FEATURE — Nearly 600 years ago Johannes Gutenberg invented the printing press and in so doing, sent thousands of hard-working scribes to the unemployment line. This was not the first or the last time new technology would replace human laborers. Today, massive John Deere tractors do the work formerly done by hundreds of farm workers, and they do it while the sole operator enjoys air conditioning, his favorite music and a mini-fridge.
In college, I worked alongside dozens of others sorting and loading packages at a shipping facility. Today, modern distribution warehouses with fully automated sorters and conveyor belts operate with hardly a human in sight.
Fears of technology destroying jobs have always accompanied its relentless march forward. In 1930 then-President Herbert Hoover publicly expressed concerns that rising technology was going to replace most jobs in America, leaving people helpless to support themselves. Yet, here we are in 2023 with a record number of people employed and an additional 9 million unfilled job listings.
There is significant economic buzz in our day surrounding the rapid emergence of Artificial Intelligence, or A.I. Stocks of companies expected to be at the forefront in this field have seen significant movement recently. Along with the excitement is the re-igniting of old fears that the American worker is about to be replaced, yet history shows that the opposite tends to be the case. Consider a few reasons why these fears have not materialized.
Powerful machinery did in fact replace large numbers of farm laborers, but in so doing it also made farms significantly more productive and cost efficient. This led to more food being produced at a lower cost. In Hoover’s day, the average family spent 30% of their income on food. Today they only spend 15%. Left with more discretionary income, Americans have improved their lifestyle by purchasing additional goods and services, often more luxurious ones.
As technology replaces jobs it creates more efficiencies that lead to higher profits. Those profits are used to expand business and create better-paying jobs, leading to higher spending across the economy. In my early college job, my employer required me to sort 1200 parcels per shift. The technology that replaced me moved significantly more items at a much lower cost, opening avenues for the economy to create many more jobs. I am reminded of this amazing growth almost every day when I see more boxes delivered to my front porch.
I do not look for AI to have a net negative effect on the job market. I believe development of AI will result in some lesser-paying jobs being replaced by many more higher-paying jobs as it creates new opportunities and greater economic efficiencies. Investors may want to identify those businesses that might lead the way in this new technology, as well as those who may benefit by implementing it.
The printing press was an amazing technology that cost a lot of people their jobs. But who can argue that in the process it created an enormous amount of new jobs and opportunities, far more than Guttenberg or anyone in his day ever imagined. I look for AI to do the same.
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