66 Business The EconomistJune 29th 2019
I
t is oneof the most widely quoted statistics of recent years. No
report or conference presentation on the future of work is com-
plete without it. Think-tanks, consultancies, government agen-
cies and news outlets have pointed to it as evidence of an immi-
nent jobs apocalypse. The finding—that 47% of American jobs are
at high risk of automation by the mid-2030s—comes from a paper
published in 2013 by two Oxford academics, Carl Benedikt Frey and
Michael Osborne. It has since been cited in more than 4,000 other
academic articles. Meet Mr Frey, a Swedish economic historian, in
person, however, and he seems no prophet of doom. Indeed, Mr
47% turns out not to be gloomy at all. “Lots of people actually think
I believe that half of all jobs are going to be automated in a decade
or two,” he says, leaving half the population unemployed. That is,
Mr Frey stresses, “definitely not what the paper says”.
So what does it say? Its authors modelled the characteristics of
702 occupations and classified them according to their “suscepti-
bility to computerisation”. This classification was, ironically, itself
automated—using a machine-learning system built by Mr Os-
borne, which was trained using 70 hand-labelled examples. After
crunching the numbers, the model concluded that occupations
accounting for 47% of current American jobs (including those in
office administration, sales and various service industries) fell
into the “high risk” category. But, the paper goes on, this simply
means that, compared with other professions, they are the most
vulnerable to automation. “We make no attempt to estimate how
many jobs will actually be automated,” the authors write. That,
they underscore, will depend on many other things, such as cost,
regulatory concerns, political pressure and social resistance.
The paper was intended for an academic audience, says Mr
Frey, and got “more attention than we would ever have expected”.
Chinese whispers and exaggerated headlines meant the carefully
caveated, theoretical and highly unlikely upper bound of 47%
came to be seen by some as a firm prediction—sometimes even a
target. In April one striking dockworker in Los Angeles carried a
placard that read “47% of American jobs are planned to be auto-
mated by 2034”. Needless to say, they are not.
Such misperceptions, irksome as they are to Mr Frey, are also
telling. For, he says, they reflect the polarised nature of the debateaboutthenatureofautomationand the future of jobs.
At one extreme are the doom-mongers. They warn of mass
technological joblessness just around the corner. One advocate of
this position, Martin Ford, has written two bestselling books on
the dangers of automation. Mr Ford worries that middle-class jobs
will vanish, economic mobility will cease and a wealthy plutocracy
could “shut itself away in gated communities or in elite cities, per-
haps guarded by autonomous military robots and drones”. The un-
employed masses will subsist on a universal basic income. At the
sanguine end of the spectrum, classical economists argue that in
the past new technology has always ended up creating more jobs
than it destroyed. Everything will work out fine in the long run,
these optimists reckon, though the short term is likely to be
bumpy, as it was during the Industrial Revolution, unless govern-
ments take action to smooth the transition.
Mr Frey is often assumed to be in the first camp. So plenty of
people are stunned to discover that he is, in fact, closer to the sec-
ond. He has now laid out his position in more detail in a new book,
“The Technology Trap”. This has allowed him, he says, to put the
47% figure in “the right context”. That context is largely historical.
Building on his original paper, he revisits the history of industrial-
isation and asks what lessons it provides today.
One is that new technologies take time to produce productivity
and wage gains. It was several decades before industrialisation led
to significantly higher wages for British workers in the early 1800s,
a delay known as Engels’s pause, after the theorist of communism
who observed it. Another lesson is that, even though it eventually
increases the overall size of the economic pie, automation is also
likely to boost inequality in the short run, by pushing some people
into lower-paid jobs. Mr Frey is concerned that automation will
leave many people worse off in the short term, leading to unrest
and opposition, which could in turn slow the pace of automation
and productivity growth. Everyone would then be worse off in the
long run. This is the titular “technology trap”. Whereas many peo-
ple assume he worries about a world with too many robots, Mr Frey
is in reality more concerned about a future with too few.
To avoid the trap, Mr Frey argues, today’s policymakers should
take advantage of the fact that this time around it is possible to see
how things might play out, and manage the transition accordingly.
In particular that means making greater use of wage insurance, to
compensate workers who have to move to jobs with a lower salary;
reforming education systems to boost early-childhood education
and support retraining and lifelong learning; extending income
tax credit to improve incentives to work and reduce inequality; re-
moving regulations that hinder job-switching; providing “mobil-
ity vouchers” to subsidise relocation as the distribution of jobs
changes; and changing zoning rules to allow more people to live in
the cities where jobs are being created.Boom or gloom
These are all sensible suggestions. Will anyone pay attention?
Messrs Frey and Osborne had an unexpected smash hit with their
study. But the bestselling books on artificial intelligence, robots
and automation are the bleak ones, like Mr Ford’s. In part that is be-
cause fear sells, particularly if stoked by misunderstanding,
whereas pragmatic expositions of policy proposals do not—or not
nearly as well. “The Technology Trap” may well ensnare doom-
seekers’ attention with its ominous-sounding title. But it should
ultimately hearten anyone who reads it. Provided, that is, they
read it more carefully than they read Mr Frey’s earlier work. 7Schumpeter An accidental doom-monger
A notorious forecast about the automation of jobs has been misunderstood, says one of its authors