AI, Automation, and Job Displacement Overview

Executive Summary

The impact of automation on jobs has been hotly debated since the Industrial Revolution.

In his book, Warnings: Finding Cassandras to Stop Catastrophes, cybersecurity expert Richard Clarke reminds us that in 1933, famed economist John Maynard Keynes predicted widespread unemployment “due to our discovery of means of economizing the use of labor outrunning the pace at which we can find new uses for labor.” ¹ In other words, automation will cost jobs.

Despite the dire warning, both business and government leaders (and, to a certain extent, the public) have contented themselves with the widely held belief that while automation will eliminate some jobs, it will create others. The classic example involves an unemployed buggy-whip maker who finds alternative employment on an automotive assembly line – a phenomenon described rather clinically as “creative destruction.” ²

Today, however, new technologies – particularly artificial intelligence, machine learning, and robotics – threaten not only the traditional “blue collar” targets of automation, but their “white collar” counterparts. Variations on the same software that allowed a computer to defeat world champion Garry Kasparov at chess have evolved to perform complex business tasks like legal analysis and medical diagnosis. In the latter case, some diagnostic programs can read x-rays with greater precision than trained radiologists.

The 47 Percent

In a 2013 Oxford University study, economists Carl Benedikt Frey and Michael A. Osborne forecast that “technological unemployment” could affect almost half of all Americans. “According to our estimates around 47 percent of total US employment is in the high-risk category. We refer to these as jobs at risk – i.e., jobs we expect could be automated relatively soon, perhaps over the next decade or two.

“Our model predicts that most workers in transportation and logistics occupations, together with the bulk of office and administrative support workers, and labor in production occupations, are at risk.

“More surprisingly, we find that a substantial share of employment in service occupations, where most US job growth has occurred over the past decades are highly susceptible to computerization. Additional support for this finding is provided by the recent growth in the market for service robots and the gradual diminishment of the comparative advantage of human labor in tasks involving mobility and dexterity.” ³

Famed physicist Stephen Hawking, who was outspoken about the potential of artificial intelligence to destroy humanity, observed that “the automation of factories has already decimated jobs in traditional manufacturing, and the rise of artificial intelligence is likely to extend this job destruction deep into the middle classes, with only the most caring, creative or supervisory roles remaining.” ⁴

Some Security Exists

While no job is totally immune from automation, especially in the AI-era, a number of positions appear relatively safe. As catalogued by analyst Abubakri Ibrahim, these include:

Leadership Roles – Persons “responsible for making strategic decisions, managing growth, and inspiring their team to achieve [enterprise] goals.”

Teachers – Persons who “inspire, motivate, and guide students, often becoming a reference point in their lives.” 

Entertainers – “Artists, musicians, and other entertainers bring a creative and imaginative touch to their work,” which is difficult to reproduce, even with generative AI programs.

Medical Practitioners – “Surgeons, doctors, and nurses possess unique skills and expertise that AI cannot fully replicate. Experience, knowledge and the ability to make split-second decisions are critical in the operating room.”

System Analysts – “Computer system analysts play a crucial role in maintaining complex software and hardware systems. This involves reviewing system capabilities, controlling workflow, and making improvements. The coordination and troubleshooting skills required in this role make it unlikely to be fully automated.”⁵

The Automation Toolbox

In the 21^st Century, automation is being fueled by advances in three interrelated technologies: artificial intelligence, machine learning, and robotics.

• Artificial intelligence (AI) is “the simulation of human intelligence processes [especially learning and adaptive behavior] by machines.”⁶
• Machine learning (ML) is a branch of artificial intelligence that enables a system to enhance its awareness and capabilities, i.e., to learn without being explicitly programmed to do so.
• Robotics generally refers to a class of software systems and/or hardware devices that perform functions faster; more reliably, i.e., with fewer faults; and less expensive than humans. A McKinsey report reveals that by 2030, robots have the potential to automate tasks that currently occupy up to 30 percent of the working hours in the US economy.⁷

While technological advances have disrupted the job market before, AI, ML, and robotics may be automation “game changers.” Analyst Michael J. Handel points out that “Many observers consider these new technologies fundamentally different from previous waves of computing technology. New computing capacities – in areas such as image recognition, robotic manipulation, text processing, natural-language processing, and pattern recognition, and, more generally, the ability to learn and improve rapidly in relatively autonomous ways – represent a break from the hand-coded, rules-based programs of the past. In this view, newer robots and AI represent a clear departure from previous waves of computing, one that accelerates the pace of technological change and job displacement.”⁸

A Disruptive Influence

Always a disruptive influence, automation is emerging as an enterprise governance priority, compelling enterprise planners to:

• Develop an Automation Strategy, determining how automation will be “employed” to improve enterprise productivity and preserve enterprise competitiveness; and
• Develop a Human Resources Strategy, guiding enterprise treatment of employees displaced or otherwise affected by automation.

