Is AI a threat to Human Employment?

Merisha Subedi
Honors Economics
Susan Doty
Final Project Issue
12/11/2019

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 Table of Contents

Section One: Overview of the issue Page 3

Section Two: Underlying Economics Page 3-4
Section Three: Background of Experts Page 5
Background of Yes Page 5
Background of No Page 6
Section Four: Summary of Articles Page 7
Summary of Yes Page 7
Summary of No Page 8
Section Five: What’s missing from articles Page 9
What’s missing from Yes Page 9
What’s missing from No Page 9
Section Six: Informed Personal Opinion Page 10
Section Seven: Works Cited Page 11
Section Eight: Final Reflection Page 12

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Overview of the issue:
Machines have been replacing humans for many jobs, just as innovative farming equipment
replaced humans and horses during the industrial revolution. At present, AI is being so widely
used that it can completely transform the way modern societies work and live. The most
relevant example could be Siri or Google assistants which perform a variety of tasks for users.
Other example could be Tesla cars, where one car is connected to others and when one learns
something new, the information is transmitted to all other cars.
AI has the potential to change the whole face of employment sector. Some chain restaurants have
already shifted to self-ordering machines; a handful have experimented with robot-assisted
kitchens. A report conducted by WIPO(World Intellectual Property Organization) concluded that
there has been an enormous increase in the number of patent applications related to AI which
could indicate a switch from theoretical research to the practical application of AI technologies
in commercial market resulting in replacement of human labor. According to a study by Carl
Benedikt Frey and Michael A. Osborne, 47 percent of currently existing jobs are under the risk
of replacement by Artificial Intelligence. A study published in 2019 by Mark Muro, a senior
fellow at Brookings suggests that about 36 million Americans currently hold jobs that are
endangered to replacement by Artificial Intelligence which means that approximately 70% of
their tasks can soon be performed by Robots. Hence, he suggests that people need to upskill,
reskill or change jobs fast to be safe from replacement. Also, a Swiss Think Tank has warned
that AI could trigger fourth industrial revolution and displace more than half of the human
workforce by 2025. [ CITATION Mar19 \l 1033 ]
On the other hand, given that AI cannot conceptualize the unknown and is not creative enough,
some people believe that it will only improve the productivity of humans by freeing them from
repetitive tasks and giving them more time to be innovative. Despite forcing millions of people
out of jobs, AI will also create twice as many job opportunities in the same time period
according to WEF (World Economic Forum). The robotization of the workplace, artificial
intelligence and the improvement in technologies could create up to 133 million brand new jobs
for humans to handle.
Hence, advancements in the field of Artificial Intelligence has both positive and negative
impacts on the human workforce that we will discuss further in this paper.

Underlying economics:
Artificial intelligence will make a huge impact on the global economy. The GDP will go up
substantially (PWC estimates that AI will add $16 trillion to the worldwide GDP by 2030) due to
Artificial Intelligence. AI will enable better productivity since machines are faster than humans.
But the advancement in this field will also pose serious threats since the pace of development
will not be the same. Some developed countries will gain huge benefits, but other countries will
struggle to keep up with the pace which will in turn make the economic gap between the
countries even wider. The replacement of human jobs by Artificial Intelligence will also pose
serious issues within the country. People with routine jobs will be replaced by robots and people
with skills in technological field will be demanded more. This will increase income gap between
people within the country. [ CITATION How18 \l 1033 ]

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 In other ways, we can also describe AI as an alternative and complementary of humans in terms
of jobs. When more machines are produced which have better productivity than humans,
unskilled people in the workforce will lose their jobs. On the other hand, when the number of
robots employed in industries increase, the skilled people who can control those robots will have
plenty of jobs available to them. These relationships between number of robots and number of
jobs for Unskilled and skilled workers are shown in the figures below

Relations
hip between number of robots and number of workers

We can also represent the impact of AI on human jobs with the circular flow diagram where AI
is a competition to households. Households contribute to the factor market by providing land,
labor, capital and entrepreneurial ability and in turn gains wages, rent, profits and interests from
the firms. When AI replace humans, a part of household income in the form of wages goes to AI
and a part of household factors in the form of labor comes from AI hence adding an extra
component to the circular flow diagram as shown in figure below.

