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June 19, 2016

Technology Kills Jobs, not Work

Nearly all technological innovations adopted by businesses are designed to eliminate jobs. In fact, one measure of the health of a society is how many jobs have been eliminated. We in the developed world have largely eliminated farriers, hewers of ice, rat-catchers and the ragman. Lamplighters, wool carders, blacksmiths, town criers, well diggers and buggy whip makers are all jobs that are effectively gone, and for which we should be most grateful to be spared the toil, unpleasantness and risk.

This phenomenon strikes our households as well. The great many innovations we use in our homes, from central heat, electricity, and plumbing to microwaves, ice makers and dishwashers, eliminate jobs done by our parents and grandparents.

One important result of technology eliminating jobs is that things we buy, from food and clothing, automobiles and homes can be acquired at a lower cost. Alternately, if we wish, we can translate the cost savings into better quality. So, we buy tastier, more healthful food, nicer, warmer clothing and safer, more environmentally friendly cars. We can do this because other things are less costly, freeing up money to shift towards these items. Also, over the past half century, increased productivity has boosted income for all workers.

Technology kills jobs, but it has done little to end work. There are more people working now than ever before, and most, if not all, of the decline in labor force participation is due to demographics changes, not lack of demand for goods.

Still, worry over technological change is as common today as it was when David Ricardo, the famous trade theorist, penned the first description of technological unemployment in 1815. We should however, be relieved that the historical record offers precisely zero evidence that technology has led to net job loss. In fact, the best evidence suggests the opposite. Technological growth causes there to be more, better, more diverse employment options, not fewer. That will almost certainly be the case in the future, but that does not mean the adjustment is painless.

As technology destroys jobs, it also changes those that remain. And, the new jobs that emerge are certain to be different from those that were destroyed. Most of us 50 years or older will possess skills that technology has rendered worthless in labor markets, and lack some that are highly prized. Increasingly, the capacity to learn new things, rather than the mastery of a particular skill may be the most important element of long-term employability.

Exacerbating the adjustment to technology is the reality that regional characteristics that attracted businesses to a particular place may no longer matter. New jobs, with different skills are apt to be created in different places than old ones.  

The result is that technology will make all our lives better, but workers who cannot learn new tasks, and places that are not generally attractive to new workers will enjoy fewer benefits. Modern economic development efforts have to focus nearly all their resources on those two issues, as almost nothing else matters.

Link to this commentary: https://commentaries.cberdata.org/843/technology-kills-jobs-not-work


About the Author

Michael Hicks cberdirector@bsu.edu

Michael J. Hicks, PhD, is the director of the Center for Business and Economic Research and the George and Frances Ball distinguished professor of economics in the Miller College of Business at Ball State University. Note: The views expressed here are solely those of the author, and do not represent those of funders, associations, any entity of Ball State University, or its governing body.

© Center for Business and Economic Research, Ball State University

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