The EconomistAugust 1st 2020 Finance & economics 61C
ovid-19 presentedemployers with a simple choice: find ways
for workers to do their jobs safely, or shut down. At least some
have chosen a third option, of dispensing with humans altogether.
Among the many breathless headlines prompted by the pandemic
are those warning of a new wave of job-destroying automation.
The pace of automation in some parts of the economy, like factory
floors and warehouses, is almost certain to accelerate. Yet on the
whole, robot-induced mass unemployment should remain near
the bottom of workers’ lists of worries.
The world has only recently recovered from a bout of robo-
phobia. In the early 2010s advances in robotics and artificial intel-
ligence (ai), described ominously in countless papers and books,
seemed to portend a wave of job destruction. High unemployment
after the global financial crisis of 2007-09 added to fears of a job
scarcity. Fretting about robots in a downturn is not entirely irratio-
nal: firms appear to do most of their job-slashing during slumps.
Nir Jaimovich of the University of Zurich and Henry Siu of the Uni-
versity of British Columbia argue that labour-market recoveries
have grown weaker in recent decades as a result. Worries can be
overdone, though. By the end of the decade unemployment had
dropped like a stone and driverless vehicles were struggling to
turn left. The earlier panic seemed a touch hysterical.
High rates of joblessness and eye-catching technological ad-
vances are again contributing to a new round of fears. In recent
weeks, for instance, mind-boggling examples of the capabilities of
gpt- 3 —an ai-based language-processing model developed by
Openai, a research organisation—have zoomed around the inter-
net. Another cause for anxiety has been businesses’ strategies for
coping with the pandemic. Anecdotes of covid-motivated automa-
tion are easy to find. Many organisations have turned to software
to automate paper-processing tasks that cannot be done by home-
bound workers. Those facing a deluge of customer enquiries, such
as hospitals, are supplementing human assistants with chatbots.
Employers’ interest in automating tasks in high-risk environ-
ments, such as slaughterhouses, is reportedly on the rise.
Any effect of these on unemployment has almost certainly
been swamped by stronger economic forces, such as social-dis-
tancing measures and collapsing aggregate demand. And the paceofautomationislikelyto begradual rather than disruptively
speedy. Many jobs, even those commonly classified as “low-
skilled”, require manual and social dexterity that machines cannot
yet match. Workers in face-to-face industries—in bars or restau-
rants, say, or hair and nail salons—are especially vulnerable to co-
vid-19. But there is little scope for, or interest in, replacing them
with robots. In New York thousands of public-transport workers
caught the virus, and dozens died. Despite billions of dollars of in-
vestment in driverless vehicles, though, computers cannot yet pi-
lot buses through chaotic city streets.
Furthermore, automation is only one of the technological sol-
utions available to firms as they weather the crisis. The pandemic’s
most profound labour-market legacy will probably be a rise in re-
mote work. About half of all Americans who were working before
the arrival of covid-19 were doing their jobs remotely by May, ac-
cording to one estimate. Surveys of firms indicate that some of the
shift will not be reversed. If remote work slashes overheads and
enables people to move to cheaper cities, it could preserve jobs, by
alleviating cost pressures on struggling firms.
Telework may have some job-destroying effects, though. The
pandemic has sped the adoption of technology in labour-intensive
sectors like education and health care. Telemedicine and distance
learning might mean that fewer doctors and teachers can serve
more patients and students. Their largest impact is likely to be on
blue-collar workers, such as clerical and janitorial staff, whose ser-
vices become less necessary as the physical footprint of education
and health institutions gets lighter. In a recent essay David Autor
and Elisabeth Reynolds of Massachusetts Institute of Technology
warn that such a dynamic could play out more widely. Over the
past half-century employment growth in cities polarised: middle-
skill work declined, and employment grew in white-collar profes-
sions and the services that support them. If remote working proves
a lasting shift, then the café staff, taxi drivers and cleaners who de-
pend on their custom could find themselves out of work.
Such severe, lasting labour-market pain in the aftermath of the
pandemic may actually delay automation, by depressing wages.
Developing and deploying new technologies costs money.
Would-be automators deciding whether or not to make the needed
investment could be swayed by the large reservoir of under-
employed labour, willing to work for low pay. In America
slaughterhouses—which often hire from a big pool of low-wage
workers, many of them undocumented immigrants—are far less
automated today than in parts of northern Europe, for example.Automatic transition
Tech-induced mass unemployment, then, seems unlikely. But
there is one scenario where covid-19 could unleash the robots—if
labour costs start to drift upwards, perhaps as global supply chains
break down, or minimum wages rise. The reshoring of manufac-
turing jobs could lead to pressure to replace cheap foreign labour
with robots at home. Production could no longer take advantage of
low-cost labour, as America’s meat-processing industry does.
Years of economic dysfunction have energised campaigns for
higher minimum wages and a more generous welfare state. The
economic devastation wrought by the pandemic lends them mo-
mentum; like past crises, it could lay the groundwork for a new so-
cial contract. If post-pandemic policy were to enable workers to
enjoy more security on fewer hours worked, firms might then face
some genuine labour scarcity. And that would really work up an
appetite for disruption. 7Free exchange The Replacements
The fear of robots displacing workers has returned. But do not expect tech-induced lay-offs just yet