What if I told you there was an industry that currently makes up 30% of the workforce, but in 20 years it will make up only 20% of the workforce, and in 50 years it will make up only 2% of the workforce. This will happen because machines are being developed that are much more efficient at producing the output from this industry. Many people who work in this industry will not immediately have the skills that other jobs require. And then what if I told you that there was a job right now that employed close to 1% of the workforce, but that would drop to 0.1% in 40 years due to new technology again. This would have to lead to more unemployment, right? What is this industry? Agriculture, circa 1935. What is the job? A telephone operator, circa 1960.
Many people like to blame robots replacing jobs as the reason for continued high unemployment. These are usually politicians on the left or those predisposed to leftist ideas (e.g., academics) who don’t wish to face other realities. The fact is, we have experienced several waves of changes in technology in this country, and each time we have survived and maintained low levels of unemployment. In the case of the change in our country away from agriculture and telephone operators, those jobs were replaced with jobs in other growing industries (e.g., leisure, health care, technology) and professions (e.g., entrepreneur, teacher, nurse, cook, and accountant). After those changes occurred, unemployment in the United States was around 4-5%. The economy had no problem adjusting. If robots are currently replacing jobs, this time will be no different. Other industries will grow that will use the excess labor. What is different this time then, that explains higher levels of unemployment? The main thing that is different in the last several years compared to those other times in history is that we have unprecedented levels of regulations, from Obamacare, Dodd-Frank, and the EPA, which stifle new business development and job creation. We had low unemployment in this country for a solid 20 years leading up to last few years. Innovation is not to blame for today’s problems.