Routine jobs are disappearing, pushing less educated workers toward either lower-paying non-routine jobs, unemployment, or non-participation in the labor market.
The automation of routine work by technology is partially responsible, though its role is relatively small, according to a paper [paywalled] published last month through the US National Bureau of Economic Research.
The paper, "Disappearing Routine Jobs: Who, How, and Why?", coauthored by Guido Matias Cortes, Nir Jaimovich, and Henry E Siu, attributes about one third of the decline in routine employment over the past four decades to changes in the demographic groups with a propensity either for routine manual labor or for routine cognitive labor, namely young to prime-age men (20-49) with low levels of education and young to prime-age women (20-49) with intermediate levels of education.
Routine occupations employed about 40 per cent of the working-age population in the US in 1979, according to the paper. That figure was stable for about a decade and then declined steadily to reach about 31 per cent in 2014.
In a related paper last year, the authors described the trend as the polarization of the labor market, with middle-wage occupations shrinking as high- and low-wage jobs increase. For workers left without jobs, accepting lower-wage work presumably is easier than retraining to pursue a position that requires high-level skills.
The researchers caution that other factors not evaluated in the study, such as outsourcing, trade, and changes in policies, may play a role in affecting labor market participation.
While demographic change might play a larger role in employment trends, automation is more visible and arguably more relevant because it can be more easily shaped through industry and government involvement. Such action is precisely what motivated the White House last month to release a report titled "Artificial Intelligence, Automation, and the Economy."
While AI and the automation it enables may be overhyped, the marketing hyperbole does not invalidate the consequences of deploying automated systems. Last week, The Mainichi, a news publication based in Japan, reported that Fukoku Mutual Life Insurance plans to replace 34 contract workers from a group of 47 in the months ahead with an AI system, IBM's Watson.
The insurance company, in a press release, said it expects Watson will improve its claims processing and document coding efficiency by 30 per cent.
The Mainichi said Fukoku will pay IBM 200 million yen (US$1.7m) to install the system and about 15 million yen (US$128,000) in annual maintenance fees, while saving 140 million yen (US$1.19m) annually that would have otherwise gone toward salaries.
IBM did not immediate respond to a request for comment.
Meanwhile, Foxconn, which assembles the iPhone along with other devices, is working to automate its production lines as much as possible. Digitimes reports that the contract manufacturing firm has some 40,000 Foxbot industrial robots and is adding more at a rate of about 10,000 a year. ®