The emergence of new technologies brings both risks and opportunities. Today, artificial intelligence is progressing at a pace that was inconceivable just a few years ago. The impact is perhaps most conspicuous in the manufacturing sector. While US Manufacturing Production has risen noticeably in recent decades, Manufacturing Employment is significantly lower.
Although the unemployment rate stands at an incredibly low 3.8% nationally, many economists, policymakers, and employees fear that the relentless progress of automation will replace millions of human workers in the future. On the road, we often field inquiries from both managers and employees who are concerned by the implications, both in conventional fields such as manufacturing as well as in previously unforeseen fields, as technological progress enables artificial intelligence to take on more varied and complex tasks. However, we believe that there are three reasons why this new technology offers far greater opportunities for humans.
First, automation has the potential to offload dangerous, high-volume, and repetitive tasks from human workers. However, while robots are more adept at certain tasks requiring precision or heavy lifting, they are currently markedly inferior in roles such as final assembly, quality control, fine adjustments, and finishing work. These roles will be protected for the foreseeable future, while new opportunities will be created in programming, system installation, system maintenance, automation development, and systems oversight. In some cases, new technology will even enable human operators to complete the same task more efficiently or safely, for example by lifting or moving heavy objects by machine rather than by hand.
Secondly, the number of new jobs created by artificial intelligence may actually exceed the number of jobs eliminated. Automation offers productivity gains that can result in cheaper products and higher volumes, thereby creating new job openings to keep up with rising demand. When ATMs were introduced in the 1970s, many analysts expected that the role of a bank teller would become obsolete. However, because ATMs lowered the costs associated with opening a bank branch, more bank branches exist today, and the need for bankers has risen. The number of fulltime bank tellers has risen by 2.0% per year since 2000 when ATMs became widely available, a higher rate than the labor force overall. With artificial intelligence, firms may be able to offer quality products at lower prices, or a greater variety of customizable products, which will boost demand. A recent study estimated that by 2030, artificial intelligence and automation could add between 20 million and 50 million new jobs globally.
Finally, the high costs and planning required to roll out new artificial intelligence will limit the pace at which human employees are replaced, leaving ample time for retraining. The new jobs created by automation will be vastly different than the jobs that are eliminated but are typically higher-paid positions requiring new skills or creativity. Artificial intelligence will not replace workers but will allow them to specialize in more interesting, cerebral, or judgment-based roles.
For businesses, it is critical to know which tasks can be automated and which tasks are better left to humans. Doing so will help to avoid production bottlenecks, such as the issues that recently plagued Tesla. Increasing automation will also unlock productivity gains and may improve safety and working conditions. Although there are often high costs associated with new artificial intelligence implementation, more efficient firms will see productivity gains that enable lower prices or a greater variety of products.
As always, both individuals and businesses who react and adapt to changing technology will find themselves positioned for success. Instead of worrying about the impact of artificial intelligence, look for ways to embrace it.
Lauren Saidel-Baker, CFA
Economist