Yesterday, the McKinsey Global Institute released a new report called, “A Future that Works: Automation, Employment, and Productivity.” This report comes after SIIA released its own report titled, “Artificial Intelligence and the Future of Work” which touches on many of the same issues. Similar to the SIIA report, it found that the adoption of automation carries significant benefits that outweigh the costs.
In 2013, two Oxford economists estimated that occupations accounting for 47% of all U.S. employment were at risk of automation. The McKinsey report states that more accurate assessment of the impact of automation on work is by looking at the impact by activity rather than the entire occupation. By its assessment, only less than 5% of occupations can be fully automated with today’s technology. Though, looking at automation via activity instead of by occupation, roughly half of all activities worldwide could be automated, totaling roughly $16 trillion in wages. Although many are concerned about the effects that automation will have on certain jobs such as manufacturing, the report claims that these positions will evolve as humans will have to take on a more cognitive and interactive role with the machines they work alongside. Thus, there will still be a need for human labor will still be necessary, though in different and unanticipated capacities.
As long as humans continue to work alongside machines, this report found that automation has the potential to raise global productivity by between 0.8% and 1.4% annually between 2015 and 2065. This prediction, when compared to other historical breakthroughs in innovation, is the highest. According to the report, from 1850 to 1910, the steam engine raised global productivity by 0.3% annually. From 1993 to 2007, early robotics raised it by 0.4% annually. From 1995 to 2005, IT raised it by 0.6% annually. The report states that this growth potential does vary based on certain factors such as the ongoing development of technological capabilities, cost of technology, labor competition, and supply and demand dynamics.
Additionally, the report does offer some suggestions for policymakers and business leaders. First, policymakers should ensure new policies encourage investment and market incentives to facilitate innovation. They must also adapt policies that help workers and businesses adapt to the changing conditions. Businesses should offer training and education opportunities to their employees to help them keep up to date with evolving technologies.
Overall more jobs will be created from automation than will be displaced. But, early adoption stages of automation will likely create some job displacement, affecting some people who will not be able to find alternative employment. So the report states that policymakers need to rethink income support and social safety nets. The report, like SIIA’s AI and work issue brief, suggests that some ideas like earned income tax credits, universal basic income, and adapted social safety nets should be considered.
The full report can be read here.