Average is over: Future of work

I suppose that it started with Beyond 2000 and today I always click on the Twitter links to stories about technology and how it is shaping the future. So, speaking at a leadership event hosted for first-year students, I thought the natural choice is to talk about the future of work. There is a lot of stuff out there on the internet and I decided to anchor the story with Tyler Cowan's new book Average is over. But this is not a book review, it is some of my thoughts, inspired by the book and a bunch of other sources.

I started drawing on a piece called Better than human, in Wired magazine: suppose that before the end of the century 7 out of 10 people will lose their jobs. In the early 19th century 70% of American workers lived on farms and today automation has eliminated all but 1% of their jobs. This will happen again on farms, in factories and to white collar jobs. It is driven by globalisation and what Cowan calls the increasing productivity of intelligent machines.

Before we get to what this means in terms of job polarisation, inequality and average being over, lots of people need some convincing about the technology. The internet is awash with interesting sites an stories:

• The blog RobotEnomics has categories on AI, driverless cars, drones, the machine economy.
• For the possible future of manufacturing have a look at the factory for Tesla's model S.
• For logistics have a look at these Kiva robots at work (the telling part is how personal it gets but the people are referred to as "warehouse associates"). PS. We already know that working for Amazon is no picnic, but even those jobs are clearly in danger.
• And it is not only large-scale manufacturing or distribution processes that are being changed by technology. Have a look at Baxter. He is designed to work alongside people, is easy to train and relatively cheap. Get Baxter and a 3D printer and traditional blue collar jobs are changing.
• And then there is iRobot's Ava 500 robot: "telepresence-on-a-stick". I could send it to a few of my meetings.

At a very basic level the point is that in the future we need to work with intelligent machines and that makes for the importance of education and training.

The Wired article breaks down the changes in the workplace of the future into four parts:

• Current jobs that humans cannot do, but machines can: think of making a computer chip, or internet search, or high-frequency trading.
• Jobs that humans do today, but machines will eventually do better: think of auto pilots, computerised mortgage appraisal, x-ray analysis, pretrial evidence gathering, telemarketing.
• Jobs that only humans will be able to do, at first: the advances lie in speech recognition, Watson winning at Jeopardy, algorithms writing like journalists and deciding what movies should be made.
• Robot jobs that we cannot imagine yet.

Average is over emphasises that we are not in a race against machines but with them. The key question is whether you will be good at working with intelligent machines. Cowan's best examples are from the world of free-style chess - humans have to decide on the openings and strategy but software is used for tactical play, humans have to look for the gaps or turning points in the game, but they use the software to play out the probabilities many moves deep. The future belongs to effective man-machine teams. But he thinks that does not mean that everyone has to learn to write code. Only that you will have to understand how the systems work and what their failings are likely to be.

This has any number of implications for everything (as a scary side note, read Noah Smith's post on drones and the end of the age of the gun), but for the future of work it means futher polarisation. It means pressure on middle-skill, middle-wage jobs. A lot has been written about this already, so I am only going to give a few links:

• A recent Briefing piece in The Economist puts it best: The onrushing wave.
• Autor and Dorn in NYT: How technology wrecks the middle class.
• Boehm at VoxEU: Job polarisation and the decline of middle-class workers' wages.
• Tyson at Project Syndicate: Intelligent machines and displaced workers.
• Flowers at FiveThirtyEight: The shift from low-wage worker to robot worker.

And the end result is likely to be more inquality. Owners of capital and supermanagers will have a greater share of wealth (Piketty, again!).

In the book Cowan goes on to explain who will prosper in the new wold. You can read the short version on the NYT Opinionator blog.

• If education and training is everything for working with intelligent machines, then open education will benefit the conscientious.
• People who listen to computers will benefit: from recommending web pages, to products, to partners on dating sites etc., computers can deal with more data and parse out better decisions that most of us who go with our gut. And your smart phone will push this info to you.
• If you have the human touch to manage and motivate. We still need people for that.

In the book he also proposes other ways in which people will deal with this changing world of under-employment and lower incomes. Amongst other things he hopes that they will move to live in more affordable places and waste less money on useless stuff.

But before we get to the future I still want to write posts about what this all means for higher education and for Economics. It really is a thought-provoking book.