Fig: Circular flow diagram including AI

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Artificial Intelligence in workforce will hamper every person’s life directly or indirectly. Hence
replacement of human jobs by automation is an issue to be concerned about.
Background of the experts:
My Yes expert is Darell M West. He is the Vice President and executive of Governance Studies
and holds the Douglas Dillon Chair. He is an American author, political scientist and a political
commentator. He is also the director of the Center for Technology Innovation at Brookings
institution and an editor-in- chief at TechTank.
My No expert is David R Henderson. Henderson is a research fellow at the Hoover Institution.
He is also a professor of economics at the Naval Postgraduate School in Monterey, California.
I believe that both my experts are well balanced since they are both from the economic
background and have done enough research about this issue. The experts have provided their
viewpoints in the topic of Artificial Intelligence in their articles and their viewpoints are
contrasting. They have properly defended their arguments and that is why I chose these experts
for my project.
Background of Yes: Darell M West:

Darell M West
Image source: golocalprov.com

His current research focuses on Artificial Intelligence, robotics and the future of work. As a part
of his research, apart from the article I am reviewing, he has authored ‘How Artificial
Intelligence is transforming the World’ published by Brookings Institution which includes
qualities of AI, its applications in diverse sectors, policy, regulatory and ethical issues and so on
to aware people about what AI is and how it impacts people’s lives. He has written 24 books and
has won 4 book awards.
Education: He earned his BA from Miami University (Ohio) and went on to earn a Ph.D. in
political science from Indiana University.

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Credibility: As I mentioned earlier, West is the director of the Center for technology Innovation
at Brookings Institution. This center that he directs at Brookings examines a wide range of topics
related to technology and innovation. The mission of this institution is to identify key
developments in technology innovation, conduct researches and inform the policymakers about
what steps need to be taken to improve the sector of technology. Hence, Darell M west, as a
director of this center is responsible for informing the public about the ongoing researches and
what people can expect from technology innovation in coming days. As Artificial intelligence is
the greatest innovation in 21st century, Darell M West is obligated to inform the public about
what effects AI is going to have on the society in coming days and what people can do to
mitigate those negative impacts and make appropriate use of the technological advancements.
[ CITATION Bro \l 1033 ]. This article is a part of his book titled “The future of work, Robots, AI
and Automation which looks at the impact of emerging technologies on work, education, politics
and public policy.

Background of No: David R Henderson:

David R Henderson
Image source: CvauganCEE

Henderson has written hundreds of articles for well known publications like The New York
Times, The Wall Street Journal, Forbes, Los Angeles Times and so on along with a number of
books that have been translated into Japanese, Korean, Arabic and Russian. Henderson is one of
the main economists blogging on socioeconomic issues at EconLog which The Wall Street
Journal has designated as one of the top 25 economics blogs in the country.
Education: Henderson earned his B.Sc. from the University of Winnipeg, followed by his M.A.
and Ph.D. in Economics from UCLA.
Why is he interested? – David R Henderson has been influenced by his economist friend Milton
Friedman whom he met at the University of Chicago in 1970 who advised him to “make politics

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an avocation, not a vocation”. Henderson’s specialty is writing on the issues related to public
policies. His writings intend to make economic policies and analyses interesting and clear to the
general audiences. His writings usually have two themes: consequences of government
regulation that are worse than the actual problem it intends to solve and role of free market to
solve the problems. From his writings. it is clear that Henderson is more influenced by capitalism
and hence in this issue, he supports the argument that advancements in AI should not be stopped
by the government regulations and if AI will take human jobs, it will create them as well if left
alone. [ CITATION Hoo \l 1033 ]

Summary of the Articles:

For the summary of articles, I have chosen their articles published by Brookings Institution and
Hoover Institution respectively. These institutions are both popular think tanks that have articles
of major concerns and which are very well researched. I chose these articles because they are
very balanced in terms of information and dates of publication. These articles include the
statistics from various sources which are very reliable and hence the experts have included them
in their research papers. The articles both represent their area of interest which contributes to the
contrasting viewpoints.

