Sunday, May 28, 2017

More on Robots, AI and Job Displacement

This blog has been frank about the future of employment in the age of technological revolution. Many now seem to be coming around to the realization that the world of work will change markedly in the near future as artificial intelligence and robots invade our workplaces. I see it as a challenge to those in the manufacturing field, but also those in the repair business, and other service industries, as described in How will Attorneys (or any of us) Adapt?

In short, I see manufacturing jobs leaving developing nations, where they heretofore fled in search of inexpensive labor and relaxed regulation. That is a notable side point worthy of consideration. Manufacturing jobs fled North America related to cost. Service jobs, like call centers, likewise sought lower labor cost abroad. Most appreciate that direct labor cost is an element of that exodus, but many ignore or deny that regulatory burden and its cost may likewise have played a role. Regulatory costs that include safety and workers' compensation. 

As robotics become increasingly prevalent and as robotic prices decrease, the labor cost contributions of production, direct and otherwise, will decrease. A producer, evaluating total cost of product inputs, will perceive robotic costs as competitive with, or perhaps lower than remote (foreign) labor. In the current paradigm, shipping products to the market costs are offset by the disproportionately low cost of that remote labor. That cost of shipping will become less easily absorbed in that equation as labor and regulatory cost is diminished by robotics, and manufacturing is likely to return to North America, but without a one-to-one reclamation of jobs. 

In March 2017, CNN published U.S. workers face higher risk of being replaced by robots. Here's why. This piece agreed with the prognostication that robotics specifically, and by implication all technology generally, present a probability of job loss. But, this analysis concluded that American workers face a greater risk of diminishing opportunity than others. A recent study and report  by PwC concluded that American workers face risk of technology displacement in 38% of present jobs. Well over one-third of the working Americans are confronted, as compared to only 30% of UK workers and 21% of the Japanese. 

The job-impact differences are difficult to reconcile on a cursory examination; market similarities between the US and UK are notable. Both are "dominated by services jobs," and there are marked similarities in the "share of workers are employed in key (economic) sectors."  The difference, according to the PwC report, is not in the economic sector analysis, but in "major differences" regarding the actual work performed by employees "within these sectors."

Stated differently, the point is not whether a job is in the financial, fast food, or hospitality fields all are "service sector." The point is whether the actual tasks performed are susceptible to being performed by either artificial intelligence or robotics. PwC concluded that there are significant differences in that susceptibility between otherwise seemingly similar market segments. For example, CNN reports that "in the U.S., 61% of jobs" in financial services "are at a high risk" of robotic replacement compared to "only 32% of finance jobs in the U.K."

The critical point, according to the economists authoring this study, will not be the economic sector in which people work (like "finance") but the actual tasks performed. For example, "many workers in the U.S. financial sector" are employed in localized services such as bank tellers, instead of more complex functions like investment banking. The economists predict that those less-skilled positions are more apt to be replaced by the next generation of automatic teller machines. In this example, the invasion of tech is already advanced. Many people I know go for extended periods without ever entering a bank anymore. I know some who never visit a bank. 

The PwC study focuses upon determination of what constitutes "routine tasks." As in the industrial revolution of the late 19th century, those tasks and processes that are repetitious and frequent are likely to be most easily undertaken by programming and robotics. This signals an important conclusion for workers, education and sophistication will likely be hallmarks of tomorrow's jobs. In this regard, the report contends that the job marked is not being eliminated by technology but "restructured."

The analysis is similar to that in Friedman's The World is Flat. Friedman explained that globalization would be driven by the competitive advantage produced by lower cost labor. He also explained the integration of technology in facilitating job migration. An example was digital transmission of radiographic diagnostic test results  from America to interpreting physicians in markets such as India. Friedman posited that professional tasks such as this, research, drafting, and more could be accomplished by people in less-expensive labor markets. People often trained at the same North American colleges.

