White Collar Jobs: The Robots Are Coming For Them

A bit of SEO in the headline. Of course robots are not coming for white collar jobs.

But software is.

This is something that is not much of a secret at this point, or at least it should not be. However, there are still some who insist that technology will, once again, create more jobs than it destroys.

An article in the New York Times seems to believe this is not necessarily the case.

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To start, people are completely unprepared for what is taking place. One of the reasons for this is that it is being hidden from them. We all heard the mantra from executives in the press that we are entering an age where people will work side-by-side with technology.

This is a complete misdirection.

It was rhetoric spewed to appease the workers. After all, management learned about the backlash when jobs were being outsourced a couple decades back. Thus, if they keep the reality of the situation quiet, workers might go along as if nothing is wrong.

COVID-19 did give the corporations some cover. Since the pandemic hit, the pace which automation is being implemented picked up. There is less need to be sly about it.

Robotic Process Automation (RPA) is a task automating process. The idea is not that jobs are replaced, just tasks that are redundant in nature. However, when enough of these are compiled, a job can be replaced.

In fact, the headlines regarding RPA often do not tell the entire story. This is how RPA firms tout their successes:

“Sprint Automates 50 Business Processes In Just Six Months.” (Possible translation: Sprint replaced 300 people in the billing department.)

“Dai-ichi Life Insurance Saves 132,000 Hours Annually” (Bye-bye, claims adjusters.)

“600% Productivity Gain for Credit Reporting Giant with R.P.A.” (Don’t let the door hit you, data analysts.)

Another reason this is so subtle is that it is not a major project being put together in many instances. Large AI projects require many departments involvement with a lot of cost. With RPA, it is minimal cost and only a couple people affected.

“It’s not a moonshot project like a lot of A.I., so companies are doing it like crazy,” Mr. Le Clair said. “With R.P.A., you can build a bot that costs $10,000 a year and take out two to four humans.”

For a company, that is a tremendous return. For $10,000 a year, more than $100K in salary and benefits are eliminated. If we spread this across a large multi-national corporation, we simply apply the rinse and repeat method.

All of this, while bad for employees, is great news for shareholders. The ability to automate ends up creating more with less. Since payroll is often one of the largest expenses a company has, significant reduction there will fall directly to the bottom line.

Unlike the robotic craze of the 80s and 90s, this one is targeting white collar workers. It is those with a college education, who work in accounting, legal, and payroll departments. We are well beyond the factory worker being automated.

The other challenge is, since we are dealing with software, advancement is much quicker and hits more people over time. In manufacturing, with robotics, it is one at a time. The process of employee replacement is slow. These devices have to be specially designed and require a lot of engineering.

Software, on the other hand, can be updated very quickly. Once certain tasks are contained in the software, more can be added. As these firms keep expanding their offerings, the number of tasks automated grows. This ends up meaning jobs.

Of course, it also starts working its way up the scale. As they become more adept, they can be programmed to work further up the decision tree. This means it is not just entry level people who are at risk.

Ultimately, we will see a situation where a large percentage of the task performed within an organization are automated.

But what about the idea of creating new jobs?

Research of what took place over the last 40 years dispels this notion. It was uncovered that technology is not really creating new jobs because it is only "so-so".

This shift may be related to the popularity of what they call “so-so automation” — technology that is just barely good enough to replace human workers, but not good enough to create new jobs or make companies significantly more productive.

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This makes total sense when we are looking at what took place over the last few decades. When it comes to jobs, outside those entirely new industries that formed, where has automation within existing industries ended up in new jobs? Or to take it one step further, where has it resulted in higher paying jobs being created?

I keep going back to a paper and then a book by David Graebar called "Bullshit Jobs" which detailed how we became very adept at creating jobs that basically meaningless and provide no value. Basically the product jobs were automated out, leaving us with a bunch of sales, admin, and other fields that offer little in terms of productivity. We basically kept creating work so people had a place to go.

Now, we are seeing many of those jobs automated out. Tesla sells its cars without dealerships i.e. sales people. Amazon does not have retail sales clerks or checkout people for most of its business. Advertising is being run by algorithms. And bots are handling the telemarketing for us.

In short, administrative positions that served little purpose other than push paper (information today) around are being automated out.

Could we be seeing capitalism actually correcting a decades long inefficiency that existed? If these people were not truly needed, why were they there? It was not for economic reasons.

Looking at the matter we can see how it is political and moral. Working is considered to be a virtuous way to be. Those who do not work are parasites. Of course, the same case could be made for the many jobs that exist and people fill yet add zero to the productivity of society.

No matter, whatever the reason, it looks like technology is going to correct the problem. And for this reason, do not expect more jobs to be created than are destroyed.

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