Summary of the YES:

Unlike other arguments, the writer here starts off with discussing the benefits of AI which he is
supposed to oppose. Darell M West starts his article with a story in Edward Bellamy’s “looking
backward”. In the story, the character wakes up in 2000, 113 years from the present and finds
that people have a high standard of living and work only part time to maintain their living
standard. They rather devote most of their time in hobbies and community services. The reason
is that technology and innovation has enabled people to be more productive while working part
time. People’s demand in businesses has decreased and hence people devote most of their time
out of the work. They also have time to pursue new skills and have an identity unrelated to their
profession. Then he relates this example with the innovation in technology and advancements in
AI.
West says that most developed countries are in the verge of moving towards the dependency on
technology at present. Advancements in the field has improved people’s living standard by
connecting everyone around the world. Then he states that even though there are these huge
benefits of AI, people still are afraid of losing their jobs and being thrown into poverty. He refers
to the study conducted by Pew Research Center which asked 1896 experts about their view on AI
and human labor and found that 48% of them envisioned a future where AI will have replaced
their jobs and led to income inequality, mass unemployment and breakdowns in social order.
Using an example of Bruegel analysis which found that 54% of the jobs are at risk of
computerization, he states that analyses of many researches have concluded that from 14 to 54
percent of jobs can be automated and hence people should prepare for large scale disruption.
Oxford University researchers Carl Frey and Michael Osborne found from their study that 47%
of US workers have a high risk of being replaced. A recent McKinsey report “Jobs Lost, Jobs
Gained ” found that 375 million workers could be affected by advancements in AI. Then he talks

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about Organization for Economic Cooperation and Development’s research which focused on
tasks as opposed to jobs and found that fewer jobs will be replaced. But although the replaced
job count is lower comparatively, yet they concluded that low skilled workers are going to be
very vulnerable to replacement as compared to high skilled workers.
West believes that if these study conclusions are not taken seriously, then Western Democracies
will likely resort to authoritarianism and in this scenario, United States will be like Syria or Iraq
with theft, war or violence as the only employment possibilities left. He also states that there will
be serious political impacts of AI and hence this issue should be given a very serious and
immediate thought to.

Summary of the NO:

David R Henderson believes that we need to be more optimistic about the future of human labor
in the presence of AI than being pessimistic about it. He believes that the presence of AI will
increase the productivity of humans which in turn will increase their income and improve their
quality of life.
He recalls the assumption John Maynard Keynes made about the future of human work in
presence of automation. Keynes believed that people would have 15 hours work week in 1990
but that did not happen. Henderson claims that Keynes did not include the factor of productivity
in his assumption. He says that Keynes assumed that people would work just as much to achieve
the same standard of living as people in 1930 and hence working 15 hours a week would be
enough to achieve that standard. But humans are not complacent creatures. They aspire to
achieve more and hence they aspired to get the better standard of living than they had in 1930.
He gives examples of cell phones, cars and so on which are requirements of standard living now
but weren’t in 1930 and says that the only way to fulfill all these desires is through technology.
He also agrees that there are downsides of AI but the downsides are comparatively smaller to the
benefits. He then introduces the economic term high elasticity of demand. After Richard
Arkwright’s cotton spinning machinery was introduced in 1760 and completely integrated in
production process in 1796, clothing was no longer a luxury rather had become a necessity for
good quality of life. He also gives example of farming where the percentage of farmers in the
labor force fell from 41% to 2% from 1900 to 2000 because of improvements in technology. But
the total number of people in labor force increased from 27.6 million to 142.6 million in the
same period because of the improvement in technology sector. Hence, he justifies that AI will
not take jobs from humans rather will increase the number of jobs. He states that the strong
complementarities between AI and labor increase productivity, raise earnings, and augment
demand for labor. He argues that Artificial Intelligence will expand the estimation of errands that
human laborers supply. To prove the assumption that the production of robots will decrease
human jobs is wrong, he gives the example of large number of women entering the labor force in
1950 which should have decreased the jobs of men but in fact doubled the number of both men
and women in labor force.
Since the amount of work to be done in an economy is unlimited, even the production of
thousands of robots will not be enough to do that work and hence the demand of humans is never
going to be fulfilled. To prove his point, he questions himself what would happen to the large
number of truck drivers in the presence of self-driving cars and answers that the development in

