Au­to­ma­tion: His­tory tells a re­as­sur­ing tale

Mint ST - - MANAGEMENT - BY JOHN H. COCHRANE feed­back@livemint.com

Iam often asked to opine about whether au­to­ma­tion will de­stroy all jobs. Yes, we talk about trac­tors, which brought farm em­ploy­ment from some­thing like 70% in the US at the be­gin­ning of the 20th cen­tury to about 3% to­day... about cars, which put horse driv­ers out of busi­ness. And about trains, which put the canal boats out of busi­ness.

A more re­cent case has oc­curred to me, how­ever. In the 1950s and 1960s of­fices used to have typ­ing pools in bas­ket­ball-court-sized rooms, staffed al­most ex­clu­sively by women.

Then along came the copier, the fax ma­chine, the word pro­ces­sor, the PC. And that’s just typ­ing. Ac­count­ing in­volved sim­i­lar ranks of women with adding ma­chines. Women by the room­ful used to op­er­ate tele­phone switch­boards, now all au­to­mated.

If you were prog­nos­ti­cat­ing in or around 1970, and some­one asked, “What will hap­pen now that women want to join the work­force, but of­fice au­to­ma­tion is go­ing to de­stroy all their jobs?” it would be a pretty gloomy fore­cast. But here’s what ac­tu­ally hap­pened: the fe­male labour force rose from 20 mil­lion to 75 mil­lion. The fe­male par­tic­i­pa­tion rate rose from be­low 35% to 60%. Women’s wages rel­a­tive to men’s rose as fe­male work­ers moved into ac­tiv­i­ties with higher pro­duc­tiv­ity than re­typ­ing the same memo a hun­dred times. Busi­nesses ex­panded. And no, 55 mil­lion men were not out on the streets beg­ging for spare change.

It is true that the male labour-force-par­tic­i­pa­tion rate fell, from 87.5% to 70%. That’s a wor­ri­some fall. But it’s 15 per­cent­age points, while the women’s in­crease was 25 per­cent­age points. Also, the male labour force ex­panded from 45 mil­lion to 82 mil­lion.

But even if women were mov­ing in and men mov­ing out of em­ploy­ment, it would just show that you can’t make pre­dic­tions sim­ply by look­ing at who has what jobs now that are threat­ened by au­to­ma­tion. The typ­ing pool got bet­ter jobs.

This is all a sim­pli­fi­ca­tion, of course. There were surely some peo­ple with spe­cific skills—short­hand, for eg.— who couldn’t re­train and do as well as oth­ers. There are real prob­lems with the labour mar­ket and real con­cerns for Amer­i­can work­ers.

But will au­to­ma­tion mean that all the jobs van­ish? In the case of the of­fice-tech rev­o­lu­tion, even com­bined with a large ex­pan­sion in the num­ber of peo­ple want­ing to work, it did not.

John H. Cochrane is a se­nior fel­low of the Hoover In­sti­tu­tion at Stan­ford Univer­sity and dis­tin­guished se­nior fel­low at Chicago Booth. This es­say is adapted from a post on his blog, The Grumpy Econ­o­mist.

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