Machines and the Modern-Day Labor Market

New report discusses how the prevalence of automated machines impacts jobs, employee value and wage inequality.

Michael GibbsA new study from the University of Chicago Booth School of Business’ Michael Gibbs finds that technological advances, particularly in machines that can perform complex tasks, have begun to dramatically change jobs and labor markets. While this phenomenon has had an economic effect, it has also reprioritized which qualities are most important in a valuable employee. Many analytical, social and creative skills cannot be replicated by machines, and therefore make a strong case for a continued need for human workers.

The labor market has become polarized: while middle-skill jobs become increasingly automated, high-skill jobs that require a combination of cognitive skills, creative acumen and leadership expertise have not been affected. Similarly, low-skill jobs that require customer service or rely on teamwork have not been as drastically changed by automated systems. Therefore, it is the middle-skill, routine occupations that have been decimated by the technological revolution.

For example, certain aspects of the medical field have been impacted by the popularity of automated machines. Many diagnostic tests, nursing tasks and surgical tools have become automated by complex machines and programs. However, certain jobs simply cannot be replicated by machines. A nurse’s interaction with his or her patients is invaluable and impossible to effectively replicate. Similarly, while machines can assist with tasks before, during and after a surgery, a machine cannot replace a skilled, human surgeon.

Gibbs’ study suggests that this “hollowing-out” of middle-skill, routine jobs has a drastic impact on wage inequality. As middle-skill opportunities shrink, giving rise to high and low-skill jobs, wages also become either high or low. This disparity has already impacted the economy and will continue to change the labor market’s landscape.

Automation in the workforce naturally impacts current employees, but students and job-seekers should take heed of the patterns that have emerged. Since the jobs that are harder to automate involve creativity, cognition and social skills, job-seekers should develop these intangible qualities to make themselves more valuable to potential employers.

On the other hand, Gibbs suggests that future research and legislation should focus on how technology and robotics could augment human creativity and cognition. Such research could enhance artificial intelligence and make robots even more common and valuable to the labor market. Although such significant technological advances would only increase labor market polarization and wage inequality, it would pave the way for the future of effective machinery.