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  • Ofer Setty

Robots are polarizing society one paycheck at a time

Updated: Aug 24, 2022

The robot – a reprogrammable automatic multifunctional machine – affects and will continue to increasingly affect our lives as consumers, as workers, and as a society. What progressions are driven by automation, and why is it not the crisis that it’s been made out to be?

New blog post.

When we hear the word “robot,” most of us immediately think of a metallic entity with human-like features that will either serve our needs or, alternatively, take over our lives. In the technological world, on the other hand, a “robot” is defined as a reprogrammable automatic multifunctional machine.

This type of robot is already here. It affects our lives today and will increasingly affect our lives in the future as consumers, as workers, and as a society. According to the International Federation of Robotics (IFR), the number of robots in the world has reached a record number of 2.7 million in 2019, with a 12% annual rate of increase. The robot improves our standard of living and enables some jobs to be performed more easily and safely. Alongside these benefits, however, it also poses a tremendous challenge to the labor market.

This is not the first time, of course, that someone or something has threatened to take our jobs. As early as the start of the 19th century, workers (“Luddites”) protested in England against the introduction of textile machines which, at times, also included vandalizing them. It’s clear that also in the 21st century, automation will greatly affect the rate of job loss in the labor market, but in the long run, it will lead to an equally important trend – an increase in alternative jobs and new professions.

A prime example of this is the shift that occurred in the composition of the U.S. labor force sectors in the 20th century, during which the percentage of agricultural workers decreased from 40% to only 2%. At the beginning, this progression raised concerns about the dramatic impact it would have on humans’ ability to create value. However, this fear did not take into account the significant increase in jobs in the service sector, a trend that was difficult to predict. Therefore, while the accelerated automation we have been experiencing in recent years will undoubtedly lead to changes in the composition of the workforce, it is by no means certain that it will cause a decrease in employment in the long run.

In the short term, technological revolutions change the employment level, the type of workers, and the income distribution. As a result, alongside the people who benefit from such a shift, there are also quite a few who lose out. Economic research shows that job redundancy due to automation does not occur at random, but rather it takes over routine tasks that machines can perform more efficiently than workers. Whereas in the early 1980s, these types of jobs accounted for almost 60% of all jobs, in 2017 they accounted for only 40%. This type of work includes repetitive mechanical operations that occur within factories, but also routine cognitive tasks such as administrative and bookkeeping activities.

This means that automation advancements are displacing jobs primarily from the middle of the income distribution. At the same time, however, we see an increase in the percentage of workers on both ends of the income distribution. On the one hand, those who work in fields such as programming, instruction, and public relations perform tasks that require social intelligence, judgment calls, and creativity – skills that not only haven’t been replaced by automation, but for which the integration of human and machine leads to accomplishing tasks more efficiently and at a more advanced level. Workers in these positions benefit most from automation (alongside capitalists, of course). On the other hand, there has also been an increase in non-routine jobs that, although do not require the skills I mentioned before, cannot be performed (at least for now) by machines. In this group, you can find, for example, couriers and cleaners.

The manner in which automation affects jobs and the distribution of income fuels social polarization, both in terms of income and socioeconomic status. As the progression is already underway, the creation of meaningful jobs will depend on technological advancements and, to a large extent, on the education and welfare policy of the state (which I will talk about in further detail at another time). In the short term, the policy adopted will affect the ability of people to integrate, or re-integrate, into the labor market and will influence the well-being of those who fail to do so. In the long run, the policy will determine what our future society will look like: What will be the productive capacity of the economy? Which workers will be able to create value precisely because of automation, and which will have to choose between working in the shadow of machines and unemployment?

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