America lost 2.4 million manufacturing jobs to Chinese outsourcing from 2001 to 2013, according to estimates by the nonpartisan Economic Policy Institute think tank. But a new report that just emerged from the World Economic Forum in Davos, Switzerland, predicts we will see robots eliminate 5.1 million jobs globally over the next five years.
Twice as many jobs as China took from us.
In half the time it took China to take them.
Gee, robots really are more efficient!
WEF calls the phenomenon of robots taking over jobs once done by humans the "Fourth Industrial Revolution." (The first through third revolutions, by the way, refer to the invention of machine tools in the mid-18th to mid-19th centuries, followed immediately by the introduction of mass production in factories, and the technological-industrial revolution of the 1990s and early 2000s, respectively.)
According to the 366 companies surveyed in WEF's report -- employing 13 million workers across 13 of the world's largest economies (plus samplings from two broader regions) -- the Fourth Industrial Revolution will comprise many parts. These will include new robots "with enhanced senses, dexterity, and intelligence [that] can be more practical than human labour in manufacturing," as well as "artificial intelligence" and "machine learning," and also "advances in manufacturing technology" such as 3D printing. To a greater or a lesser extent, all of these factors are expected to noticeably lessen demand for human labor over as early as just the next few years.
Media reports are homing in on the robots angle, and characterizing this latest industrial revolution as the "robot revolution." But perhaps the most surprising thing is that the changes WEF describes won't be entirely industrial -- or even always robotic.
A robot war on the middle class
Turns out, the "robots" that WEF is warning about don't all resemble R2-D2. At least some of them are intelligent machines of the noncorporeal variety.
According to WEF's predictions, trends in mobile Internet, cloud computing, big data, and the Internet of Things are combining into "a perfect storm of technological trends." While these trends threaten jobs in many heavy industries -- manufacturing, construction, and mining, for example -- they're a particular threat to white-collar office jobs. WEF refers to the big trend as automation. In conjunction with robots, I'm going to call it "automation and automatons."
Let's take a look at the automatons -- real-life robots -- first. To see what's happening here, you need look no further than Amazon.com (NASDAQ: AMZN). After first experimenting with the use of Kiva robots to move boxes around its fulfillment centers, Amazon found the robots so useful that it bought the company that made them. Then Amazon deployed 1,000 Kivas to work its warehouses. Then it ramped that to 10,000 robotic workers. Then 15,000. At last report, Amazon had 30,000 robots working for it.
To put that in context, Amazon only has 90,000 humans working in its warehouses. As of today, one in every four full-time Amazon warehouse workers... is a robot.
So automatons are quickly taking over the warehouses at Amazon, and running the assembly lines at Toyota and other heavy industrialists as well. But pure computer automation is an even bigger threat to human jobs. If you think of all the data entry, data monitoring, and number-crunching tasks involved in a field like healthcare (where, against all expectations, WEF says jobs will be lost over the next five years), and put this in the context of computers that can process data faster, this makes sense. It explains both why Amazon spent $775 million to buy Kiva four years ago and why its Amazon Web Services unit is the company's most profitable business.
None of this will come as much comfort to the millions of folks who thought that by pursuing a college degree and a white-collar job, they might escape the plague of blue-collar manufacturing jobs being exported abroad. Instead, WEF forecasts nearly 5% job losses among office and administrative workers over the next five years. That's a near-1% shrinkage in the entire global office and administrative workforce. Every year. For five years.
Of course, WEF's forecast only goes out five years -- so the job losses may not end there.
Popping the bubble
And that's not even the worst part. The most worrisome part of WEF's report is that it challenges the common wisdom that while change brings creative destruction to many "old" jobs, even more "new" jobs are created. WEF begs to differ.
Over the next five years, warns the report, global employment will not rise, but rather fall by 0.5%. 7.1 million jobs will be lost globally because of changes in technology. But only 2 million new jobs will be created as advancements in tech reveal new uses for the tech, and open up new opportunities for displaced workers.
The net effect: 5.1 million jobs lost. And no new jobs to replace them.
Domo arigato for nothing, Mr. Roboto.