The Future of AI and Employment: Managerial Choices and The Power of Augmentation
The discussion surrounding artificial intelligence (AI) often revolves around its potential negative impact on employment. Many are concerned that AI will automate jobs and replace human workers, leading to unemployment. However, it is important to approach this topic with a balanced perspective.
One key point to consider is that the decision to augment or automate work is not solely determined by the technology itself, but rather by the choices made by managers. The way work is organized within a company is ultimately decided by managers, and their choices determine whether AI is used to augment or automate human work.
Research has shown that strong automation tends to occur when companies possess significant labor market power. In cases where companies are powerful employers, they are more likely to automate tasks and leverage this increased efficiency to drive down wages for all employees. While this negative consequence is a real concern, the responsibility lies not with the technology, but with concentrated corporate power.
Addressing excessive automation should focus on implementing anti-trust regulations to limit corporate power, rather than blocking technological innovation. The recent increase in anti-trust regulation signifies a step in the right direction, but further action could be taken.
Another concern surrounding AI is that even if it is used to augment human work, it may increase productivity to such an extent that fewer people are needed for the same tasks. While this may be true, it overlooks an important insight from economist William Stanley Jevons, known as the Jevons Paradox. He argued that increasing the efficiency of a key input, such as human labor, often leads to an increased demand for that input.
The same logic applies to programming. AI tools are now enhancing the productivity of programmers, making their work more efficient. This increased efficiency could potentially lead to a greater demand for programmers, as the reduced cost of programming opens up new possibilities and applications. Although fewer people may be required to produce the same output, the overall demand for programming work may expand, requiring more individuals in the field.
While it is crucial to recognize that the amount of work needed may change, it is equally important to understand that the nature of work can also evolve. Forward-thinking managers should focus on using AI to add value rather than solely using it as a cost-cutting measure. AI technology not only enables workers to do more of the same tasks but also empowers them to undertake new endeavors that were previously inconceivable.
A classic example of this is the advent of spreadsheet software. In the past, accounting involved manual calculations that were time-consuming. However, with the introduction of spreadsheet software, calculations became faster and more streamlined. This technological advancement opened up new possibilities, allowing for simulations and improved decision-making. The technology enabled entirely new ways of adding value to management processes that were previously too costly.
So, what can managers do to navigate this evolving landscape? Firstly, individual managers have a personal responsibility to gain a deep conceptual understanding of AI, its applications within the business realm, and how to leverage it effectively. CEOs, in particular, should ensure they stay up-to-date with the latest technology and its potential future developments. Practical knowledge of past processes is less important than understanding how AI can enhance value for customers.
Furthermore, managers aiming to encourage employee learning and engagement with AI must design tools that directly benefit their workforce. While new technologies create new opportunities, there will always be challenges in managing a transition. Some employees may resist change, requiring a humane approach to navigate the process.
In conclusion, while there are concerns about the impact of AI on employment, it is crucial to view the situation from a balanced perspective. Managerial choices play a significant role in determining whether AI augments or automates human work. Addressing excessive automation requires anti-trust regulations to limit corporate power, rather than stifling technological innovation. Additionally, the productivity gains from AI can lead to an increased demand for certain types of work, such as programming. Smart managers will leverage AI to add value and develop a deep understanding of the technology. By designing AI tools that benefit employees, managers can navigate the future of AI and employment successfully.