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Robots will build better jobs

15 November 2017 | Joe Davis

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Robots will build better jobs

Computers, artificial intelligence programs and robots are doing more and more of the work that used to be done by humans. Data from the US Bureau of Economic Analysis show that the amount of technology used per unit of production doubled between 2001 and 20151. There's no reason to believe this trend will slow any time soon.

What does that mean for jobs?

Studies conducted by the World Bank and the University of Oxford estimated that 69% of jobs in India, 77% in China2 and 47% in the United States could be automated within the next decade3, meaning hundreds of millions of people could find themselves out of work.

Those statistics paint a bleak picture of the future, but it's one I have to respectfully disagree with.

Tasks are not jobs

I find it hard to accept automation being a job-killer with unemployment in most of the industrialised economies currently below 5%. In fact, 75% to 85% of the world's economies are at or near full employment. This disconnect prompted me and my team to dig deeper into how all of us spend our time at work and how that has evolved with advances in technology.

In looking at nearly 1,000 occupations, we were able to classify the more than 18,000 activities people do into three broad categories totalling 41 tasks. We spend our collective workdays on:

  • Basic tasks including harvesting, moving objects and recording information;
  • Repetitive tasks including assembling, inspecting and processing information;
  • Advanced tasks including problem-solving, strategising and thinking creatively.

The tasks in that last group are uniquely human. Regardless of how smart computers become, humans will have a comparative advantage in performing them.

For example, IBM's supercomputer Watson knows every fact and figure about the Battle of Trenton (an important clash in the American war for independence). But Watson can't think creatively and inspire us the way my 11th-grade history teacher did when he walked us across that New Jersey battlefield in the dead of winter and told us to take off our shoes.

"There's a foot of snow on the ground," we protested.

"Gentlemen," he said, "the American volunteers who fought here that day didn't have shoes on their feet."

When I close my eyes, I can still feel the snow underneath my feet. And I've been a student of history ever since.

Automation is accelerating the evolution of human labour

As recently as 1850, the US workforce spent 80% of its time on basic tasks. There was little time for anything else. Think of a farmer spending almost all day in the fields. Today, thanks largely to mechanisation, only about 10% of the world's time is spent on basic tasks.

By 1940, with the rise of the office and the assembly line that created the middle class, 80% of the developed world's time was being spent on repetitive tasks. That work provided a good living for many, and it happened to be made up of tasks that technology has been automating away since then. To give you one example close to home for me: Mutual fund net asset values, once calculated by hand in leather-bound ledgers, are now determined more quickly and accurately by computer.

Today, we estimate that about 50% of our time is spent on advanced tasks. Art and engineering are among the professions that scored the highest for advanced tasks in our research, but every single occupation we looked at has moved up the task complexity ladder. And over the past 15 years, technological advances have been behind some of the occupations where the share of those tasks has been rising the fastest. They include auto mechanics, astronomy and desktop publishing.

To put it in perspective, some jobs now involve 20% more advanced-level tasks than they did 15 years ago. That's an additional full day of work each week devoted to uniquely human tasks. (The profession that has changed the least? Mine: economist. It truly is the dismal science.)

As you can see in the chart below, we expect the trend to accelerate; automation-proof tasks should occupy 80% of our time ten years from now.

Time humans spend doing uniquely human tasks

robots will build better jobs

Sources: Vanguard calculations based on data from McKinsey & Company, US Bureau of Labour Statistics, and US Department of Labour O*NET database.

More and better jobs

Automation anxiety isn't without merit. Jobs that are largely made up of repetitive tasks – those in the auto manufacturing industry, for example – have been shrinking for decades. And there will be new victims of automation in the future. It's hard to see, for example, how taxi drivers will fare in a world of self-driving cars.

But for the vast majority of workers, automation will continue to elevate – or, if you will, "upcycle" – their jobs by eliminating some of the tasks they don't want to do, allowing them to spend more time on engaging ones.

In an irony that will surprise pessimists, robots will make our work lives more human.

1 Sources: Vanguard calculations, based on US Bureau of Economic Analysis input-output tables and figures from Thomson Reuters Datastream.
2 Source: The World Bank, World Development Report 2016: Digital Dividends. Washington, DC: The World Bank, 2016.
3 Source: Carl Benedikt Frey and Michael A. Osborne, The Future of Employment: How Susceptible Are Jobs to Computerisation? Oxford, UK: University of Oxford, 2013.

Important information:

This article is directed at professional investors and should not be distributed to, or relied upon by, retail investors.

This article is designed only for use by, and is directed only at, persons resident in the UK. It is for educational purposes only.

This article was produced by The Vanguard Group, Inc. It is not a recommendation or solicitation to buy or sell investments.

The value of investments, and the income from them, may fall or rise and investors may get back less than they invested. Past performance is not a reliable indicator of future results.

The material contained in this article is not to be regarded as an offer to buy or sell or the solicitation of any offer to buy or sell securities in any jurisdiction where such an offer or solicitation is against the law, or to anyone to whom it is unlawful to make such an offer or solicitation, or if the person making the offer or solicitation is not qualified to do so.

Opinions expressed in this article are those of the author and may not be representative of Vanguard Asset Management, Ltd.

Issued by Vanguard Asset Management, Limited, which is authorised and regulated in the UK by the Financial Conduct Authority.

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