Other Forces Affecting Jobs

Although the dominant force affecting jobs and the future of employment, automation as a workforce and business management challenge cannot be considered in isolation. Other factors affecting workforce size and composition include:

1. Globalization – Transferring enterprise operations (and jobs) to low-wage countries.
2. Outsourcing – Delegating select business functions to third-party providers.
3. Immigration – Enlarging the labor pool, thereby facilitating the replacement of older, high-wage workers with younger, low-wage workers.
4. Education – Training workers to fill existing job openings.
5. Business Reengineering – Eliminating outdated business functions. Also, redesigning business functions to reduce labor and other expenses.
6. Benefits – Firing – or not hiring – employees due to the escalating costs of healthcare and other benefits.
7. Minimum Wage – Firing – or not hiring – employees owing to mandatory minimum salary levels.
8. Competition – Ceding business (and jobs) to more agile firms like Amazon and Uber.
9. Natural Disasters – Losing critical enterprise facilities and jobs to climate change-aggravated super storms.
10. Health Crises – In particular, pandemics like the recent COVID-19 outbreak, which produced severe economic disruption and loss of employment.
11. Poor Import/Export Policy – Raising the costs of imported goods and services and diminishing access to foreign markets.
12. Security Breaches – Reducing customer confidence in enterprise products and services, thereby reducing enterprise sales.
13. General Unemployment – Decreasing demand for enterprise products and, thus, workers.
14. No “Industrial Policies” – Aside from promoting STEM (Science, Technology, Engineering, and Mathematics) education, what policies has Washington actually advanced for dealing with the impact of automation, globalization, etc.?

What Employers Owe Employees

Ask enterprise executives what they value and their immediate – almost reflexive – response is employees and customers. The customer part is simple enough: without customers, there is no business. An enterprise’s commitment to employees, however, is more complicated. As analyst Erik Sherman reflects, “It reminds me of some middle to upper manager in a company I once [interviewed]. There was some technology that could replace many people. I asked if the idea were to free people up for more meaningful work. He took a breath over the phone, as if tired of the usual answer people in corporations made, and said something to the effect of, ‘No, that’s what we generally say, but really, we’re looking to cut jobs.’ Period.”⁹

Stated succinctly, calculated enterprise self-interest generally lies in shedding workers, not retaining them, or even retraining them for other jobs. Understanding these harsh realities and cognizant of their positions as workers themselves, enterprise officials must determine:

• What they owe their employees; and
• How they will satisfy that obligation.

At a minimum, enterprise officials should:

Develop an Enterprise Automation Strategy – The strategy should outline the enterprise approach to automation. Is it aggressive, with the objective of eliminating jobs? Is it casual, taking advantage of automation opportunities as they present? Is it somewhere in between?

Align the Automation Strategy with the Enterprise Business Strategy – Automation should be pursued within the context of enterprise business plans. Importantly, select employees should participate in the formation of the Automation and Business strategies, and all employees should be informed of their general parameters.

Envision the Enterprise “Future-State” – In one, two, or five years hence:

• What will the enterprise look like from a workforce perspective?
• What will the enterprise do to preserve as many jobs as practical? “Upskill” employees. “Reskill” employees. Transfer employees to other departments or divisions?¹⁰
• What will the enterprise do to assist severed employees to find gainful employment?¹¹

Developing an Automation Strategy

Hiring As a Last Resort

As reported by analyst Olivier Garret, automation planning often occurs before an individual is hired. According to Steven Berkenfeld, a managing director in the investment banking division at Barclays, the hiring thought process goes something like this:

• “Can I automate it [the process for which a person may be hired]?
• “If not, can I outsource it?
• “If not, can I give it to an independent contractor?”¹²

Hiring is often the option of last resort.

Automating the Automation Function

One of the purposes of automation is to render a business process predictable and reliable. Enterprise officials should apply the same criteria to automation initiatives by developing – and adhering to – an automation strategy.

A key element of the strategy involves identifying business processes that are ripe for automation. These would include manual or labor-intensive processes, or processes with limited economic value.

For each automation prospect:

1. Ask the process expert – the person (or persons) performing the process – to recommend actions aimed at enhancing process efficiency, including automation.
2. Reward individuals who contribute meaningful suggestions by permitting them to participate – even lead – process reengineering efforts.
3. For those individuals who become expendable due to automation, outsourcing, or other circumstance beyond their control, seek remedies short of termination, such as:

• Arranging a transfer to another department or division.
• Offering a part-time position with reduced hours or reduced pay.
• Allowing the employee to re-engage with the enterprise post-employment as a consultant or other freelancer.
• Depending on age and aptitude, retraining – especially in areas like cybersecurity where the enterprise may have encountered difficulty in recruiting and retaining qualified personnel.

It is inevitable – and in many instances, beneficial – for enterprises to eliminate jobs in favor of automated operations. In all cases, however, the decision to lay off workers should be informed by thoughtful and compassionate analysis.

Automation and Public Policy

While many public officials have cited “income inequality” as a major threat to today’s economic order, there may be little appreciation for the ways in which income inequality intersects with automation.  As analyst Erik Sherman explains, “As automation removes jobs, without equivalent work opening up, the world will see massive increases of inequality that will turn social orders upside down.

