A 2019 study by the Brookings Institution found that over 61% of jobs will be affected by automation. That comes on the heels of a 2017 report from the McKinsey Global Institute that found that 51% of total working hours and $2.7 trillion dollars in wages are highly susceptible to automation and a 2013 Oxford study that found 47% of jobs will be replaced.
The future looks pretty grim indeed until you start looking at jobs that have already been automated. Fly-by-wire was introduced in 1968, but today we’re facing a massive pilot shortage. The number of bank tellers has doubled since ATMs were introduced. Overall, the US is facing a massive labor shortage.
In fact, although the workforce has doubled since 1970, labor participation rates have risen by more than 10% since then. Everywhere you look, as automation increases, so does the demand for skilled humans. So the challenge ahead isn’t so much finding work for humans, but to prepare humans to do the types of work that will be in demand in the years to come.
1. Automation Doesn’t Replace Jobs, It Replaces Tasks
To understand the disconnect between all the studies that seem to be predicting the elimination of jobs and the increasingly dire labor shortage, it helps to look a little deeper at what those studies are actually measuring. The truth is that they don’t actually look at the rate of jobs being created or lost, but tasks that are being automated. That’s something very different.
To understand why, consider the legal industry, which is rapidly being automated. Basic activities like legal discovery are now largely done by algorithms. Services like LegalZoom automate basic filings. There are even artificial intelligence systems that can predict the outcome of a court case better than a human can.
So it shouldn’t be surprising that many experts predict gloomy days ahead for lawyers. Yet the number of lawyers in the US has increased by 15% since 2008 and it’s not hard to see why. People don’t hire lawyers for their ability to hire cheap associates to do discovery, file basic documents or even, for the most part, to go to trial. In large part, they want someone they can trust to advise them.
In a similar way we don’t expect bank tellers to process transactions any more, but to help us with things that we can’t do at an ATM. As the retail sector becomes more automated, demand for e-commerce workers is booming. Go to a highly automated Apple Store and you’ll find far more workers than at a traditional store, but we expect them to do more than just ring us up.
2. When Tasks Become Automated, The Become Commoditized
Let’s think back to what a traditional bank looked like before ATMs or the Internet. In a typical branch, you would see a long row of tellers there to process deposits and withdrawals. Often, especially on Fridays when workers typically got paid, you would expect to see long lines of people waiting to be served.
In those days, tellers needed to process transactions quickly or the people waiting in line would get annoyed. Good service was fast service. If a bank had slow tellers, people would leave and go to one where the lines moved faster. So training tellers to process transactions efficiently was a key competitive trait.
Today, however, nobody waits in line at the bank because processing transactions is highly automated. Our paychecks are usually sent electronically. We can pay bills online and get cash from an ATM. What’s more, these aren’t considered competitive traits, but commodity services. We expect them as a basic requisite of doing business.
In the same way, we don’t expect real estate agents to find us a house or travel agents to book us a flight or find us a hotel room. These are things that we used to happily pay for, but today we expect something more.
3. When Things Become Commodities, Value Shifts Elsewhere
In 1900, 30 million people in the United States were farmers, but by 1990 that number had fallen to under 3 million even as the population more than tripled. So, in a manner of speaking, 90% of American agriculture workers lost their jobs, mostly due to automation. Still, the twentieth century became an era of unprecedented prosperity.
We’re in the midst of a similar transformation today. Just as our ancestors toiled in the fields, many of us today spend much of our time doing rote, routine tasks. However, as two economists from MIT explain in a paper, the jobs of the future are not white collar or blue collar, but those focused on non-routine tasks, especially those that involve other humans.
Consider the case of bookstores. Clearly, by automating the book buying process, Amazon disrupted superstore book retailers like Barnes & Noble and Borders. Borders filed for bankruptcy in 2011 and was liquidated later that same year. Barnes & Noble managed to survive, but has been declining for years.
Yet a study at Harvard Business School found that small independent bookstores are thriving by adding value elsewhere, such as providing community events, curating titles and offering personal recommendations to customers. These are things that are hard to do well at a big box retailer and virtually impossible to do online.
4. Value Is Shifting From Cognitive Skills To Social Skills
20 or 30 years ago, the world was very different. High value work generally involved retaining information and manipulating numbers. Perhaps not surprisingly, education and corporate training programs were focused on teaching those skills and people would build their careers on performing well on knowledge and quantitative tasks.
Today, however, an average teenager has more access to information and computing power than a typical large enterprise had a generation ago, so knowledge retention and quantitative ability have largely been automated and devalued. High value work has shifted from cognitive skills to social skills.
Consider that the journal Nature has found that the average scientific paper today has four times as many authors as one did in 1950 and the work they are doing is far more interdisciplinary and done at greater distances than in the past. So even in highly technical areas, the ability to communicate and collaborate effectively is becoming an important skill.
There are some things that a machine will never do. Machines will never strike out at a Little League game, have their hearts broken or see their children born. That makes it difficult, if not impossible, for machines to relate to humans as well as a human can. The future of work is humans collaborating with other humans to design work for machines.