Friedman explained the simple economic truth that a radiologist can examine and interpret a fixed volume of "films" in an hour. If the radiologist (legal researcher, drafts-person, etc.) is in a market where cost of living is lower than the U.S., and in which resulting wages are lower than the U.S., then the cost for interpreting each film is likewise lower. This illustrated the impact of technology (digitizing and transmitting the images across the world for interpretation) on globalizing the economy and professional service delivery. 

Friedman has the analysis correct in that regard, jobs shifting to foreign professionals, as owners seek to minimize cost and maximize profit. But, similarly, the shift is as likely to be from American jobs to technology as it is to be from American jobs to Indian jobs. Friedman explained that for jobs moving from country to country the "hands-on" occupations would be less likely to move. That they are less likely does not mean that the cannot or will not, but perhaps they will move with less frequency and later in the adaptation (technological revolution) process. 

For example, it is entirely plausible to see MRI data transmitted from an Eastern Time Zone hospital at 10:00 pm to a radiologist in India for interpretation during her normal business day. But, it is less plausible to see the treating physician in the Eastern Time Zone so readily displaced. The patient in New York perhaps has little interest in where the radiologist is located, but will likely prefer to have the treating physician wander into the patient's hospital room for discussion and explanation. While telemedicine is increasingly accepted, I foresee most still wanting an in-person visit when hospitalized. 

The radiologist (interpretive) position seems more prone to Friedmans' globalization paradigm than the treating physician. And, perhaps the telemedicine paradigm described supports that long-distance follow-up or supportive medicine might be more likely exported than the in-patient hospital care?

The same analysis is likely worthwhile regarding displacement by technology. If a computer can be programmed to break all of the digital elements of an MRI down, and to analyze those bits regarding presence, severity, etc. of some anomaly (herniated disc, tumor, etc.), the patient is less likely to even notice the absence of the radiologist that is replaced. But people will notice if the treating physician is replaced with some computer-generated Dr. Siri reminiscent of the intelligence of the Hal 9000 in 2001 A Space Odyssey

Friedman suggested a decade ago that economic success may be predicated in the future on you being the worker that actually interacts with other human beings. That is, he sees a strong future in being that treating physician, but less in being the local radiologist. The analysis he provided in 2005 is focused on the technology facilitating relocation of service provision (beaming that radiology to India for interpretation). But, that analysis may be as valid in terms of the shifting of jobs to artificial intelligence and robotics instead of to India.

The PwC report echoes some of this analysis. It suggests that "jobs in education, health care and social work are the least at risk of being replaced" by technology. In fact, the report concludes that jobs will persist, and workers will thrive, if they possess "critical thinking" and "emotional intelligence." This is consistent with the overall analysis. Those tasks that do not require such may be likely candidates for replacement by machines. 

In this regard, there may be hope for the bank teller yet. Though there is a population that rarely if ever visits an actual bank to see an actual person, there are those who find that in-person banking paradigm both comforting and familiar. I know people that will not bank online and even in this age possess no debit card for an ATM. They are inclined to know the people with whom they do business, and they prefer to do that business in person. They find value in the human relationship and interaction. 

American workers might take note of this critical point. Some people find value in human interaction. Thus, the bank teller jobs that do survive will likely be held by people that are genuinely interested in and that care about the customer. Those who sincerely provide customer service that a machine cannot will seemingly retain value. Perhaps the surly, dismissive, and rude will be the first service workers displaced? Will it be any different for lawyers, architects, accountants or judges?

Human displacement is coming. And, the development and deployment of technology is already all around us. Tech will come to us in the workplace as a benefit, a labor-saver, an improvement of the working world. It will work along side us and evolve. It will make our jobs easier, and through evolution or revolution it will come to replace many of us. It will be an intriguing transition that some, including the authors of the PwC report covered by CNN, see potentially changing our world dramatically. There are likely to be many who survive the evolution and thrive, but a fair few who are instead overwhelmed and displaced by it. 


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