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A new report released by the Whitehouse indicates that accelerating Artificial Intelligence (AI) capabilities will enable automation of some tasks that have long required human labor. The report authors indicate that these transformations will open up new opportunities for individuals, the economy, and society, but they will also disrupt the current livelihoods of millions of Americans. At a minimum, some occupations such as drivers and cashiers are likely to face displacement from or a restructuring of their current jobs.
The challenge for policymakers will be to update, strengthen, and adapt policies to respond to the economic effects of AI.
Although it is difficult to predict these economic effects precisely, the report suggests that policymakers should prepare for five primary economic effects:
- Positive contributions to aggregate productivity growth;
- Changes in the skills demanded by the job market, including greater demand for higher-level technical skills;
- Uneven distribution of impact, across sectors, wage levels, education levels, job types, and locations;
- Churning of the job market as some jobs disappear while others are created; and
- The loss of jobs for some workers in the short-run, and possibly longer depending on policy responses.
More generally, the report suggests three broad strategies for addressing the impacts of AI-driven automation across the whole U.S. economy:
- Invest in and develop AI for its many benefits;
- Educate and train Americans for jobs of the future; and
- Aid workers in the transition and empower workers to ensure broadly shared growth.
Key points from the report
The authors state it is unlikely that machines will exhibit broadly-applicable intelligence comparable to or exceeding that of humans in the next 20 years, it is to be expected that machines will continue to reach and exceed human performance on more and more tasks.
AI should be welcomed for its potential economic benefits. However there will be changes in the skills that workers need to succeed in the economy, and structural changes in the economy. Aggressive policy action will be needed to help Americans who are disadvantaged by these changes and to ensure that the enormous benefits of AI and automation are developed by and available to all.
Today, it may be challenging to predict exactly which jobs will be most immediately affected by AI-driven automation. Because AI is not a single technology, but rather a collection of technologies that are applied to specific tasks, the effects of AI will be felt unevenly through the economy. Some tasks will be more easily automated than others, and some jobs will be affected more than others—both negatively and positively. Some jobs may be automated away, while for others, AI-driven automation will make many workers more productive and increase demand for certain skills. Finally, new jobs are likely to be directly created in areas such as the development and supervision of AI as well as indirectly created in a range of areas throughout the economy as higher incomes lead to expanded demand.
Strategy #1: Invest in and develop AI for its many benefits. If care is taken to responsibly maximize its development, AI will make important, positive contributions to aggregate productivity growth, and advances in AI technology hold incredible potential to help the United States stay on the cutting edge of innovation. Government has an important role to play in advancing the AI field by investing in research and development. Among the areas for advancement in AI are cyberdefense and the detection of fraudulent transactions and messages. In addition, the rapid growth of AI has also dramatically increased the need for people with relevant skills from all backgrounds to support and advance the field. Prioritizing diversity and inclusion in STEM fields and in the AI community specifically, in addition to other possible policy responses, is a key part in addressing potential barriers stemming from algorithmic bias. Competition from new and existing firms, and the development of sound pro-competition policies, will increasingly play an important role in the creation and adoption of new technologies and innovations related to AI.
Strategy #2: Educate and train Americans for jobs of the future. As AI changes the nature of work and the skills demanded by the labor market, American workers will need to be prepared with the education and training that can help them continue to succeed. Delivering this education and training will require significant investments. This starts with providing all children with access to high-quality early education so that all families can prepare their students for continued education, as well as investing in graduating all students from high school college- and career- ready, and ensuring that all Americans have access to affordable post-secondary education. Assisting U.S. workers in successfully navigating job transitions will also become increasingly important; this includes expanding the availability of job-driven training and opportunities for lifelong learning, as well as providing workers with improved guidance to navigate job transitions.
Strategy #3: Aid workers in the transition and empower workers to ensure broadly shared growth. Policymakers should ensure that workers and job seekers are both able to pursue the job opportunities for which they are best qualified and best positioned to ensure they receive an appropriate return for their work in the form of rising wages. This includes steps to modernize the social safety net, including exploring strengthening critical supports such as unemployment insurance, Medicaid, Supplemental Nutrition Assistance Program (SNAP), and Temporary Assistance for Needy Families (TANF), and putting in place new programs such as wage insurance and emergency aid for families in crisis. Worker empowerment also includes bolstering critical safeguards for workers and families in need, building a 21st century retirement system, and expanding healthcare access. Increasing wages, competition, and worker bargaining power, as well as modernizing tax policy and pursuing strategies to address differential geographic impact, will be important aspects of supporting workers and addressing concerns related to displacement amid shifts in the labor market.
