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White House: The Downside To Innovating Is Unemployment And Inequality

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The White House Council of Economic Advisers warned in a report Monday that technological innovations like automation could lead to unemployment and inequality.

The annual report highlighted several advantages and disadvantages of the increased rate of technological innovation. Automation, for instance, could lead to some low-skilled workers being replaced by computers, but it could also open up new and better paying jobs for high-skilled workers. Those low-skilled workers that keep their jobs may fall behind as overall wages increase.

“Over time, employment moves to both the lower and higher ends of the occupational skill ranking,” the report stated. “It complements the abilities of highly skilled workers and improves their productivity, thereby increasing their earnings and employment opportunities. Lower-skilled workers are not necessarily made more productive, but neither are they easily replaced.”

Some low-skilled workers are not easily replaced in many industries because they require interpersonal skills. A good portion of low-skilled occupations involve costumer interactions which is often best facilitated by actual people. Nevertheless, there are still those occupations that can be replaced by computers and robots.

“The deployment of robots has accelerated, leading them to contribute more to productivity,” the report continued. “These changes potentially also create challenges in labor markets as concerns have arisen about the extent to which robots will displace workers from their jobs.”

General Motors was the first company in the country to utilize robots for production in 1961. Automation has been primarily used in industrial occupations but in recent years other industries have begun exploring it as well. Computers are being increasingly used in the service industry to replace jobs like cashiers.

“As workers have historically been displaced by technological innovations, they have moved into new jobs, often requiring more complex tasks or greater levels of independent judgment,” the report added. “A critical question, however, is the pace at which this happens and the labor market institutions facilitate the shifting of people to new jobs.”

The report says lawmakers should enact policies that help mitigate the risk without hurting innovation. The policy recommendations, however, pretty much just reaffirm what President Barack Obama has already been doing. It suggests lawmakers should improve education, Obamacare and raise the minimum wage.

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