San Francisco is home to some of the most successful technology companies, to the point that the city could be called the cradle of innovation. Even as companies headquartered in San Francisco develop new technologies or novel products, some of the city’s bureaucrats have recently expressed support for policies that would hinder further innovation.
City supervisor Norman Yee wants to prohibit food delivery robots, citing concerns about space and potential lost delivery jobs. His push goes in the opposite direction of some other jurisdictions that have made efforts to create a framework that would encourage pilot demonstrations and further developments for delivery robots. While his proposal was voted down, he “remains committed” to the ban.
More recently Jane Kim, another city supervisor, is pushing for a statewide tax on robots. Her interest in some form of robot tax echoes earlier interest from none other than Bill Gates, who said there should be a willingness to “raise the tax level and even slow down the rate of adoption” in order to accommodate potential job loss or displacement. The fears that drive these proposals do not seem supported by the data so far, and they would run into substantial problems with implementation.
One of the most widely-cited studies for proponents of a robot tax is a working paper by Carl Benedikt Frey and Michael Osborne for the University of Oxford’s Programme on Technology and Employment. The authors estimate that 47 percent of occupations would be at risk of being automated, perhaps within the next decade or two.
However, many of the occupations previously categorized as “at risk” have at least some tasks that would be difficult to automate. Using a task-based approach, a more recent working paper from the OECD estimates that only 9 percent of U.S. jobs are at high risk of automation.
Aggregate data for the United States also rebuts fears that new technologies have driven workers out of the labor market in droves. The prime-age employment rate for persons aged 25 to 54 was 78.4 percent in May, 1987. After three decades of continued innovation, the proliferation of the internet, and the creation of entire spheres of industry that did not exist outside of science fiction, the prime-age employment rate in May 2017 was 78.4 percent.
The raw number of total jobs can also be informative. Total nonfarm payrolls in May 1987 were about 101.7 million, growing to almost 147 million by 2017. The U.S. economy has some 44 million more jobs and the same rate of prime-age people working as three decades ago. The fears about a wave of automation replacing workers seem misplaced so far.
Some specific jobs or occupations have been phased out, but to an extent this has corresponded with the creation of more jobs and new types of work. Many technological innovations may have some degree of substitution for human labor, but they can also be complementary, creating new or additional jobs that work hand in hand with automation.
According to the popular narrative, Amazon’s ascendancy and the decline of traditional retail will lead to thousands of jobs being lost overall. While brick and mortar retail has seen retrenchment, many of those brands are seeing strong growth in sales through their digital channels.
As for Amazon itself, the notion that the company functions as a platform only without the need for a substantial workforce is misguided. A recent report from Michael Mandel at the Progressive Policy Institute found that Amazon was the fastest American company to reach 300,000 workers, at an average employment growth rate of about 30 percent per year. That does not take into account Amazon’s recent announcement that it had begun the search for a location for its second headquarters, which would come with 50,000 additional jobs.
Technological developments boost productivity, increase economic growth, and raise living standards. Some tasks, and even entire occupations, could be lost, but more automation can also support the creation of new jobs. Whether through delivery robot bans or robot taxes, attempts to insulate jobs from the effects of automation will only serve to stifle innovation.
Cities and states that enact these protectionist measures will become less attractive to businesses. While it has played an outsized role in the recent wave of technological progress, San Francisco could lose its place of primacy if these policies are ever enacted. Policymakers should strive to create a framework that fosters innovation, instead of hampering it.
Charles Hughes is a policy analyst at the Manhattan Institute. Follow him on twitter @CharlesHHughes.
Interested in real economic insights? Want to stay ahead of the competition? Each weekday morning, E21 delivers a short email that includes E21 exclusive commentaries and the latest market news and updates from Washington. Sign up for the E21 Morning Ebrief.