Tech is destroying jobs: And it’s a good thing, too

It seems increasingly common for politicians, journalists, and pundits to engage in hand-wringing over how tech is destroying jobs:

• President Barack Obama complained that bank ATMs and airport kiosks cost the US economy jobs by improving efficiency.
• Rep. Ro Khanna (D–CA) is afraid that Amazon’s proposed acquisition of Whole Foods will cause people to lose jobs.
• The Wall Street Journal reported that retailers are replacing workers with robots.
• Tesla CEO Elon Musk told the National Governors Association that artificial intelligence threatens all human jobs.

Is tech destroying jobs? Absolutely! And we should be glad.

Why does tech destroy jobs?

Obama and The Wall Street Journal are correct that tech improves efficiency. How? Businesses adopt technologies to lower costs or improve service. The choices don’t always work out. But when they do, they improve businesses’ ability to satisfy customers. This improvement gives customers more bang for their buck, which is by definition economic growth. But the new technologies are generally doing things that humans used to do. The old jobs disappear, and the people who held them are displaced.

Does tech increase unemployment?

No. Technological change does not affect a fundamental principle: Whether a person has work is determined by whether that person can do something that others value. New tech creates new jobs: It takes people to create, produce, and use the next inventions. To illustrate, more than 1.3 million people worked in Silicon Valley in 2016 — an increase of more than 23 percent since 2010. These jobs largely would not exist without the tech sector. What about the displaced workers who do not find work making or using the new technologies? The same work ethic, ability to learn, desire to grow economically, and craving for meaningful work that made each person successful in an old job drives him or her to retool, find a new job, or create a business. According to the Bureau of Labor Statistics, this churn is a normal phenomenon: The median number of years that someone had stayed with his or her current employer was only 4.2 years in January 2016.

Do new technologies make everyone better off?

Ultimately. Consumers get better and/or less expensive products. Business owners profit from innovation. Greater productivity means higher average incomes. But there is no guarantee that everyone is better off in the initial stages. Some people may have trouble retooling themselves, and others may find it costly to move to where the new jobs are.

Are there historical parallels?

Yes. Imagine for a moment if Obama, Khana, and Musk had been alive in 1892 to witness John Froelich invent the gasoline powered farm tractor. They might have recoiled in horror at the potential effects. In 1890, farmers were 43 percent of the US population. “Surely,” Obama, Khana and Musk might have reasoned, “these new-fangled tractors will eliminate the need for so many farmers? And when tractors replace horses and mules, won’t the people who shod them, who treated them when they were ill or injured, all lose their jobs?" Thank goodness no one stopped agricultural mechanization. Because of the past 125 years of rural to urban migration, farmers now make up only 2 percent of the US population. This has enabled an economic boom: The demand for agricultural technologies created jobs for engineers, scientists, mechanics, and business managers. People who left farms took jobs in manufacturing, started businesses, became college professors, and the like. Everyone is enjoying a better standard of living today in part because of this displacement of farmers. So take heart the next time you hear that tech is destroying jobs. Your children and your children’s children will be better off as a result.  

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