more art in teaching (sad). Ironically the co-founder of Apple said this was going to happen years ago at an education conference, they laughed at him, how ironic now.

    All this being said, IS THIS A BAD THING? Does work make you valuable as a person? Does it make life fore filling? So yes it will cause serious economic turmoil, but what would the world look like if 80/90/100% of people did not work? Or only worked on stuff for fun, hobbies, charity, etc?

    • Darren Starr says:

      Agreed.. mostly..

      I’ve been explaining for a while now that if we can design machines that can be used at airports to perform “precision X-rays”, effectively stripping clothing from a human, we can improve that technology to perform full body scans rapidly for medical diagnostics. A scanner spinning around a few times, possibly employing medical level ultra-sound could be used to measure far more than a simple general practitioner could and do so much faster. A single educated operator at central location could watch for “red flags” and elevate a patients case to either a better machine or a human diagnostician of some sort. Not only that, but he/she would be able to handle 100 remote patients at a time. A single machine would be able to scan an process hundreds of patients a day, 24 hours a day. This sounds like science fiction, but given a hundred thousand for development and a hundred thousand for salary and office space, I working alone could have a prototype up and running in a year ready to be programmed with different medical conditions.

      Lawyers are the easiest to replace. There’s a very limited number of actual trial lawyers out there. For the most part, they just sit around and fill out forms or ask a fixed series of questions and spew out contracts. This is something which a computer can do far more efficiently and a simple notary of the public should easily replace a common lawyer. Probably most remaining forms of law could easily be centralized into sweatshops of immigrant or remote outsourced labor.

      I teach Cisco networking for a living these days. I regularly make the comment “If computers are total idiots and a computer can do your job better than you, why would you still want that job? What would it make you?” I regularly write programs to eliminate jobs. I spent an hour today lecturing on how to eliminate as many jobs as possible by removing repetitive labor like patching cables or changing network settings when a user moves desks. Basically, I believe without a second of hesitation that over 80% of IT staff can be eliminated using relatively easy to write and implement software. A close friend of mine and I are about to start publishing entire corporate IT designs from cell-phones to data centers with step by step directions a monkey can follow. We will do this for free and fun.

      I am also starting a new business this week where I’ll release software which will eliminate as many jobs as possible from the fashion industry with regards to technical drafting of garments for production. There is already some software which could in theory do that someday, but it costs and average of $25000 for a single workstation (PC included). Mine is far more advanced, accurate and stable and costs $50 and works on iPad, Windows, Mac, Linux, even as a web app, etc… I am also designing robots to eliminate many of the people from garment manufacturing. The goal is build the machines as open source projects that are mostly 3d printable and able to be assembled in western Europe for $400 or less. I estimate that tens of thousands of jobs could be lost from the designs I’m releasing for free.

      I see also many many jobs in sales going bye bye. Consider car sales, etc… There’s also farming which needs to be replaced by mostly machines. I’ve been talking with farmers and asking them what their year looks like. Everything they mentioned seems to be mostly automated already, plowing, picking, watering, harvesting, etc… they all are handled by human driven machines. It shouldn’t be a problem to make self driving tractors.

      I think there will be far less demand for managers as well. Is there’s no one to manage, why have a manager. I also think that many CEO style jobs will be consolidated.

      There’s a major revolution coming and we’re not ready for it. We are simply unprepared to cope with simply not needing people.

  3. its not a question of what the 99% needs, they only control 1% of the wealth, its a question of what the 1% who control 99% of the wealth need and what they need can increasingly be satisfied without employing the 99% at all. The problem is not how to sustain the employment of the 99% and the ownership of the 1%, the problem is how to transfer ownership from the 1% to the 99%.

    If you own the machine that replaces you than you can’t be displaced, if an employer owns the machine that displaces you than you may easily be displaced. Why should be be a nation of employee “rent a slave” chattel who own nothing but dept?

    Once the majority of Americans owned their own land and business, technology allowed elite cartels to displace nearly all Americans from their land and businesses and turn them into refugee “employees” in the cities instead.

    As long a technology could not run itself this worked out, the 99% were needed by the 1%. Now that technology can increasingly run itself the 1% owners of technology no longer need the 99% maintainers of technology which puts us all out of a job, except for the owners who need not worry because they are owners.

    If the 99% want to stop worrying they will need to stop whoring themselves off to the highest bidder like refugees and like warriors start finding the means of regaining the ownership of the technology that is replacing them and the dignity that was stolen from them by the agricultural and manufacturing cartels that now rule the world and engineer the concentration of wealth impoverishing nearly everyone.

  4. mjr1007 says:

    The Industrial Revolution replaced physical labor with machine labor. The Information Revolution is replacing human expertise with machine expertise. I’m not sure what exactly is left. Even if new jobs are created that require different expertise, there is no reason to believe they won’t be either create with automation or be automated rapidly. A fundamental change is occurring in this millennium and our so called experts are still looking at solutions from the last millennium.

    I already write programs that write programs, and it does it orders of magnitude faster then I can write the final programs myself and it’s more accurate. Currently I still need to input some parameters but it’s not that far off when the program will identify the parameters itself. People need to take their heads out of the sand, or else where, and start to take a serious look at the future.

  5. […] In an important new paper based on a speech at the trade union congress in London, Andy Haldane Chief Economist at the Bank of England and Executive Director of Monetary Analysis and Statistics has…  […]

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