Finally, if a significant proportion of Americans are affected in the short- and medium-term by AI-driven job displacements, US policymakers will need to consider more robust interventions, such as further strengthening the unemployment insurance system and countervailing job creation strategies, to smooth the transition.
I will add detailed comments and my thoughts as I digest the full report in the coming days.
BofA Merrill Lynch chief investment strategist Michael Hartnett – the one who coined the term “Great Rotation” — in a note to clients writes about where they are forecasting growth in 2014:
“BofAML’s tech analysts favor innovative hardware, the socially mobile consumer and cloud collaboration as their big 2014 themes. We are long tech but wary of the close correlation between Internet stocks and central bank liquidity.”
In an interview he added Tech innovations like 3-D printing, big data & the cloud are primed to fuel corporate growth in 2014 with more and more investments.
The client letter also included this chart indicating:
“The rise in the use of industrial robots and the decline in the number of manufacturing jobs for human beings.”
This is very much in line with my article on the significant increases in orders for industrial robots.
Original source: Business Insider – H/T Ruben Harris
It seems de rigueur in the press to claim that robots will take our jobs, or drones will be able to make their own decisions, we read often about how advances in technology will lead to our own destruction. The Chief Investment Officer of Blackrock Fundamental Fixed Income even suggested that as many as 35 million jobs in the US may have been displaced by the advances in technology over the last 10 to 15 years.
Frankly I’m tired of the doomsayers. We will always evolve and advances in technology will create jobs. Sure jobs will be displaced … but new ones will be created.
We often hear of the Industrial Revolution being a catalyst for growth, and indeed it was, but also consider the 13th century in England. The 1200s were one of the golden ages of the Middle Ages where businesses flourished as a result of advances in technology. Royal Courts were richly furnished, monasteries grew in abundance, cathedrals rose towards the sky, watermills, windmills, bridges and ports were built all over England. The fact is we have always had cycles where new technologies contributed to new ways of doing business. There has always been and always will be new ways of production, of transportation and new consumer demands in all industries. During the Industrial Revolution advances led us away from lives that were as Hobbes so aptly put it: “nasty, brutish, and short.”
In order to thrive in the new economy those who learn to continuously upgrade their skills and harness technology will increase their worth. Those who do not will stagnate.
This dynamic creates highly skilled, highly productive workers that are increasingly in demand. Salaries for these high-performing workers will continue to grow “creative” workers, as defined by Richard Florida, may command a $61,000 premium in compensation over the average worker.
In his book The Rise of the Creative Class Revisited, (New York: Basic Books, 2012, pp. 398-400.) Richard Florida, classified those that will be in demand as:
Super-Creative workers include: computer science and mathematics; architecture and engineering; life, physical, and emotional science; education, training, and library management; and arts, design, entertainment, sports and media studies. Creative workers include: management; business and financial operations; law; health care and technical fields; high-end sales and sales management.
And above all, those that posses strong analytical skills. (See for example: The world needs data scientists).
One area that is and will continue to be in demand was so well written about some 5 or 6 years ago by Marc Andreesen, the man who essentially developed the internet browser (Mosaic, Netscape), and who is acknowledged as a leader within the technology world, with ownership positions in companies such as Skype (now sold to Microsoft), Twitter and has held (or still holds) board positions at FaceBook, HP, and eBay, among others:
Which undergraduate degrees are useful in the real world?
Typically, those that have a technical element of some form — that teach you how to do something substantive.
Engineering degrees obviously qualify. The current myth that engineering and computer science degrees are less useful because all the jobs are going to India and China is silliness; ignore it.
Hard science degrees — physics, chemistry — also clearly qualify, as do mathematics and economics.
Why do I take this stance?
Technical degrees teach you how to do something difficult and useful that matters in the real world. Even if you don’t end up actually doing what the degree teaches you how to do, going through the experience of learning how to do it will help you go through other serious learning experiences in your career. Complexity and difficulty will not faze you.
Plus, technical degrees teach you how to think like an engineer, a scientist, an economist, or a mathematician — how to use reason, logic, and data. This is incredibly useful in the real world, which generally demands rigorous thinking on the path to doing anything big.
Plus, technical degrees indicate seriousness of purpose to future employers and partners. You get coded right up front as someone who is intent on doing real things.
Marc’s companies and investments in early stage entities have added billions of dollars to the world economy, changed the way many of us communicate, learn and do business. Indeed created channels of accelerating and improving the way we do business, enabling our own businesses to prosper and in the process possibly created tens of thousands of new jobs.
Marc’s philosophy, and now mentoring and investments into new companies, has been the bedrock of economic growth and with it substantial job creation and innovation of new tools that add real value to the world.
In another blog post Marc indicated his hiring preference of engineers.
I think as the robot economy continues its upward spiral of growth we would be well advised to follow his suggestion.