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Thursday, December 27, 2018

Robots, Blue Collars, and Labor Force Participation

Robots are hitting the working class.

Thomas B. Edsall at NYT:
In a paper that was published earlier this year, “Robots and Jobs: Evidence from U.S. Labor Markets,” Daron Acemoglu and Pascual Restrepo, economists at M.I.T. and Boston University, demonstrate that the Midwest and sections of the South have far higher ratios of robots to population than other regions of the United States.
They calculate the job losses resulting from the addition of one robot in a “commuting zone.” Their bottom line: “one more robot in a commuting zone reduces employment by about six workers.”
These job losses are concentrated
in blue collar occupations such as machinists, assemblers, material handlers and welders. Workers in these occupations engage in tasks that are being automated by industrial robots, so it is natural for them to experience the bulk of the displacement effect created by this technology.
One of the most striking developments in recent decades is the ongoing decline in work force participation among men, from 88.7 percent in July, 1947 to 68.7 percent in September, 2010, according to the Federal Reserve.
This drop in participation has been sharpest for men without college degrees.
In an email, David Autor, who is also an economist at M.I.T., explained the situation:
We find that automation displaces employment and reduces labor’s share of value-added in the industries in which it originates. In the case of employment, these own-industry losses are reversed by indirect gains in customer industries and induced increases in aggregate demand.
Overall, according to Autor,
employment is growing steadily, and its growth in terms of number of jobs has not been discernibly dented by technological progress. But the sum of wage payments to workers is growing more slowly than economic value-added, so labor’s share of the pie of net earnings is falling. This doesn’t mean that wages are falling. It means that they are not growing in lock step with value-added.
Automation and productivity improvements, Autor wrote,
tend to grow the economic pie in aggregate while simultaneously considerably diminishing some slices and yet expanding others’ dramatically. Most new workplace technologies displace some worker tasks and entire jobs, devalue certain skills, and disrupt livelihoods. This is individually and socially costly and politically disruptive.