Navigating Job Loss and Opportunities in the Age of Automation
, by Unboxify, 4 min reading time
The Age of Automation: A Double-Edged Sword
⚙️ Companies Cutting Down on Workers
Companies have been trying to cut down on workers for as long as those workers have demanded pay and benefits. Whether it's downsizing, outsourcing, streamlining, understaffing, or automating, if there's something a business can do to get rid of workers and their salaries, you better believe they are going to do it. But this time does feel a little bit different.🔍 AI: The Current State and Its Impact on Jobs
Recent AI advances have been mocked for not quite living up to the bold claims of their Tech bro founders. However, even in their current imperfect form, large language models (LLMs), general-use robots, and generative models are already replacing jobs and improving every day. A new study predicts that almost half of all global jobs could be affected by artificial intelligence. It found that AI could replace 300 million full-time jobs, including positions in the legal and engineering fields.📉 The Reality for Workers
According to a survey of 697 companies, companies that did not use AI in 2023 hired 89% more agents than those that did use AI in their contact centers. Additionally, for existing employees in contact centers, 36.8% of companies laid off an average of 26.1% of their employees after incorporating AI. These alarming numbers are within just one year and just within call centers.🏭 The Ford Example: A Misleading Myth
In 1914, Henry Ford doubled the salary of his factory workers to $5 per day. The story goes that he did this because he wanted all of his employees to be able to afford a Ford Model T of their own, boosting company revenue. However, the reality was that Ford wanted to reduce turnover and deny talent to up-and-coming car companies like Dodge. Nevertheless, there is some truth in the idea that employment rates can significantly impact a company's revenue. If global employment rates were to drop as they did in the call centers, companies would undeniably struggle with reduced revenue. A laid-off workforce doesn't have the buying power they once did, and even those with jobs might cut back out of fear of being next.🤑 Catering to the Wealthy
There is a business plan worth considering: making products exclusively for other wealthy business owners while diverting resources away from those who can't offer anything that a machine or a cheaper worker on the other side of the world can't do more efficiently. This concept may sound crazy, but it's already happening, especially evident in the video game industry.🎮 The Video Game Industry: A Case Study
According to Grand View Research, the video game industry is now bigger than the movie, music, and television industries combined. They have perfected a business strategy called freemium pricing. Most people play games for free, but a select few, affectionately known as "whales," spend thousands, sometimes even millions of dollars on in-game perks. The key is that these games still need free users because without them, "whales" would have nobody to show off to or compete against with their paid-for advantages.💸 The Changing Value of Labor
As the value of an hour of human labor has stayed stagnant, the value of assets and the availability of credit has skyrocketed. Business owners and investors benefit from automation as it provides a free labor substitute. This trend has pushed the value of human labor down while asset values continue to rise.💰 Universal Basic Income: A Potential Solution?
One policy fix often discussed is Universal Basic Income (UBI). UBI is a government payment made to everyone, regardless of personal financial conditions, enough to cover basic living expenses. It's proposed as a solution to keep the system going if people's labor is outsourced or automated.📊 UBI Experiments and Their Implications
A recent UBI experiment gave 1,000 people $1,000 a month with no conditions attached. Although mental health and food security initially improved, these benefits faded over time due to rising living expenses. While UBI could serve as a compromise, the concern lies in creating a future where people either depend on government lifelines or belong to a class of business owners who complain about the taxes funding those lifelines.🚀 The Future of Work and Automation
The rate of change in AI and automation makes the future unpredictable. However, one thing is clear: The value of human work is set to decline while the value of assets will skyrocket. People investing in these technologies will need to understand the bigger picture if they want to remain profitable. As outsourcing and automation continue, the challenge for everyone else is to ensure they're not excluded from the "automated utopian future." It's crucial to adapt quickly and understand the implications of these rapid technological changes.Blog posts
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