Artificial Intelligence Is Killing Jobs, Will Have ‘Large And Robust Negative Effects' On Labor Market: Study

Politicians like President Donald Trump often demonize trade deals and undocumented immigrants for their suspected downward pressure on labor and job supply, but a study published Tuesday by the National Bureau of Economic Research indicated that the economic threat of artificial intelligence may be far more serious.

With the introduction of one robot per 1,000 workers, the percent of the population employed could drop by between 0.18 and 0.34 percentage points, while wages could fall by between a quarter and a half of a percentage point, according to the study, by researchers at the Massachusetts Institute of Technology and Boston University.

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That may not sound like much, but, for perspective, Amazon.com added 15,000 robots to its 30,000-robot strong fulfillment center workforce between 2015 and 2016. The fast food restaurant Wendy’s announced plans in February to install ordering kiosks at 1,000 of its stores by the end of 2017. Even stock market traders aren’t immune, as investment management firm BlackRock Inc. has recently begun to shift its trade decision-making toward algorithmic and robotic stock pickers.

Greg Hayes, the chief executive of United Technologies—the parent of Carrier Corporation, where Trump erroneously claimed to have saved 1,100 jobs from outsourcing to plants in Mexico—has also been on board with this change in the face of the workforce. He said on CNBC in December that the Indianapolis Carrier plant in question would soon “automate to drive the cost down so that we can continue to be competitive.”

“Now is it as cheap as moving to Mexico with lower cost labor? No. But we will make that plant competitive just because we'll make the capital investments there,” Hayes told “Mad Money” host Jim Cramer. “But what that ultimately means is there will be fewer jobs.”

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Using previous research forecasting the spread of robots throughout the U.S. and the impact of the increasing use of artificial intelligence on the labor market from 1990 to 2007, the study’s authors expected employment to fall by between 0.54 and 1.76 percentage points between 2015 and 2025, and projected a general wage growth decline of between 0.75 and 2.6 percentage points over the same period.

“We view our paper as a first step in a comprehensive evaluation of how robots will affect, and are already affecting, the labor market equilibrium,” the researchers wrote, adding that they factored in “the creation of jobs in other industries and occupations” in response to the increasing prevalence of artificial intelligence.