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AI will take time and those replaced will get other jobs eventually like the farmers got in 1900s.
Then he talks about the role of government and says that government should tear the licensing
laws that makes it difficult for people to enter new jobs.
He concludes his argument by talking about the difference in thoughts between economists and
non-economists about the future of human labor and AI. Non economists find it easier to be
pessimistic than optimistic about the future and also tend to put undue weight on the seen than
the unseen in contrast to economists.

What’s missing from the articles:

Both the experts have done a brilliant job in presenting their arguments. However, there are some
things that if include din the articles would have made it even better. For yes article, I would
have liked to know more about the transition towards authoritarianism as a result of AI which he
very briefly discusses. For no article, I would have liked to know why humans would always be
demanded in spite of large number of robots incorporated in the workforce or what
characteristics would distinguish humans from robots.
What’s missing from yes:
The writer of the Yes article gives us the statistics on job replacement with the advancements in
AI. He bases his argument on those statistics rather than stating the causes that would have led to
the situation. Hence, I was looking for more in-depth analysis of the issue rather than a bunch of
statistics.
He tells us that jobs will be replaced, and this issue should be taken seriously however does not
mention how the jobs will be replaced. Some elaboration on this topic would have given us a
clear idea on how AI is a threat to human jobs. Also, the writer is too involved. on the future of
AI and human labor that he fails to include the present scenario of the issue. He fails to mention
how AI is currently replacing jobs.
Moreover, he tells us that this issue should be taken seriously but does not provide his opinion on
how this problem can be solved. He does not provide solutions on what should be done to reduce
the effect of AI on human jobs without hampering the progress in the sector. He does not provide
information about the role of government, employers or trade unions for solving this issue.
In addition, his statement about the western democracies moving towards authoritarianism with
the advancements in AI really intrigued me but he did not build up on this statement. He only
introduced this concept but did not build on it hence leaving the readers with feeling of
incompleteness.
Overall the argument was strong but including these points in it could have made the argument
even stronger.

What’s missing from NO:

Unlike the Yes expert who supported his argument with the predictions about future, the no
expert supported his argument with the examples from the past. He gave various examples of

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how technology proved to be a blessing when it was thought to be a boom and how people’s
productivity improved in its presence when people were afraid to lose their jobs.
However, the expert built his argument solely on the benefits of AI and did not mention the
negative impacts it could have on human labor. Although he mentions that low skilled workers
will be replaced by automation, he covers this fact by saying that more jobs will be created in
overall and they can do those jobs but does not consider the fact that those low skilled workers
will have difficulty in entering new jobs that the AI will create since they are unaware about the
sector. He could have given the measures that should have been taken to allow those workers to
enter a new field of jobs to make his argument stronger.
I really liked how he displayed the never-ending work in the economy as a reason that will
always keep humans in demand, but I would have really liked it if he had built up a little more on
it. He only gives the example of how women did not replace men in labor force in 1970s but
does not give strong opinion on why humans will be demanded despite production of large
number of artificially intelligent robots or what characteristic distinguishes humans from robots
that ensures that they will be demanded.

