Employment Challenge With Advancing Technology

Recessions cause companies to pay much closer attention to their costs. Chief executives become zealots for reducing spending, and labor is no exception. The unemployment claims we’ve seen over the past weeks show clearly that there are, tragically, a lot of layoffs with the Covid recession.

When you look at the history of recessions, there's an interesting pattern: Employment rebounds more slowly after each one. This is because technology keeps advancing – it can do more and more tasks that used to require humans. After each successive downturn, those tasks don’t go back to people; they remain automated. Since the last recession ended a bit more than ten years ago, we’ve seen the rise of machine learning, the appearance of drones and other kinds of physical automatons, and the explosive growth of the cloud. In short, digital technologies are much more powerful.

But it’s important to realize that this combination of automation and recessions does not cause permanent unemployment. Innovators and entrepreneurs come up with all kinds of new offerings that fuel growth, and many of the tasks underlying these offerings can be done only by people. So employment eventually rebounds. The same thing will happen this time. We’re confident that this recession will not mark the start of large-scale technological unemployment.

Source: Erik Brynjolfsson & Andrew McAfee (Second Machine Age Technologies.)