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Is Technology Innovation a Job Creator or Job Killer?

September 11, 2013

This week, the Information Technology & Innovation Foundation (ITIF) hosted a debate between ITIF’s President Robert Atkinson and Andrew McAfee, principal research scientist at the Center for Digital Business in the MIT Sloan School of Management and co-author of Race Against the Machine. The lively debate revolved around the impact of technology innovation on the U.S. labor market in an attempt to answer a complex question — is technology innovation a job creator or job killer?

Andrew McAfee argued technology innovation is leading to job loss and the pace will only speed up due to the rapid rate of technology innovation. In their recent book, Dr. McAfee and co-author Dr. Erik Brynjolfsson claim technology-driven productivity, specifically in the information technology and robotic fields, has reduced the need for middle-class workers in the well-paying manufacturing sector and is rapidly spilling over to knowledge-based fields (e.g., law, medicine).

According to Dr. McAfee, his data shows that the issue started during the industrial revolution, but has been rapidly increasing over the past decades due to rapid advances in information technology (e.g., Moore’s Law, personal computers, big data) and robotics. Originally, rapid technology-innovation affected mostly blue-collar and manufacturing workers. Due to the personal computer, however, the loss of jobs due to technology innovation is rapidly affecting most sectors including knowledge-based fields. Dr. McAfee used the example of online law resources and the super-computer Watson attending medical school as signs that robotics and information technology resources have started to become viable replacements for the human workforce in knowledge-based fields. Dr. McAfee contends that if not addressed properly, jobs across all sectors will be mostly automated and severe social stratification will occur.

To counter Dr. McAfee’s argument, Dr. Atkinson contends that technology does not lead to net job loss and that the U.S. actually needs faster, technology-based productivity growth. According to Dr. Atkinson, the U.S. has rarely seen increased productivity coupled with job loss. The most recent example of consecutive years of this phenomenon occurring was during the Great Depression. In fact, increased productivity and job growth are normally associated with each other in U.S. history.

Dr. Atkinson also argued that two things occur to the labor market when technology-based productivity growth occurs. First, firms hire more employees because they see higher product demand due to lower costs. Second, when looking at the economy as a whole, displaced workers move to new sectors of the economy to find employment. As technology innovation continues to automate certain process, workers will find jobs in sectors that are not or are unable to be automated. He went on to contend that U.S. policymakers and citizens should not fear technology innovation, but support it because it will increase quality of life and U.S. competitiveness.

ITIF also released an accompanying report that addresses the job creator versus job killer question.The report highlights several of Dr. Atkinson’s claims made during the debate and provides long-term data to support them. The report also calls for the development of a national productivity policy to support innovation-driven job creation.