Business Impact

Actually, Steve Mnuchin, Robots Have Already Affected the U.S. Labor Market

The suggestion that job loss due to automation is 50 years off is laughable—and there’s finally some data to prove it.

The idea that automation isn’t harming American jobs is plainly false, according to a newly published analysis of the impact of robots on the labor force.

According to Treasury Secretary Steve Mnuchin, automation isn’t about to displace American workers. Speaking to Axios last week, he said that the phenomenon is “not even on our radar screen,” adding that such effects are “50 to 100 more years" away.

Sadly for Mnuchin, that is simply not true: the effect has already been playing out for a number of years. But until now, there has been little evidence to quantify exactly how many jobs have been affected by the arrival of robots in factories and warehouses around the country.

Now, as if on cue, a new working paper published by the National Bureau of Economic Research traces the effects of workplace robots on the labor market. It provides us with some hard numbers to show how automation is affecting unemployment and wages.

The research, carried out by Daron Acemoglu of MIT and Pascual Restrepo of Boston University, studied the effects of increased use of industrial robots between 1990 and 2007. Over that period, Acemoglu and Restrepo found that as many as 670,000 jobs were lost in local U.S. labor markets due to the arrival of robots, with manufacturing hit the hardest.

Adjusting for effects like globalization and demography, the analysis also shows that, on aggregate, an extra robot per thousand workers decreased employment by 5.6 workers and cut wages by around 0.5 percent. Those figures were worse for some specific areas outside of big cities.

Perhaps most important, though, is what this all means for the future. As Acemoglu and Restrepo note in their paper, there are still relatively few robots in the U.S. economy. While it’s difficult to accurately extrapolate their findings, the effects on employment and wages will be felt more acutely as robots continue to proliferate.

As Acemoglu told MIT Technology Review earlier this year, political leaders are “totally unprepared” to deal with this problem—something that Mnuchin’s comments demonstrate all too clearly.

(Read more: National Bureau of Economic Research, Axios, “How Technology Is Destroying Jobs,” “The Relentless Pace of Automation,” “Learning to Prosper in a Factory Town”)

Hear more about automation at EmTech MIT 2017.

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