Computerization, jobs and the future: Research views on technology’s effects

 
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The effects of outsourcing and offshoring have long been the chief focus of stories about U.S. labor market disruption, but in recent years the speed and power of technology itself has increasingly been singled out. For example, the social networking site Facebook recently bought the mobile messaging service WhatsApp for a staggering $16 billion cash and stock. The acquired company had a staff of 55 employees. Some commentators see this as a sign of things to come, and the trend of lean-staffed, technologically advanced business is not limited to Web-based services. Everywhere service employees like cashiers are being replaced by self-service terminals and professionals such as accountants by software — even taxi drivers face the looming prospect of Google’s driverless car.

This trend is anything but new, as technological innovation has always tended to make certain jobs obsolete. Frank Seth Levy of MIT and Richard J. Murnane of Harvard note that, since 1960, “well-paid manual and clerical jobs have been computerized or offshored to other countries, while jobs calling for human ingenuity to solve unstructured problems proliferate.” Many societies accept job-displacement costs in exchange for the gains in efficiency and productivity, and grow new industries into which workers can move. But could things be different this time, as productivity radically accelerates? “Until now the jobs most vulnerable to machines were those that involved routine, repetitive tasks,” a January 2014 article in the Economist states, “But thanks to the exponential rise in processing power and the ubiquity of digitized information (‘big data’), computers are increasingly able to perform complicated tasks more cheaply and effectively than people.” Erik Brynjolfsson and Andrew McAfee of MIT argue that we should be relatively optimistic about this “third industrial revolution”: They assert that there will be a “world of benefits” as humanity harnesses digital technology and changes the way labor functions, but acknowledge that there will be considerable disruption in the short term.

Precisely how disruptive might these changes be in the coming decade or so? A 2013 study by Oxford University researchers, “The Future of Employment: How Susceptible Are Jobs to Computerization?” analyzes U.S. Department of Labor statistics to calculate the probability of computerization of various jobs. The study, by Carl Benedikt Frey and Michael A. Osborne, classifies 702 occupations according to the ease with which the required work can be specified by a computer programmer. The more “bottlenecks,” or barriers, to computerization, the less likely the occupation is to be automated. The research helps clarify which categories of jobs are most at risk and provides a framework for looking at particular skills and their value in the future.

The study’s findings include:

  • Among the job types analyzed, 47% fall are at a “high risk” of being computerized. Sectors particularly affected are service, sales and office administrative support. These are jobs, the researchers say, that “we expect could be automated relatively soon, perhaps over the next decade or two.” (Roughly speaking, the higher the probability of computerization, the sooner the particular job will be automated.)
  • Wages and education show a strong negative correlation with the probability of job computerization. In other words, jobs that pay more and require more education resist replacement by computers. (It is worth noting that other scholarship has long established these connections.)
  • There are three attributes (“engineering bottlenecks”) that make a job less likely to be computerized. First, perception and manipulation (i.e., finger/manual dexterity, the ability to work in cramped/awkward positions, etc.). Second, creative intelligences (i.e., originality, fine arts, etc.) and third, social intelligence (i.e., social perceptiveness, negotiation, persuasion, and assisting and caring for others).
  • The analysis reveals two waves of computerization. First, labor is likely to be substituted by computer capital in transportation and logistics occupations, office and administrative support work, and production occupations. Second, as the computational bottleneck is overcome, additional jobs could be replaced with computer capital.
  • The current trend of labor market polarization to extremely low-paying and extremely high-paying jobs will be truncated. The demand for middle-income occupations will not continue indefinitely: The study predicts that computerization will replace low-skill, low-wage jobs, while high-skill and high-wage occupations are the least susceptible to being replaced.

“Our findings thus imply that as technology races ahead, low-skill workers will reallocate to tasks that are nonsusceptible to computerization — i.e., tasks requiring creative and social intelligence,” Frey and Osborne write. “For workers to win the race, however, they will have to acquire creative and social skills.”

Keywords: technology, economy

Last updated: February 24, 2014

 

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Citation: Frey, Carl Benedikt; Osborne, Michael A. “The Future of Employment: How Susceptible Are Jobs to Computerization?” Oxford University Martin School, September 2013.