False Alarmism: Technological Disruption and the U.S. Labor Market, XXXXXXXXXX Electronic copy available at: https://ssrn.com/abstract=3066052 PAGE 1 INFORMATION TECHNOLOGY & INNOVATION FOUNDATION |...

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False Alarmism: Technological Disruption and the U.S. Labor Market, XXXXXXXXXX
Electronic copy available at: https:
ssrn.com/abstract=3066052
PAGE 1 INFORMATION TECHNOLOGY & INNOVATION FOUNDATION | MAY 2017

False Alarmism: Technological
Disruption and the U.S. Labor
Market, 1850–2015
BY ROBERT D. ATKINSON AND JOHN WU | MAY 2017

It has recently become an article of faith that workers in advanced
industrial nations face almost unprecedented levels of labor-market
disruption and insecurity. From taxi drivers being displaced by Uber, to
lawyers losing their jobs to artificial intelligence-enabled legal-document
eview, to robotic automation putting blue-collar manufacturing workers
on unemployment, popular opinion is that technology is driving a
elentless pace of Schumpeterian “creative destruction,” and we are
consequently witnessing an unprecedented level of labor market “churn.”1
One Silicon Valley gadfly now even predicts that technology will
eliminate 80 to 90 percent of U.S. jobs in the next 10 to 15 years.2
As the Information Technology and Innovation Foundation (ITIF) has documented, such
grim assessments are the products of faulty logic and e
oneous empirical analysis, making
them simply i
elevant to the cu
ent policy debate.3 For example, pessimists often assume
that robots can do most jobs, when in fact they can’t, or that once a job is lost there are no
second-order job-creating effects from increased productivity and spending. But the
pessimists’ grim assessments also suffer from being ahistorical. When we actually examine
the last 165 years of American history, statistics show that the U.S. labor market is not
experiencing particularly high levels of job churn (defined as the sum of the absolute values
of jobs added in growing occupations and jobs lost in declining occupations). In fact, it’s
the exact opposite: Levels of occupational churn in the United States are now at historic
lows. The levels of churn in the last 20 years—a period of the dot-com crash, the financial
crisis of 2007 to 2008, the subsequent Great Recession, and the emergence of new
technologies that are purported to be more powerfully disruptive than anything in the past
—have been just 38 percent of the levels from 1950 to 2000, and 42 percent of the levels
from 1850 to 2000.
Levels of U.S.
occupational churn
are now at
historic lows.
Electronic copy available at: https:
ssrn.com/abstract=3066052
PAGE 2 INFORMATION TECHNOLOGY & INNOVATION FOUNDATION | MAY 2017

Other than being of historical interest, why does this matter? Because if opinion leaders
continue to argue that we are in unchartered economic te
itory and warn that just about
anyone’s occupation can be thrown on the scrap heap of history, then the public is likely to
sour on technological progress, and society will become overly risk averse, seeking
tranquility over churn, the status quo over further innovation. Such concerns are not
theoretical: Some jurisdictions ban ride-sharing apps such as Uber because they fear losing
taxi jobs, and someone as prominent and respected as Bill Gates has proposed taxing robots
like human workers—without the notion being roundly rejected as a te
ible idea, akin to
taxing tractors in the 1920s.
In fact, the single biggest economic challenge facing advanced economies today is not too
much labor market churn, but too little, and thus too little productivity growth. Increasing
productivity is the only way to improve living standards—yet productivity in the last
decade has advanced at the slowest rate in 75 years.4
This report reviews U.S. occupational trends from 1850 to 2015, drawing on Census data
compiled by the University of Minnesota’s demographic research program, the Minnesota
Population Center, to compare the mix of occupations in the economy from decade to
decade. We also assign a code to each occupation to judge whether increases or decreases in
employment in a given decade were likely due to technological progress or other factors.
Overall, three main findings emerge from this analysis.
First, contrary to popular perception, rather than increasing over time, the rate of
occupational churn in recent decades is at the lowest level in American history—at least as
far back as 1850. Occupational churn peaked at over 50 percent in the two decades from
1850 to 1870 (meaning the absolute value sum of jobs in occupations growing and
occupations declining was greater than half of total employment at the beginning of the
decade), and it fell to its lowest levels in the last 15 years—to around just 10 percent.
When looking only at absolute job losses in occupations, again the last 15 years have been
comparatively tranquil, with just 70 percent as many losses as in the first half of the 20th
century, and a bit more than half as many as in the 1960s, 1970s, and 1990s.
Second, many believe that if innovation only accelerates even more then new jobs in new
industries and occupations will make up for any technology-created losses. But the truth is
that growth in already existing occupations is what more than makes up the difference. In
no decade has technology directly created more jobs than it has eliminated. Yet,
throughout most of the period from 1850 to present, the U.S. economy as a whole has
created jobs at a robust rate, and unemployment has been low. This is because most job
creation that is not explained by population growth has stemmed from productivity-driven
increases in purchasing power for consumers and businesses. Such innovation allows
workers and firms to produce more, so wages go up and prices go down, which increases
spending, which in turn creates more jobs in new occupations, though more so in existing
occupations (from cashiers to nurses and doctors). There is simply no reason to believe that
The single biggest
economic challenge
facing advanced
economies today is
not too much labor
market churn, but too
little, and thus too
little productivity
growth.
PAGE 3 INFORMATION TECHNOLOGY & INNOVATION FOUNDATION | MAY 2017

