The Myth of the Myth of Technological Unemployment

Over at Slate, Matt Yglesias has a post titled ‘The Myth of Technological Unemployment‘ accompanied by a graph showing that hours worked in the US have been rising and falling in lockstep with output. He writes

Machines are replacing workers, in other words, but they’ve been doing so since the cotton gin and the spinning jenny.

Which is absolutely true and completely uncontroversial. It’s also true that previous waves of automation have not, in the long run, led to mass unemployment. But is that still true? Here’s a graph (drawn with the assistance of my trusty assistant FRED) similar to Yglesias’s, but concentrating on US manufacturing output and jobs over the past 40 years.

FRED Graph

That really looks like technological unemployment to me, especially when manufacturing employment is also on the decline in Germany and Japan, in China, and around the world. When this is the case, it means that employment changes are not due to jobs moving around the world in search of cheap human labor; they’re due to machine labor becoming at least as capable as and cheaper than humans.

There’s evidence that the same phenomenon – rising output but falling employment – is also occurring the US wireless industry, at least in part because of “gains in productivity and the fact that more customers were going online to choose their phone and pay their bills, reducing the need for more call-center workers and salespeople.” Again, that looks like technological unemployment.

How’s the US economy as a whole doing? Take it away, FRED:

FRED Graph

We are still adding jobs and working more hours in non-recession years, but not as quickly as we used to. Since the end of the 2001 recession real GDP has increased by just about 20%. The number of hours worked, however, has increased by only 2.8% over that same time, and the total number of jobs by 1.9%. Those latter two numbers are pretty close to zero. Is it so hard to believe that a realistic future combination of fast automation and relatively slow GDP growth could cause them to turn negative?

I don’t find that scenario implausible at all. Technological employment has not happened economy-wide yet, but as the facts change — as technology’s role in the economy shifts — shouldn’t we change our opinions about what constitutes a myth?