Automation and the U.S. Economy

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Dr. Brendan Cunningham

Jobs and the American economy are always relevant topics for discussion, yet today more than ever they dominate the national discussion, which increasingly revolves around international trade agreements. Recently, Dr. Brendan Cunningham, Assistant Professor of Economics at Eastern, shared some thoughts on automation of production, an economic concept studied in his macroeconomics courses that relates directly to the principles of this blog—innovation, design, entrepreneurism, and artistry.

Automation has been expanding for decades, affecting most industries and increasingly evoking the question, “To what extent will machines replace people in the workplace?” In a recent example, Otto, an American self-driving technology company, successfully tested the design of its self-driving semi-trailer truck system in the fall of 2016. Automated driving will clearly disrupt the workers who depend on driving careers, such as truckers and taxi drivers, and it will continue to transform the workplace over time. Jobs that involve routine, predictable tasks will experience effects more quickly than other, more complicated roles. Nevertheless, even white collar workers will be displaced in some cases, especially with the advancement of the most sophisticated form of automation—artificial intelligence. For example, computer-assisted diagnosis may increasingly present x-ray technicians and others with competition.

The last time society experienced this level of economic transformation was at the turn of the twentieth century and primarily involved agrarian industries. Our response was to require expanded universal education, and to develop more skills among workers, preparing them for different jobs. MIT Economist David Autor has used the banking industry as a modern example of this effect, pointing out that the introduction of automated teller machines (ATMs) did not eliminate the need for bank tellers. Despite the ubiquity of ATMs, employment opportunities for tellers are reasonably stable, but their tasks are different—more complicated than they once were. Automation does not eliminate the employment of humans; it changes what people do and what skills they need.

Within the current, spirited discussion of international trade agreements is an argument that we must bring manufacturing jobs back to the United States; however, the decline in manufacturing jobs can be attributed more to the effects of automation than to the effects of trade. If manufacturers return to the U.S., it’s not clear how many jobs would actually be created. It may be that factories operate in the U.S. using robots built overseas, in countries such as China, where robot design is advancing rapidly. In other words, tariffs may encourage companies to locate in the U.S., but fail to create more jobs, highlighting the need to update the education and training of American workers to ensure success in our changing world economy.

Dr. Cunningham’s primary field of research is applied industrial organization, including topics such as media economics, copyright economics, and the economics of higher education. He primarily teaches courses relating to these topics as well as macroeconomics. Dr. Cunningham will present his thoughts on automation of production and Universal Basic Income at UCONN’s Center for Learning in Retirement (http://clir.uconn.edu/) in the Fall of 2017.