Technology's Impact on Jobs
The Luddite Fallacy and a few lessons from history
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Hi friends,
This week, we'll take a step back into the past. There's been much talk about how artificial intelligence will affect jobs, with some companies already citing it as a reason for layoffs. This week, I’ll explicitly not be tackling AI. Instead, I’ll be examining the impact of previous technologies on employment.
It is very possible that AI, particularly if it reaches Artificial General Intelligence, could be unlike any technology we've seen before. But this week let’s ignore AI and focus on a few lessons from history, and I’ll touch on AI’s impact on jobs in a future piece.
Lesson #1: Fear of Widespread Unemployment
Throughout history, technological breakthroughs have triggered widespread fear of unemployment and job losses.
The most infamous example was the Luddites, a group of British textile workers in the early 19th century who protested against automated weaving machines. The Luddites believed that these machines would replace their jobs as handloom weavers and destroy their livelihoods. The Luddites engaged in acts of sabotage against the machines, breaking them and sometimes attacking the factories where they were housed.
The British government responded with harsh repression, passing laws that made machine-breaking a capital offense and deploying troops to suppress the protests. Despite the Luddites' efforts, the machines eventually became widespread.
There are numerous other examples, pretty much throughout history upon invention of horseless carriages, assembly lines, automatic elevators, and more as below
Lesson #2: Job Losses Do Occur
The fear of job losses is not unfounded — there have been numerous examples of technology rendering specific jobs less important or even obsolete.
In fact, the Luddites were partly correct in that the eventual popularity of weaving machines did lead to losses of jobs as handloom weavers.
There have been numerous other examples of technology that rendered certain jobs more or less obsolete. Some examples of jobs and the technology that resulted in their reduction or demise include:
Switchboard operators: Before the widespread adoption of automated phone systems, switchboard operators were responsible for manually connecting phone calls. By the 1980s, this job did not exist at any meaningful scale.
Typists: With the rise of personal computers and word-processing software, the need for professional typists has declined significantly.
Film projectionists: The shift to digital movie projection has made the job of the film projectionist largely obsolete.
Travel agents: With the rise of online travel booking websites, the need for human travel agents has greatly decreased.
Bank tellers: The introduction of ATM machines and online banking has reduced the need for bank tellers.
Elevator Operators: The advent of automatic elevators almost completely eliminated the need for elevator operators.
Lesson #3: Job Losses are Rarely Immediate
Job losses do not usually happen overnight. Typically, they start with jobs evolving to fit the nature of the technology and then gradually reducing over time.
Take the case of switchboard operators. Even though the technology to do automated dialing was available in the early 1900s, it took 60-70 years for the job to really be eliminated. Initially, the job evolved slightly and actually grew in number as the telephone became more popular. It was only in the 1960s to 1980s did we see a steep fall in the role as automated dialing became commonplace. There were 100s of thousands of operators in the early 1900s which grew to over 300,000 in the 1950s, before a decline to ~40,000 by 1985.
Typists are another example. With the advent of PCs and word processors in the 1980s, the role of a professional typist (on a typewriter) became less valuable. Typing skills on the computer became more ubiquitous.
But typing jobs didn’t go away immediately. In some cases, they evolved to typing on computers and taking on other work (data entry, general assistance), and only over time did they decline in their original typist form. Even in the early 2000s, there were still over 250,000 typists, as the chart below shows.
Lesson #4: New Jobs are Created
Historically, most enabling technologies that have displaced certain jobs have also created new jobs. In fact, the scale of new job creation has usually been greater than job displacement. Thus, on the whole, technology creates more jobs while also increasing consumer surplus.
Consider the Luddites we have discussed. While they were correct in predicting job losses in the textile industry because of weaving machines, they were wrong about mass unemployment. Automated weaving machines created new jobs both directly and indirectly.
Machine operators were needed to operate the machinery, and maintenance workers were required to keep it in good working order, directly creating jobs. As the machine spurred growth in the textile industry, more jobs were created in related service industries, such as retail and marketing. Additionally, the increased production of textiles created more demand for raw materials, resulting in job growth in farming and transportation/distribution. This net impact of job creation with new technology is why the case of the Luddites is often referred to as the Luddite fallacy.
This effect of job creation has also been true of other technology which has displaced specific jobs, as highlighted in the table below:
One important aspect to note here is that the new jobs created by technology may demand different skill sets from the ones that are displaced. This underscores the significance of reskilling and upskilling to ensure that the affected workforce can secure meaningful employment and enjoy the benefits of the enabling technology.
Additional Reading
The rise and fall of Typists by the CGO at Utah State
The fall of Switchboard Operators by the FRB
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