Computers Reshaping Global Job Market, for Better and Worse: Paper

Automation and increasingly sophisticated computers have boosted demand for both highly educated and low-skilled workers around the globe, while eroding demand for middle-skilled jobs, according to research to be presented to global central bankers on Friday.

But only the highly educated workers are benefiting through higher wages, wrote MIT professor David Autor in the paper prepared for a central banking conference in Jackson Hole, Wyoming. Middle- and lower-skilled workers are seeing their wages decline.

That is in part because as middle-skilled jobs dry up, those workers are more likely to seek lower-skilled jobs, boosting the pool of available labor and putting downward pressure on wages.

"(W)hile computerization has strongly contributed to employment polarization, we would not generally expect these employment changes to culminate in wage polarization except in tight labor markets," Autor wrote.

Any long-term strategy to take advantage of advances in computers should rely heavily on investments in human capital to produce "skills that are complemented rather than substituted by technology," he said.

Recounting the long history of laborers vilifying technological advances, Autor argues that most such narratives underestimate the fact that computers often complement rather than replace the jobs of higher-skilled workers.

People with skills that are easily replaced by machines, such as 19th-century textile workers, do lose their jobs.

In recent years computer engineers have pushed computers farther into territory formerly considered to be human-only, like driving a car.

Still, computer-driven job polarization has a natural limit, Autor argues. For some jobs, such as plumbers or medical technicians who take blood samples, routine tasks are too intertwined with those requiring interpersonal and other human skills to be easily replaced.

"I expect that a significant stratum of middle skill, non-college jobs combining specific vocational skills with foundational middle skills - literacy, numeracy, adaptability, problem-solving and common sense - will persist in coming decades," Autor wrote.

Autor, who has been studying technology and its impact on jobs since before the dot-com bubble burst, notes that some economists have pointed to the weak U.S. labor market since the 2000s as evidence of the adverse impact of computerization.

Such modern-day Luddites are mistaken, he suggested. U.S. investment in computers, which had been increasing strongly, dropped just as labor demand also fell, exactly the opposite of what ought to happen if technology is replacing labor.

More likely, he said, globalization is to blame, hurting demand for domestic labor and, like technology, helping to reshape the labor landscape. While in the long run both globalization and technology should in theory benefit the economy, he wrote, their effects are "frequently slow, costly, and disruptive."

© Thomson Reuters 2014