Automation and Jobs

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Automation and Jobs

by James G. Barr

Docid: 00021074

Publication Date: 2003

Report Type: TUTORIAL


The impact of automation on jobs has been hotly debated since the Industrial
Revolution. But recent technological breakthroughs like artificial
intelligence, machine learning, robotics, and even e-commerce are accelerating
the pace at which human workers are being displaced or marginalized by their
physical and digital counterparts. According to a 2013 Oxford University
study, around 47 percent of US employees are at high risk of technological

Report Contents:

Executive Summary

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


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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

Despite the dire warning, both business and government leaders (and, to a
certain extent, the general pubic) 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, too. 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.

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 gradually 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

No Safe Harbor

Going forward, the effects of automation on jobs will be hard to predict,
and usually contrary to conventional wisdom.

As reported by analyst Alana Semuels, a new analysis by the University of
Redlands "suggests that the places that are going to be hardest-hit by
automation in the coming decades are in fact outside of the Rust Belt. It predicts that areas with high concentrations of jobs in food preparation,
office or administrative support, and/or sales will be most affected.

"The authors estimate that almost all large American metropolitan areas
may lose more than 55 percent of their current jobs because of automation in
the next two decades.

"What’s particularly striking about the … Redlands report is that the
regions that are susceptible to automation are those that already have a
high share of low-wage jobs. Previously, automation had hurt
middle-class jobs such as those in manufacturing. Now, it’s coming for
the lower-income jobs. When those jobs disappear, an entire group of
less-educated workers who already weren’t making very much money will be out
of work." 5

On a positive note, Oxford Economics found that while repetitive jobs –
and job holders – are at greater risk of elimination, jobs that require
compassion, creativity, or social intelligence will likely continue to be
performed by humans "for decades to come."6

The Automation Toolbox

In the 21st century, automation is being fueled by advances in
three related technologies: artificial intelligence, machine learning, and

  • Artificial intelligence (AI) is "the
    simulation of human intelligence processes [especially learning and adaptive
    behavior] by machines."7
  • Machine learning 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 devices that perform
    functions faster; more reliably, i.e., with fewer faults; and less expensively
    than humans.

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

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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 like hurricanes Harvey and Irma.
  10. Health Crises – In particular,
    pandemics like the current Coronavirus outbreak, which has already produced
    severe economic disruption and loss of employment.
  11. Poor Import/Export Policy – Raising the costs of imported goods and services. Also, diminishing access
    to foreign markets.
  12. Security Breaches – Reducing customer
    confidence in enterprise products and services, thereby reducing enterprise
  13. General Unemployment – Decreasing
    demand for enterprise products and services, as fewer workers – the real
    "job creators" – have less money to spend.
  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,

As enterprises embrace automation, they must be prepared to deal with the
consequences of automation in concert with its companion workforce issues.

What Employers Owe Employees

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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."8

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
  • How they will satisfy that obligation

Fortunately, with respect to these critical queries, there is time for
thoughtful decision-making. Analyst Marcus Casey emphasizes that
"while jobs are changing due to technological adoption, they are changing
relatively slowly, and, notwithstanding the special case of industrial
robots in large manufacturing plants, there is little evidence of wholesale
displacement in other sectors. In addition, they also suggest the speed and
scope of change at this point may allow us … to make choices that better
prepare workers for the labor market of the future."9

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:

  • What will the enterprise look like from a
    workforce perspective?
  • What will the enterprise do to preserve as
    many jobs as practical? Continuing education? Retraining? Relocation?
  • What will the enterprise do to assist severed employees to find gainful

Developing an Automation Strategy

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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?”11

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) actually 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
    • 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 layoff workers should be informed by thoughtful and
compassionate analysis.

Automation and Public Policy

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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."12

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, including former Democratic presidential
candidate Andrew Yang, are proposing a "universal basic income" (UBI),
where all citizens receive a small monthly stipend from the government. Finland is experimenting with the concept which has drawn support from prominent
business leaders like Bill Gates, Elon Musk, Mark
Zuckerberg, and Richard Branson.13

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,
government has no coherent automation and jobs policy, save for encouraging
students to study STEM (Science, Technology, Engineering, and Mathematics).

Lamenting the loss of jobs due to automation and globalization is a popular
pastime but not a policy, nor a prescription for career planning. As a long-term
ambition, 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

In the short term, the government should consider more modest
improvements like those offered by MIT.14 As summarized by
analyst Marcus Casey:

  • "[Value] human capital in the tax code
    – The tax code favors investments in physical capital
    over human capital. Policymakers can potentially mitigate this imbalance
    by providing more incentives for investments in
    worker training, especially in areas where workers
    would receive credentials.

  • "[Incentivize] innovation that enhances [and
    complements worker efforts]

    – Subsidies and other incentives should be shifted
    towards supporting innovation that complements and
    augments worker efforts, making them more

  • "Reintroduce workers as stakeholders
    – Pushing firms to reevaluate their
    institutional imperatives, coupled with more worker
    representation in decision processes, may
    potentially help contribute to workers sharing more
    in the benefits associated with increased
    productivity and increased economic dynamism that is
    promised by advances in technology and AI."15

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

  • 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.


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Richard A. Clarke and R. P. Eddy.
Warnings: Finding Cassandras to Stop

. HarperCollins Publishers, 2017:212.

Carl Benedikt Frey and Michael A. Osborne. “The Future of Employment: How
Susceptible Are Jobs to Computerization?” Oxford University. September 17, 2013:5.


. 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 Alana Semuels. "The Parts of America Most Susceptible to
The Atlantic

. May 3, 2017.

6 Rory Cellan-Jones. "Robots ‘to Replace
Up to 20 Million Factory Jobs’ by
2030." BBC. June 26, 2019.


Erik Sherman. "A New Wrinkle And Danger In How Automation Will
Obsolete Jobs." Forbes. January 30, 2020.

9 Marcus Casey. "How
Automation Could Make Some Jobs
Better." Brookings Institution. November 21, 2019.

10 "Automation Is Here to Stay … But What About Your
Workforce?" Deloitte Touche Tohmatsu Limited. 2017.

11 Olivier Garret. "How the Coming Wave of Job Automation Will
Affect You and the U.S."

. February 23, 2017.

Erik Sherman. "A New Wrinkle and Danger in How Automation Will
Obsolete Jobs." Forbes. January 30, 2020.

13 Nikhil Reddy. "Universal Basic Income: The
Full Rundown." Huffington Post. September 12, 2017.

14 "The Work of the Future:

Shaping Technology and Institutions: Fall 2019 Report." Massachusetts
Institute of Technology. 2019.

15 Marcus Casey. "How Automation Could
Make Some Jobs
Better." Brookings Institution. November 21, 2019.

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About the Author

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James G. Barr is a leading business continuity analyst
and business writer with more than 30 years’ IT experience. A member of
"Who’s Who in Finance and Industry," Mr. Barr has designed,
developed, and deployed business continuity plans for a number of Fortune 500
firms. He is the author of several books, including How to Succeed in
Business BY Really Trying
, a member of Faulkner’s Advisory Panel, and a
senior editor for Faulkner’s Security Management Practices. Mr.
Barr can be reached via e-mail at

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