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White House sees robots taking well-paying jobs

Patrick Thibodeau | Feb. 24, 2016
Workers earning up to US$40/hour at risk.

If a robot takes your job, don't say the government didn't warn you.

Federal economic advisers issued a stark assessment Monday about the nation's technology direction. Innovation in the U.S. is slowing, and federal spending on basic research -- the seed corn of innovation -- is declining.

But here's the kicker: If you earn roughly between $41,000 and $83,000 ($20 to $40 a hour), there is a median probability of 31% that your job will be automated.

The probability of being replaced by robotic systems is as high as 83% if you earn less than $20 an hour. Those who earn more than $40 an hour face a negligible chance of being replaced by automation.

What the Council of Economic Advisers can't predict, in its annual report to Congress, is the response to automation. The Council of Economic Advisers is an agency "within the Executive Office of the President," the website says.

Most economists, the report says, believe automation will lead to higher incomes, more consumption and job creation. But a "critical question" is whether the new jobs "are created fast enough to replace the lost jobs."

The trend, though, is clear: Robotics use in industry is on the rise.

Automotive makers are the largest users, followed by consumer electronics. Robotic systems are raising productivity "of similar magnitude to the impact that the advent of steam engines had on labor productivity growth," the report said.

This rise in automation seems to suggest that innovation is rising as well, but that's not the case.

The birth rate of startups has been declining for nearly 40 years.

Startups create jobs at a faster rate than established firms, and also drive incumbent firms to innovate. "Startups are vital to productivity growth in the U.S.," the report says.

"Business dynamism -- the so-called churn or birth and death rate of firms -- has been in persistent decline in the United States since the 1970s," the report said.

Young firms that survive "grow faster than older, established firms," the report says. But "there are fewer young firms in the economy today than in the 1980s."

The reason for the decline in startups is not clear, but it may stem from a decline in innovation and productivity. This could be due to the increases in government regulation, and a consolidation of market power by mergers and acquisitions.

Lower rates of job creation and destruction may be reducing the labor churn in the marketplace, "by which workers find jobs best matched to their skills and vice versa, lowering overall productivity for all firms -- young and old."

The report also argues for increased high-skilled innovation, faults the visa caps and cites studies by authors who support cap increases. It doesn't discuss how temporary visas are also used in job displacements. The Senate Subcommittee on Immigration will hold a hearing on this topic Thursday.

 

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