Is This Time Different? The Opportunities and Challenges of Artificial Intelligence Jason Furman Chairman, Council of Economic Advisers The National Academies of Sciences, Engineering, and Medicine Washington, DC December 12, 2016
The Recent Concern Over Robots Taking Our Jobs CNN Money, January 2016 1
People Were Also Worried in 1980 New York Times, September 1980 2
And in 1960 Wall Street Journal, July 1960 3
And in 1935 Washington Post, January 1935 4
And in 1812 Reward Poster for Luddite Attacks Near Leeds, March 1812 5
The Unemployment Rate Has Been Roughly Trendless Since We Have Measured It Percent of Labor Force 28 24 Unemployment Rate, 1901-2016 Nov-16 20 16 12 8 Average, 1901-2016 4 0 1901 1921 1941 1961 1981 2001 Note: Data prior to 1929 are annual rates for individuals 14 and older. Data from 1929 to 1947 are monthly rates for individuals 16 and older from the National Bureau of Economic Research. Data from 1948 to 2016 are monthly rates for individuals 16 and older derived from the Current Population Survey. Source: Census Bureau; National Bureau of Economic Research; Bureau of Labor Statistics, Current Population Survey; CEA calculations. 6
But We Have Become Richer in Material Goods 2010 U.S. Dollars 60,000 Canada Germany 50,000 Japan United States 40,000 Real GDP per Capita, G-7 Countries France Italy United Kingdom 30,000 20,000 10,000 0 1950 1960 1970 1980 1990 2000 2010 Note: Real GDP per capita using 2010 prices and exchange rates. Source: National sources via Haver Analytics. 7
And Also Richer in Leisure Hours 2,400 2,200 2,000 1,800 Total Annual Hours Worked per Worker, G-7 Countries 1,600 United States United Kingdom 1,400 Canada France 1,200 Italy Japan Germany 1,000 1950 1960 1970 1980 1990 2000 2010 Source: Organisation for Economic Co-operation and Development. 8
Our Recent Concern is Too Little Productivity Growth, Not Too Much Percent, Annual Rate 3.0 2.5 2.0 1.5 1.0 0.5 0.0 Labor Productivity Growth, G-7 Countries 1995-2005 2005-2015 -0.5 United States Canada Japan Germany France United Kingdom Italy Source: Conference Board, Total Economy Database; CEA calculations. 9
Robots Have Helped Productivity, But Not Enough to Offset Other Forces Slowing Productivity Growth Estimated Worldwide Annual Supply of Industrial Robots, 2004-2014 Thousands of Units 280 240 229 200 160 120 97 120 112 114 113 121 166 159 178 80 60 40 0 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Source: International Federation for Robotics, World Robotics 2015. 10
The Probability of an Occupation s Automation Varies Dramatically Across the Wage Spectrum 90 80 70 60 50 40 30 20 10 0 Probability of Automation by an Occupation's Median Hourly Wage Median Probability of Automation, Percent 100 83 31 Less than 20 Dollars 20 to 40 Dollars More than 40 Dollars Median Hourly Wage in 2010 4 Source: Bureau of Labor Statistics, Occupational Employment Statistics; Frey and Osborne (2013); CEA calculations. 11
Similarly, It Varies Across the Educational Attainment Spectrum 45 40 35 30 25 20 15 10 Share of Jobs with Highly Automatable Skills, by Education Percent 50 5 0 44 19 Less than High School High School Degree or Equivalent 8 Trade School Certificate 6 Associates Degree 1 0 Bachelors Degree Graduate Degree Source: Arntz, Gregory, and Zierahn (2016) calculations based on the Survey of Adult Skills (PIAAC) 2012. 12
High and Rising Inequality is a Problem Across Major Advanced Economies, But Particularly for the United States Percent 20 18 16 Share of Income Earned by Top 1 Percent, G-7 Countries United States United Kingdom Canada France Italy Japan Germany 2015 14 12 10 8 6 4 1975 1980 1985 1990 1995 2000 2005 2010 2015 Source: World Wealth and Income Database 13
The U.S. Decline in Prime-Age Male Labor Force Has Been Steeper Than in Almost Every Other Advanced Economy Percent 100 95 90 85 80 75 Prime-Age Male Labor Force Participation Rates Across the OECD 2015 1990 70 Israel Italy United States Norway Finland Ireland Belgium Australia Turkey Poland Denmark Canada Korea Austria Portugal United Chile Hungary Netherlands New Zealand Estonia France Germany Spain Slovenia Greece Sweden Slovak Republic Iceland Luxembourg Mexico Czech Republic Japan Switzerland Source: Organisation for Economic Co-operation and Development. 14
Policy Implications We Need More AI 1. Investing in Basic Research 2. Fostering a Workforce to Develop AI 3. Increasing Competition 4. Supporting Privacy 5. Promoting Cybersecurity We Need to Help Workers Thrive With More AI 1. Educating Youth for the Jobs of the Future 2. Expanding Access to Training and Re-Training 3. Empowering Workers and Job Seekers 4. Modernizing and Strengthening the Social Safety Net 5. Modernizing Tax and Economic Policy 15
Is This Time Different? The Opportunities and Challenges of Artificial Intelligence Jason Furman Chairman, Council of Economic Advisers The National Academies of Sciences, Engineering, and Medicine Washington, DC December 12, 2016