Does automation kill jobs? Forbes says Yes! And No! (But shhhh, don’t tell minimum wage workers, really, no.)
Forbes blogger Tim Worstall is of two minds on automation.
Forbes blogger Tim Worstall sure does love himself a vigorous debate—so much so that he’s taken to arguing with himself on the job destroying/creating impact of automation.
When it comes to raising wages (minimum or otherwise) the dystopian Worstall repeatedly warns that if you raise the cost of labor, employers are going to respond with automation, leading to painful job losses for the very same low-wage workers the minimum wage is trying to help. Seems straightforward enough. Yet at the same time, the utopian Worstall consistently shrugs off automation-related job losses as all part of the healthy process of creative destruction.
Higher wages means that automation becomes, relatively, more profitable. And it is to automation that most jobs go to die, not trade or international competition.
We’ve coped with this sort of thing before. There’s no reason at all to think that it’s going to be different this time. The increasing computerisation, roboticisation, of the economy is no more than a slight uptick in the normal rate of job destruction.
So, their first change is going to be looking at greater automation. This raises the productivity of the labor that they do employ, which is great. But it also means that for any given level of output they will be employing less labor: That’s what automation and higher productivity both mean. So, job losses coming here.
What happens when the robots get good enough to come and steal all our jobs? There’s various possible responses to this, from screaming in fright and running from the room in Luddite panic all the way through to denying, flat out, that it can possibly ever happen. I’m in that second camp myself.
Raise the price of human labour and people will substitute away from it to using more capital and more machinery. Things formerly done by people will be done by machines. That is, raising the minimum wage does cause job losses.
[T]his is how the macroeconomy works. Technology destroys the jobs that it automates. This then frees up that labour to go off and satisfy some other human need or desire. And as long as we don’t run out of those, then there’s no problem, is there?
Confused? You shouldn’t be. The truth is, Worstall is perfectly consistent when it comes to the economic impact of automation: Labor-saving technology tends to displace individual workers (that’s kinda inherent in the very notion of saving labor), something even the utopian Worstall never fails to concede. But Worstall is also fully aware that at the macroeconomic level, automation tends to drive job creation at a pace that more than offsets the jobs it costs. He just never mentions that part when he warns against raising wages.
So it’s not that Worstall is schizophrenic or inconsistent or incoherent on the issue. (Okay, maybe a tad incoherent.) It’s that he’s disingenuous. He’s threatening low-wage workers with only half the automation story, while saving the job-creating good news for conversations that don’t involve the minimum wage.
