Robots as Employees?

In “Will robots displace humans as motorized vehicles ousted horses?” written by an anonymous author from The Economist, an interesting analogy about horses being replaced by tractors and other automated machines is related to what robots could possibly do to the human labor force. Just as the introduction of tractors decreased the equine labor force quite significantly, the introduction of robots into the labor force has shown some similarities that has some people worried. Daron Acemoglu from Massachusetts Institute of Technology and Pascual Restrepo of Boston University decided to conduct research and publish their findings on this topic (Link to full paper can be found here). They found that increasing the number of robots in a certain area of the economy did not raise employment among any group of workers. Even if workers had college degrees, the results were the same. In fact, total job loss in the U.S. was found to be between 360,000 to 670,000 jobs. While that is not overly alarming, there are not as many robots in use in the U.S. economy as there are in other countries. Therefore, this job loss should be noted as possible evidence to the beginning of human labor decline. From Acemoglu and Restrepo’s research, they were able to conclude that the addition of one robot per thousand workers reduces wages across an entire economy by 0.5%. Wage decline is a similar strategy from the horse labor decline, as horse prices greatly decreased in an attempt to combat the introduction of tractors. However, the tractors eventually replaced horses almost entirely, which is exactly what these authors fear could happen with the human labor force.

A possible future robot construction worker.

While much of this seems like a problem that needs to be fixed, in reality robots replacing human labor should be a good thing. Automation in general allows firms and consumers to save money, which in turn can lead to that money saved being spent on other goods or services. In the minds of firms, they do not have to pay wages to as many workers if they choose the automation route. According to Michael Lindley from Concept Systems Inc., Automation also allows a company to continue their competitive advantage, so automation could quite easily replace a large percentage of the work force in the coming years.

I thought these two articles were very interesting, especially the one from The Economist. I knew that robots and automation has been on the rise, but it was interesting to see certain statistics on how inserting robots into the economy negatively affects the human labor force. I thought it was very surprising how as little as one robot per thousand workers reduces the wages across an entire economy by approximately 0.5%. While that is not significant alone, employing multiple robots at once could really do some damage to wages. Automation is important to me as a teacher because I believe it will be one of the main business content areas within the next 10 years. Right now, a lot of the business education curriculum is focused on conducting business with human employees and customers. Evidence from articles like these show that the focus should switch to conducting business with robot employees instead. Including these ideas in my future teaching can help better prepare the next generation of entrepreneurs and business professionals.