Informed Personal Opinion:

AI has been implemented in most of the sectors at present including government agencies. It is a
matter of fact that AI can increase the productivity of human workers and the overall
productivity of the businesses. Given that AI can perform the repetitive tasks easily and faster
than humans, I believe that a certain portion of human jobs will be in threat of replacement by AI
if not the whole. Hence, I side with the Yes expert in this issue. When businesses do have an
opportunity to employ the robots for lesser cost and more productivity, then they are going to
take that opportunity since people respond to incentives in predictable ways.
I partly agree with the no expert that AI will create jobs as well. When the cost of production
decreases with the employment of AI or robots, the remaining capital can be utilized in creating
other projects which in turn will create some more jobs for humans. However, low skilled
workers who will be replaced by AI cannot find other jobs as easily as the no expert describes in
his article. There is no point in creating more technology specific jobs because although people
in this field will get a chance to find a suitable job for themselves as they will have plenty of
options, the low skilled workers however will not be able to feed themselves. An economy can
grow if the unemployment rate is low but, in this scenario, there will be shortage of people in
technology sector and shortage of jobs in manual sector which is definitely not a good sign.
Hence, in my opinion, advancements in the sector of AI should be taken further by keeping in
mind that low skilled workers are vulnerable to unemployment than skilled workers and hence
we should create some measures to tackle this obstacle. Although the productivity of the
businesses will increase, the poverty rate will increase along with it if AI replaces low skilled
human workers which will eventually bring the economy of the country down. This is the time
when everybody should think of both the pros and cons of AI on human employment and take
the steps accordingly.

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Works cited:
Bibliography:
Brookings. (n.d.). Darell M West. Retrieved from brookings.edu:
https://www.brookings.edu/experts/darrell-m-west/
How Artificial Intelligence Job Displacement Will Affect The Worldwide Economy. (2018, 10
09). Retrieved from forbes.com: https://www.forbes.com/sites/quora/2018/10/09/how-
artificial-intelligence-job-displacement-will-affect-the-worldwide-
economy/#70effee21f52
Institution, H. (n.d.). David R Henderson. Retrieved from hoover.org:
https://www.hoover.org/profiles/david-r-henderson
Szczepański, M. (July 2019). Economic impacts of artificial Intelligence(AI). EPRS | European
Parliamentary Research Service.
Here are the links to the articles:
https://www.hoover.org/research/will-robots-steal-human-jobs
https://www.brookings.edu/blog/techtank/2018/04/18/will-robots-and-ai-take-your-job-the-
economic-and-political-consequences-of-automation/

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Final Reflection:
This was my first Economics class ever. Whenever I used to hear my friends talk about
communism, socialism, conservatives, radicals and all these political and economic terms, I used
to feel left out. I tried a lot to learn these concepts from internet, but it wasn’t helpful. When I
first started this class, I was a little nervous because I did not have any former knowledge about
the course or economics in general. I remember in our very first class, Ms. Doty asked us what
we expected from the course and I vividly remember myself saying, “I know nothing about
economics. I expect to learn what economics is really about”. At this point of the semester, I can
proudly say that my expectations from this course are met. In this course, I actually learned how
to relate every aspect of life to economics. Prior to taking this class, economics was all about
money for me but now I can say that economics is way deeper than just money matters.
This course has not only helped me understand the meaning and importance of economics, but
also helped me develop my leadership skills. Presentations in every alternate class really
intimidated me in the beginning but now I believe that I have excelled presentation skills. I am
far more confident in speaking to an audience than I was when I did my first presentation.
Talking about issues, all 11 issues were really interesting. These issues helped us relate what we
learnt in class to the real world. Also, these issues helped keep us updated about what is going on
in the world. Apart from the pre-decided issues, our final project issue really pushed us to do
detailed research about the topics that intrigued us. Being a Computer Science major, I thought
Artificial Intelligence would be an interesting topic for me. Watching Robots movies, machines
performing tasks like humans always intrigued me. I always wanted to dive into the topic and
learn more but never did because I did not have motivation to do so. This project provided me
that motivation After I started doing my research, I knew so many things that I had never thought
really existed. During the research for this project, there were some obstacles like finding
balanced experts with opposing views, finding most current statistics that would relate to the
issue, relate the issue to economics and so on. But these obstacles only helped me understand the
topic even better.
Honors Economics helped me see the real world more clearly than ever. Ms. Doty has been an
awesome professor to learn from. She has been a huge help in every step of this course, and I
would really like to thank her for introducing economics to me.

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