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The Future Of Automated Job Loss May Be Brighter Than Ever

While fears swirl around an impending economic doom of a jobless world, the exact opposite might be true. Rather than automated job loss getting worse in the future, the economy might be getting progressively better at helping workers find new jobs after being replaced by technology. Technology is increasing the number of high-skill jobs and better utilizing latent creative abilities that otherwise were wasted before routine jobs were automated.
The first one comes from a special supplement to the Census, the Displaced Worker survey, which collects information on workers who lose their job to plant closings or insufficient hours, which is a pretty good proxy for automation that either directly replaces workers with a robot, ships production overseas, or reduces hours through more efficient scheduling. In 1994, the median gainfully employed worker retained 98% of their old wages at least one year after losing their job, and by 2016, new wages were 8% higher than old wages. This generally jives with a working paper from economist Henry Farber, who also found that, in some cases, the drop from displaced wages was getting slightly less severe over time for people with full time jobs.
Overall, full-time displaced workers seem to be retaining more of their previous wages.

Now, this isn’t to say that there aren’t people hurting; displacement is especially bad for older workers in small towns. But, I think these well-intentioned stories of struggling workers have constructed a misleading narrative around displacement. When we think of the effect of something like Amazon’s cashless grocery store, prefabricated high-rise construction, or self-driving taxis, these technology’s will largely impact the millions of urbanized lower-middle wage workers—and there will be plenty of higher-skill jobs for those urbanized workers to find.


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