Study: China Trade, Not Automation, Destroying U.S. Jobs

Left-leaning think tank finds 'trade shock' eliminated four times more jobs than robots

Despite concerns that the robots are coming for our jobs, automation is responsible for only a fourth as many jobs lost as trade with China since the turn of the century, according to a report released Wednesday.

The left-leaning Economic Policy Institute analyzed recent research by economists Daron Acemoglu, of the Massachusetts Institute of Technology, and Pascual Restrepo, of Boston University, and concluded that automation is a sideshow compared to the bigger causes of job loss and wage stagnation.

“Studies that attempt to estimate the number of jobs that will be potentially lost to automation in the future never seem to take into account automation’s positive effects on employment.”

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“Studies that attempt to estimate the number of jobs that will be potentially lost to automation in the future never seem to take into account automation’s positive effects on employment,” study co-author Josh Bivens said in a prepared statement. “The invention of the automobile eliminated jobs in the horse-drawn carriage industry, but it led to new jobs in the repair and sales of autos, as well as the construction of highways. There is no evidence that future automation will somehow be different.”

The report indicates that the simulated effects of automation project an annual job loss total of about 40,000. Job loss from the “China trade shock” is about four times as high. The robot displacement Acemoglu and Restrepo found amount to a decline of .34 percentage points in the share of the work-age population with jobs, according to the Economic Policy Institute.

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Alan Tonelson, an independent economic policy analyst and  longtime trade critic, said the report’s job-loss estimates as a result of China trade are plausible.

[lz_table title=”Productivity Slowing” source=”Economic Policy Institute”]Average annual productivity gains
|Years,Productivity Gains

“That’s certainly on the low end,” he said.

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Tonelson, who writes about the economy at the RealityChek blog, told LifeZette that other economic data support the conclusion of the Economic Policy Institute that productivity gains are slowing.

“It certainly does track with the idea that capital spending has been relatively weak,” he said.

The report argues that there is no evidence that automation in the past 10 to 15 years has increased overall joblessness. The report points to data showing that automation increased rapidly in the late 1990s at the same time that America experienced the fastest across-the-board wage growth in a generation. But indicators of automation fell during two periods of stagnant or declining wage growth — from 1973 to 1995 and from 2002 to today.

In the last decade, according to the report, the pace of automation has slowed along with declining rates of productivity and investment in software and information equipment.

Those statistics, the authors argue, do not suggest America is on the cusp of a robot takeover.

“Rather than wringing our hands over possible problems that are more than a decade away, policymakers need to focus on addressing the decades-long crisis of wage stagnation by creating good jobs and supporting wage growth,” co-author Lawrence Mishel said in a statement.

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Tonelson said it is a reasonable conclusion that automation in manufacturing improves efficiency, which leads to job growth in other sectors.

“It could be creating jobs in manufacturing itself,” he said.

But Tonelson said he thinks the Economic Policy Institute is too quick to dismiss concerns about the potential for robots and artificial intelligence to displace millions of workers in the future.

“It is possible there’s this watershed that we’re rapidly approaching,” he said.

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