Automation is changing the workforce, an executive at the Federal Reserve Bank of San Francisco said Friday at a conference on the future of work.
Sylvain Leduc, executive vice president and director of economic research at the bank asked if workers are going to be able navigate this future.
Leduc said employers seem to be automating rather than raising wages, though the change may not be all that prevalent yet.
William Beach, commissioner of the U.S. Bureau of Labor Statistics, said:
“We are in a world of enormous change.”
“It has been changing rapidly around us.”
The two pillars of change are globalization and The Great Recession, Beach said, adding that the Internet is a disruptor, which is lowering prices.
Economists say that can be good for consumers who pay those lower prices, helping them improve their standard of living.
But how well are workers doing in terms of productivity, which also affects standards of living and Beach said affects almost all of life. According to Lucy Eldridge, an associate commissioner with the Bureau of Labor Statistics:
“We have seen a slowdown in productivity growth (in the U.S.).”
Productivity is how much a worker produces every hour, according to economists.
From 1990 to 2000, productivity among private, non-farm firms grew at a 2.3 percent rate followed by a jump between 2000 and 2007 to 2.8 percent, Eldridge said.
But since 2007, productivity growth has slipped to 1.8 percent. This means living standards may deteriorate as firms can afford to pay less when workers produce less.
Stanford University economist Nicholas Bloom offered a possible solution to the productivity problem.
Good management is the answer, Bloom said, adding that management is a type of technology.
He said good management is highly correlated with productivity growth as well as other positive business characteristics. Firms that manage well have higher profits and are more likely to innovate.
Well-managed firms use less energy, lowering carbon pollution and all forms of pollution, he said.
According to his research, well-run companies have less inequality among employees.
“There’s been a huge focus on inequality.”
Many claim aggressive management enriches managers, raising inequality, Bloom said. But he found better-run companies pay workers more at all levels.
Susan Athey, economics of technology professor at Stanford University and the final speaker said for workers technology can be a good thing.
She said technology can solve problems rather than just something that destroys jobs. AI can help businesses reprioritize resources and it can augment physical labor. Augmenting will be a big deal, according to Athey.
“There’s a lot of room for AI (artificial intelligence) in the world.”
Unfortunately, using AI requires businesses to overcome a lot of obstacles, which may be why productivity has not increased as a result of AI, she said.