Jan. 9, 2018
SOURCE: Scott A. Wolla – Economic Research, Federal Reserve Bank of St. Louis

"Robot Apocalypse" is a modern expression that refers to a fear of technological advance, but the anxiety goes back centuries.1 In 1589, Queen Elizabeth refused to grant the inventor of a mechanical knitting machine a patent for fear of putting manual knitters out of work.2 In the early 19th century, textile artisans called Luddites attempted to prevent or derail the mechanization of the textile industry. Even economists, such as John Maynard Keynes, have worried about "technological unemployment."3 The fear has not receded. A recent headline from Business Insider suggests that "machines may replace half of human jobs."4 Before your anxiety rises to uncomfortable levels, consider economist David Autor's warning that journalists tend to overstate the extent to which machines will substitute for human labor and ignore the positive aspects that benefit workers and create jobs.

. . . Automation does not mean that jobs with routine or repetitive tasks will simply disappear. When ATMs were introduced during the 1970s, many worried that they would replace bank branches and tellers and that employment would contract. Actually, because ATMs reduced the cost of operation, the number of bank branches increased. And while the number of tellers per branch decreased, because there were more branches, there were more employment opportunities for tellers. There were more tellers employed in 2010 than in 1980, and their duties have since expanded to include "relationship banking"—something ATMs cannot do.9 A similar effect has occurred in auto manufacturing: While much manual human labor has been replaced by automation, cars have become more complex, requiring more labor. As a result, it takes more human labor to produce a car now than in the past.