Saturday, August 29, 2015

"Technology eliminates jobs, not work"

Reason's Ron Bailey facetiously asks "why are there any jobs still left?" while pointing out how technology has created far more jobs than it's destroyed:

Despite all these jobs and more lost to automation, U.S. employment continued to steadily rise. Why? Because technological progress is a "great job-creating machine," argue Ian Stewart, Debapratim De, and Alex Cole, three economists at the business consultancy Deloitte. The trio argues that "the current discourse is biased towards the job-destroying effects of technological change due to the relative unpredictability of its creative aspects."

Analyzing technological and employment trends over the past 150 years in the United Kingdom, the three find that while machines have eliminated millions of jobs, they have also conjured into existence many more. Even better, living standards dramatically improved as the technological destruction of old jobs proceeded.

How? First, technology substitutes for labor, thus raising productivity and lowering prices. Since 1950, the percent of British incomes spent on food and clothing has fallen from 35 and 10 percent to 11 and 5 percent, respectively. In addition, the real price of automobiles has been halved. In 1948, a television in the U.S. would have cost the equivalent of $12,000 in today's money. Since then, the price of a TV has since fallen by 98 percent.

Second, the sectors that are the sources of innovation expand, boosting the demand for labor. The Bureau of Labor Statistics reports that the number of people working in computer systems design and related fields rose from 400,000 in 1990 to over 1.5 million in 2011. Similarly, the number of people employed in life sciences (biotechnology, pharmaceuticals) increased from 174,000 in 1990 to 1 million in 2012.

Third, technology improves outcomes in areas such as medicine, leading to increased demand for labor in those areas. Consider that the annual death rate for cardiovascular diseases in the United States has fallen from 805 per 100,000 in 1963 to 236 per 100,000 today. Five-year cancer survival rates have risen from 50 percent in 1970 to 70 percent today. Meanwhile, U.S. health-care employment rose from 2 percent of the workforce in 1950 to 9 percent today—that is, from 1.2 million to 13.4 million workers.

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