Market Mad House

In individuals, insanity is rare; but in groups, parties, nations and epochs, it is the rule. Friedrich Nietzsche

My Thoughts

Will Your Job Survive the Fourth Wave of Technological Unemployment?

The Fourth Wave of Technological Unemployment is upon us and one question is weighing heavily on a large segment of the population: will my job be around in five years?

The question is a very legitimate one in light of recent advances in artificial intelligence, robotics, machine learning and blockchain technology. It is also a hard one to answer or even explain because many people do not understand the new technologies or how they kill jobs.

Disturbingly many publications and websites are full of articles with the theme: “don’t worry, the robots won’t take your jobs.” There is a great deal of truth to that statement because robots are not the primary culprits in the Jobs Apocalypse. Yet the articles are misleading, because many of them ignore other more potent job-killing technologies.

The Four Waves of Technological Unemployment

The best way to determine how safe your job is; is to understand the Four Waves of Technological Unemployment and how they work. This will convey a brief history of the phenomenon and show us how it might unfold in the future.

Four Waves of Technological Unemployment

Wave One: Industrialization or Mechanization. – 1750-Present – Replacement of human beings with machines. Began with the first Industrial Revolution and continues to this day. A good example was the replacement of human weavers with looms in the 18th and 19th centuries. Marked by large machines, high output, high expenses and lots of job creation especially for the poorly educated. Most of those put out of work were skilled artisans and specialists such as weavers. Machines were clumsy and limited and required lots of human assistance. Most machines required a human operator.

Wave Two: Hard Automation – 1950-Present – Machines operating themselves. Devices are limited and perform one task or do one process. A good example is an automatic teller machine or a copier. Devices were large, complex and generally uncompetitive with human labor. Many machines could run without a human operator but they could only do one thing. A good example of this would be a washing machine or a dishwasher.

Wave Three: Robotics and Computerization – 1970-Present. Characterized by programmable technology, robots and machines can be easily programmed to do a task and large amounts of data storage. Technology is far faster than humans but not very versatile. For example a computer can run millions of computations but it cannot understand a simple card game like poker. Technology is very versatile; a computer can perform a wide variety of tasks from data entry to data processing to information retrieval.

Wave Four: Machine Learning and Artificial Intelligence – 2010-Present. Instead of being programmed by humans, machines learn a task by examining or performing it. For example the AI Libratus learned how to play poker and beat human professionals by playing Texas Hold Em. Wave three devices needed complete information to perform a task, wave four technologies only need partial information. This means they can function independently and take the place of people with specialized knowledge or expertise.

The Convergence that could Kill Your Job

As you can see all four waves of Technological Unemployment are ongoing and simultaneous. The phenomenon is driven by technological progress, a development that began long before our grandparents were born and will be ongoing long after our grandchildren are dead.

It also means that there are several threats to our jobs as technologies and techniques from the different waves get combined. For example an automobile, a first wave machine can be combined with a computer; a third wave device, and an artificial intelligence – a fourth wave technology – to produce a self-driving car.

Today robots and other devices in a factory can only do what humans program them too. In a few years there will probably be machines in factories that refine and improve processes on their own. For example a welding machine that can adjust its functions when faced with a new project.

The different waves are converging fast to produce a totally new kind of technology only a few of us understand. We cannot even begin to understand the limits or potentials of this convergence.

What Jobs are threatened by the Fourth Wave of Technological Unemployment?

Although one thing is made clear from past waves of technological unemployment it will destroy vast numbers of jobs. The question facing us now is what jobs will be threatened.

Recent news stories are giving us a few clues to the positions most threatened by the fourth wave of technological unemployment. Disturbingly the clues indicate that it will be middle and even some upper middle class jobs that are most threatened.

Artificial intelligence is very expensive so it will be used to replace highly paid individuals first. JPMorgan Chase (NYSE: JPM) is using COIN or Contract Intelligence a block-chain driven artificial intelligence to perform work formally done by lawyers and loan officers. Bloomberg Markets reported that COIN has done 360,000 hours of work normally done by highly-paid college-educated professionals; lawyers and loan officers, since it went live in June.

Contract Intelligence shows us that janitors and plumbers have little to worry about from the Fourth Wave – for now. Yet attorneys, accountants, auditors and finance majors should be scared to death. COIN’s first job was to analyze commercial loan agreements for flaws, which it apparently does better than humans.

Any job that requires a lot of specialized knowledge and expensive training or education is potentially threatened by artificial intelligence. This also includes many positions with big salaries. That means finance, law, banking, investment, medicine, science and possibly engineering will be among the first fields to feel the effects of artificial intelligence.

An example of this would be a medical clinic where artificial intelligence handles the “brain work” of diagnosis and creating treatments. The actual labor of tests, caring for patients, etc. can be performed by physicians’ assistants, nurses others who make a lot less money than doctors.

The Jobs that will Go First

One reason for that is average people will not notice those effects and possibly benefit from them. The truck driver; whose brokerage fees are eliminated by the AI, will not care if the finance major is delivering pizzas for a living. Nor will he lose much sleep over doctors who can no longer pay their country club memberships.

Another is that the stakes in finance are very high; one dumb decision by an inept trader can bring down a huge financial institution as events of recent years have demonstrated. This provides a massive incentive to get rid of or reduce the human element.

After those high-paying jobs AI will next be adapted to positions that are dangerous, or hard to fill. A burger flipping machine for use in fast-food joints is not likely, but a robot chef for use in gourmet restaurants, hotels or the homes of the wealthy is. Such a device is already being developed by a British company called Moley. An AI driven truck on our streets is unlikely for a few years, but AI operated machines in mines or in nuclear power plants are.

Another development will be human AI teams for example an AI operated delivery truck which carries a human delivery person. The AI will drive, the human will take the deliveries to the final destination; and possibly collect payment. More exotic developments might be a human salesperson peddling investments created by AI fund manager. Another possibility is a restaurant with an AI powered chef that employs human wait staff to provide an illusion of fine dining.

The effects of the Fourth Wave of Technological Unemployment will be devastating but they will be felt first in a few highly-paid professions. Average people should only begin to worry when AI and machine learning becomes as cheap and as pervasive as computers.