April 25, 2018
Erik Loomis had an NYT column arguing for a government jobs guarantee by telling readers:
“Employment numbers may look solid now, but economists, physicists and industrial engineers all say that automation will, in the not-so-distant future, drive higher unemployment.”
This is not true. Productivity growth (a.k.a. “automation”) has been very weak for the last decade, averaging just over 1.0 percent annually. Most projections assume that productivity growth will remain slow, implying a relatively limited amount of displacement. (The Congressional Budget Office assumes growth of less than 1.8 percent annually over the next decade.)
Furthermore, if productivity growth did accelerate, there is no reason to believe that it will lead to large-scale unemployment. Productivity growth averaged 3.0 percent annually from 1947 to 1973. This period was one of low unemployment and rapid wage growth.
This doesn’t mean that Loomis is wrong to argue for a job guarantee, but the case should not rest on a massive surge in productivity growth leading to widespread unemployment. That is not a very plausible scenario.
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