“[Because] of the global nature of work, there are going to be rebounding effects. The more people displaced, the more people desperate for work and willing to take less and then less and less if it’s perceived as a chance to live. More low-end jobs will shift from one country to another and back again. Wages will drop as a large percentage of the population will grasp at any opportunity.”¹³

Owing to these effects, the impact of automation on jobs demands public debate followed by informed public sector action, particularly at the federal level.

Universal Basic Income

Realizing that automation and other factors might produce a future in which a large segment of the population is unemployed or, worse, unemployable, some social scientists and politicians are proposing a “universal basic income” (UBI), where all citizens receive a small monthly stipend from the government. The concept has drawn support from prominent business leaders like Bill Gates, Elon Musk, Mark Zuckerberg, and Richard Branson.¹⁴

While many are opposed for fiscal reasons, such as running up the national debt, lawmakers may be forced to implement some form of UBI as automation further disrupts the job market.

Lifelong Learning Opportunities

One of the foundations of western society is free public education, typically K-12. The goal is to give young people a basic understanding of language, mathematics, science, and history sufficient to prepare them for higher education or a public/private sector job.

Unfortunately, since many, if not most, people will change careers – not just jobs – multiple times over the course of a normal work life, “front-loading” their education may be contrary to national and economic interests.

Although controversial, it might be necessary to extend and expand the concept of free education by providing people in their 30s, 40s, and 50s with the chance to reenter school for supplemental training, particularly people threatened with automation-induced job loss.

Informed Public Policy

Government has a critical role in shaping public education and job training, especially as they relate to automation and its effects on jobs. Thus far, however, the government has no coherent automation and jobs policy, save for encouraging students to study STEM (Science, Technology, Engineering, and Mathematics).

Two potential policies, as outlined in the Chicago Policy Review, would involve:

1. Upgrading K-12 curricula to include courses on automation-compatible “communication, analytical, and creative skills;” and
2. Enacting a new “G.I. bill” that would lower the exorbitant cost of obtaining a college degree.¹⁵

Rather than waiting for lawmakers to act, however, both the public and private sectors should collaborate to create a jobs roadmap, giving young people, in particular, a best guess vision of the job market in 2030, 2040, and beyond.

Jobs and Security

In the US and globally, the economic inequality crisis is real and accelerating. Automation promises to exacerbate the problem, producing serious security concerns:

• For individuals, income insecurity, or the inability of breadwinners to reliably provide for themselves and their families; and
• For law enforcement, increased criminal activity, as workers steal to augment their income, or commit acts of violence against the government or enterprise entities they hold responsible for a deteriorating job market.

Again, the public and private sectors should cooperate to mitigate the impact of present and future job loss resulting from automation and globalization.

Web Links

• Continuity Central: https://www.continuitycentral.com/
• US National Institute of Standards and Technology: https://www.nist.gov/

References

¹ Richard A. Clarke and R. P. Eddy. Warnings: Finding Cassandras to Stop Catastrophes. HarperCollins Publishers. 2017:212.

² Carl Benedikt Frey and Michael A. Osborne. “The Future of Employment: How Susceptible Are Jobs to Computerization?” Technological Forecasting and Social Change. September 17, 2013:5.

³ Ibid. pp. 44-45.

⁴ Rob Price. “Stephen Hawking: This Will Be the Impact of Automation and AI on Jobs.” World Economic Forum. December 6, 2016.

⁵ Abubakri Ibrahim. “The Rise of the Robots? Job Automation and the Future of Work.” ticktocktech.com | Onsite Technology Solutions Incorporated. February 2, 2024.

⁶ TechTarget.

⁷ Abubakri Ibrahim. “The Rise of the Robots? Job Automation and the Future of Work.” ticktocktech.com | Onsite Technology Solutions Incorporated. February 2, 2024.

⁸ Michael J. Handel. “Growth Trends for Selected Occupations Considered at Risk from Automation.” Monthly Labor Review, U.S. Bureau of Labor Statistics. July 2022.

⁹ Erik Sherman. “A New Wrinkle and Danger in How Automation Will Obsolete Jobs.” Forbes Media LLC. January 30, 2020.

¹⁰ Abubakri Ibrahim. “The Rise of the Robots? Job Automation and the Future of Work.” ticktocktech.com | Onsite Technology Solutions Incorporated. February 2, 2024.

¹¹ “Automation Is Here to Stay … But What About Your Workforce?” Deloitte Touche Tohmatsu Limited. 2017.

¹² Olivier Garret. “How the Coming Wave of Job Automation Will Affect You and the U.S.” Forbes . February 23, 2017.

¹³ Erik Sherman. “A New Wrinkle and Danger in How Automation Will Obsolete Jobs.” Forbes Media LLC. January 30, 2020.

¹⁴ Nikhil Reddy. “Universal Basic Income: The Full Rundown.” Oath. September 12, 2017.

¹⁵ Philip Klafta. “No Adult Left Behind: Automation, Job Loss, and Education Policy.” Chicago Policy Review. February 12, 2024.