MNI INTERVIEW: Fed's Harker: Automation Not a Job Killer

--But Technology Might Widen Inequality

By Jean Yung

     WASHINGTON (MNI) - The impact of automation on jobs could be neutral over

the long run, but machine learning and other new technologies threaten to

exacerbate income inequalities and leave less advantaged workers behind,

Philadelphia Federal Reserve Bank president Pat Harker told MNI in an interview.

     A new report co-authored by Harker and published Wednesday by the

Philadelphia Fed urges policymakers, companies and educational institutions to

work together to smooth large-scale workforce transitions over coming years.

     It finds that with sufficient economic growth and productivity gains, there

could be enough new jobs created to accommodate workers displaced by automation,

but the benefits of the new technology would be unequally distributed across

populations and geographies.

     "There has been a lot of fear and anxiety about the role of automation,"

and while the focus has often been on job destruction, "technology also creates

opportunities and new jobs," Harker said.

     "We need to be proactive in thinking about what are the skills for the

future and how do we help people get those skills, particularly those groups

that are particularly vulnerable to technological changes."

     --JOB LOSSES

     Roughly 25 million jobs, about 18% of the U.S. total, are at high risk of

being replaced by machines in the next decade, and another 30% percent are at

some risk, with potentially significant changes to tasks and skills required of

workers, according to the research.

     In the Philadelphia Fed district, a third or more of the high-risk

occupations like cashiers, tellers and telemarketers could be automated in the

next decade. These jobs are highly concentrated among female, minority, younger,

and some older workers, groups that are already in vulnerable in the labor

market.

     But the authors stress adoption of new technology doesn't happen overnight.

     "Some will be automated over the next decade. Some might not be automated

at all. There are economic, legal and social considerations," said co-author Lei

Ding, economic adviser at the Philadelphia Fed, adding that estimates of future

job losses are "just a potential."

     The current tight labor market also changes the calculus for businesses,

Harker added. "A lack of skilled workers will raise the bar on how much firms

are willing to spend on technology," especially if some workers are also

unwilling to move to where jobs are, as data suggests.

     --JOB GAINS

     Over the longer run, automation also creates new jobs to complement tasks

taken over by machines, while productivity gains as a result of technological

progress could feed demand for workers.

     "Automation has the potential to improve productivity, increase income, and

when people have more to spend, that will create new demand," Ding said. Better

paid workers may be more keen to eat out and go on vacation, for example,

driving job creation in leisure and hospitality.

     However, the adoption of technology in certain sectors may not translate to

faster economic growth, Harker cautioned.

     "Eighty percent of the economy is services. If we're going to see an

overall large increase in productivity in the economy as a whole, you do have to

confront the service sector." And in health care, one of the largest sectors in

the economy, "we really haven't seen that yet," Harker said.

     --LOCAL SOLUTIONS

     The study highlights "the need for action, community by community" to help

mitigate the impact on job losers, Harker said.

     Employment growth is unlikely to be evenly distributed among geographic

regions and is more likely to be concentrated in higher skill professions. The

challenge is to connect displaced workers with new opportunities.

     "At the national level, the best thing we can do is to put in place support

for local communities," Harker said. "There's no one size fits all."

--MNI Washington Bureau; +1 202-371-2121; email: jean.yung@marketnews.com

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