this dynamic will change in the future for the simple reason that consumer wants are far
from satisfied.
Third, in contrast to the popular view that technology today is destroying more jobs than
ever, our findings suggest that is not the case. The period from 2010 to 2015 saw
approximately 6 technology-related jobs created for every 10 lost, which was the highest
atio—meaning lowest share of jobs lost to technology—of any period since 1950 to 1960.
Many believers in the inaccurately named so-called “fourth industrial revolution” will argue
that this relative tranquility is just the calm before a coming storm of robot- and artificial-
intelligence-driven job destruction. But as we discuss below, projections based on this
view—including from such venerable sources as the World Economic Forum and Oxford
University—are either immaterial or inaccurate.
Policymakers should take away three key points from this analysis:
1. Take a deep
eath, and calm down. Labor market disruption is not abnormally high;
it’s at an all-time low, and predictions that human labor is just one tech “unicorn”
away from redundancy are likely vastly overstated, as they always have been.

2. If there is any risk for the future, it is that technological change and resulting
productivity growth will be too slow, not too fast. Therefore, rather than try to slow
down change, policymakers should do everything possible to speed up the rate of
creative destruction. Otherwise, it will be impossible to raise living standards faster
than the cu
ent snail’s pace of progress. Among other things, this means not
giving in to incumbent interests (of companies or workers) who want to resist
disruption.

3. Policymakers should do more to improve labor-market transitions for workers who lose
their jobs. That is true regardless of the rate of churn or whether policy seeks to
etard or accelerate it. Likewise, it doesn’t matter whether the losses stem from
short-term business-cycle downturns or from trends that lead to natural labor-
market churn. While this report lays out a few
oad proposals, a forthcoming
ITIF report will lay out a detailed and actionable policy agenda to help workers
etter adjust to labor-market churn.

THE MYTH OF TECH-DRIVEN LABOR-MARKET DISRUPTION
Today a growing number of futurists and pundits argue that the cu
ent technology system
is unique, particularly in its pace of change. Go to any technology conference, and you are
likely to hear from an enthusiastic futurist
eathlessly claiming that the pace of innovation
is not just accelerating, but that it is accelerating “exponentially.” Indeed, it’s become de
igueur for authors claiming to be futurists to paint dystopian pictures of technology
unning roughshod over jobs and whole occupations. All this is happening because,
according to them, the pace of change is accelerating.
PAGE 4 INFORMATION TECHNOLOGY & INNOVATION FOUNDATION | MAY 2017

Futurist Daniel Bu
us tells us “that we’re in a world of exponential transformational
change.”5 Joseph Jaffe talks about “explosive and exponential” advances.6 John Kotter
writes that the rate of change is “not just going up. It’s increasingly going up not just in a
linear slant, but almost exponentially.”7 Peter Diamandis and Steven Kotler write that we
are entering an era in which the pace of innovation is growing exponentially.8
For some of these techno-pundits, this so-called exponential change (i.e., change is twice as
fast next year as this, four times faster in two years, and eight times faster in three) is an
unalloyed good. But a larger share of “exponentialists” are at best torn in their view, liking
the progress but fearing it at the same time. MIT professors Erik Brynjolfsson and Andrew
McAfee capture this equivocation in their book The Second Machine Age: Work, Progress,
and Prosperity in a Time of Brilliant Technologies. Yes, they, too, tout that “technical
progress is improving exponentially.” But they also argue that the “second machine age”
(the first one was during the Industrial Revolution) is “doing for mental power … what the
steam engine and its descendants did for muscle power. They’re allowing us to blow past
previous limitations and taking us into new te
itory.”9 The tone suggests that humans who
do not work with their “hands,” jobs thought safe from automation, may soon be at risk,
with no clear path
Answered Same DayApr 06, 2022

Solution

Parul answered on Apr 06 2022
13 Votes
Reflection on Article - "False Alarmism: Technological Disruption and the U.S. Labor Market, 1850-2015" by Robert D. Atkinson and John Wu
I found article "False Alarmism: Technological Disruption and the U.S. Labor Market, 1850-2015" by Robert D. Atkinson and John Wu extremely interesting and insightful. Indeed, today we live in one of the most competitive world, where changes and disruptions are happening in all industries. In the golden word of Ray Noorda, "Cause Change and lead or accept change and survive or resist change and die". If any company or individual not only wants to survive the test of time but also wants to thrive in future, it is imperative to consistently change and adapt. As evident from the details shared in the article, the overall relationship between the new technologies, employment status and the inequality that has gained a lot of traction in recent years. Hence, there is a massive cause for the interest is perhaps the alarming reports about probable negative outcome for the overall employment from the huge utilisation of new insights as well as communication technologies (ICTs) which includes new IT related disruptions like Artificial Intelligence (AI), machine learning, digitalisation of production, automated vehicles and robotics. Majority of disruptions are dominated in IT sector which are penetrating into many other sectors as well as leading to numerous new changes in several businesses. What I gauged from the article is that there are different prospective attach to na
atives shared in public - pessimistic view point and an optimistic view point. From the face of it and skimming through the surface, the pessimistic prospective influence the new technologies which is initial point for a single review of the overall literature on the employment as well as innovation. However, if we dig deeper in the literature, it becomes much clearer...
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