AI/Robots Are Coming for White-Collar Jobs
White-Collar Robots Are Coming for Jobs
A combination of AI and globalization could reshape the
workforce like nothing we’ve seen before. Richard Baldwin, professor of
International Economics at the Graduate Institute, Geneva, explains
Until recently, most service-sector and professional jobs
were shielded from automation by humans’ cognitive monopoly. Amelia and other
‘white-collar robots’ are changing that.
By Richard Baldwin Jan. 31, 2019 8:00 a.m. ET
Amelia works at the online and phone-in help desks at the
Swedish bank SEB. Blond and blue-eyed, she has a confident bearing softened by
a slightly self-conscious smile. Amelia also works in London for the Borough of
Enfield and in Zurich for UBS. And did I mention that Amelia can memorize a
300-page manual in 30 seconds, speak 20 languages and handle thousands of calls
simultaneously?
Amelia is a white-collar robot. She interacts with
customers over the phone, as a chatbot and as a three-dimensional avatar on
smartphone and computer screens. When she starts a new conversation, she knows
all of a customer’s previous contact history. As The Wall Street Journal
reported in March 2018, average call duration at Allstate Insurance call
centers dropped to 4.2 minutes from 4.6 minutes after the company deployed
Amelia.
Her maker, Chetan Dube, left his professorship at New
York University to start IPsoft, an automation software company, convinced that
using remote workers in India would be nowhere near as efficient as replacing
U.S. and European workers with cloned human intelligence.
Amelia and her kind are not enhancers of labor
productivity—like faster laptops or better database systems. They are designed
to replace workers. They are not yet as good as human workers, but they are
significantly cheaper.
Until recently, most white-collar, service-sector and
professional jobs were shielded from automation by humans’ cognitive monopoly.
Computers couldn’t think, so jobs that required any type of thinking—nuclear
physics professor, florist and everything in between—required a human. But a
form of artificial intelligence called “machine learning” has given computers
skills like reading, writing, speaking and recognizing subtle patterns.
Thinking computers like Amelia are opening a new phase of automation and
bringing the pluses and minuses to a whole new class of workers—those who work
in offices rather than farms and factories. These people are largely
unprepared.
U.S. workers today also face direct wage competition from
highly skilled, low-cost foreign workers working (virtually) in U.S. offices.
Web platforms like Upwork—essentially eBay for freelancing—allow employers to
source talent from across the globe, often at a much lower cost. Think of this
as telecommuting gone global. Think of it as telemigration. The combination of
this new form of globalization with this new form of robotics—call it
“globotics”—is really something new. The most obvious difference is that it’s
affecting people working in the service sector instead of the manufacturing and
agricultural sectors—about 129 million Americans as of last month, according to
the U.S. Bureau of Labor Statistics.
Amelia is used by over 20 of the world’s leading banks,
insurers, telecom providers, media companies and healthcare firms. Research had
shown that customer satisfaction with phone-in helplines is directly tied to
empathy shown by the agent handling the call, so Amelia’s maker added a
psychological module to her algorithm. She is aware of the emotional state of
the person with whom she is speaking, and she adapts her responses, facial
expressions and gestures to better communicate. Amelia can’t handle everything.
Sometimes she passes on information to her human colleagues so they can take
over. But Amelia is curious. The software hangs on the line listening to the
humans—and the resolution of a problem. She then adds these new tricks to her
knowledge-management system. Once her learnings are approved by her human
supervisor, she can answer similar queries herself in the future.
In the past, some AI “advances” were a flash in the pan.
But many companies have introduced Amelia-like software. Bank of America rolled
out Erica in the summer of 2018. She can let you know when your checking
account has dipped into the red or suggest putting additional funds toward your
Visa, based on your monthly spending. JPMorgan ’s white-collar robot is called
Contract Intelligence (COIN). Capital One has Eno. IBM is selling many
Amelia-like virtual assistants under the brand Watson. Salesforce offers
Einstein, SAP has HANA and Infosys has Nia.
The sophistication of AI systems like Amelia, Watson and
Erica will displace many service-sector jobs—but they will eliminate only a few
occupations. This is what automation has always done. Tractors, for example,
automated some farm chores, but they did not eliminate farming as an
occupation. We just needed fewer farmers. This is what we’ll see all across the
service sector in coming years.
Many studies have tried to estimate the total impact of
recent, AI-linked automation on jobs. A 2016 study by the consulting firm
Forrester suggests that 16% of all U.S. jobs will be displaced by automation in
the next 10 years, with white-collar professions expected to be the hardest
hit. About half of the job destruction will be matched by job
creation—positions such as “robot monitoring professionals,” data scientists,
automation specialists and content curators—resulting in a net loss of 7% of
jobs by 2025.
New jobs will be created by the massive amounts of data
that humans and their connected devices are generating. Services we once paid
money for—maps, travel advice, news—are often free in today’s world. Even
though much of the work behind free services like Google Maps is done by
white-collar robots, these services create demand, forcing companies to hire
people to look after the robots and to do more human chores like management,
accounting, human resources and the like.
But the number of new jobs for humans is limited. Even
Alphabet Inc. —the wildly innovative and fast-growing company that owns Google,
which built a search engine based on algorithms—created only a net 71,300 jobs
between 2007 and 2017. That’s a drop in the U.S. job-market bucket with its 140
million workers. And becoming a Googler is not an option for most of the U.S.
hospitality workers whose jobs will be displaced by automation in the next few
years.
This new version of the old disruptive duo—automation and
globalization—will lower the headcount in many service-sector occupations. The
“globotics” transformation will not be gentle. Given the rapacious progress of
digital technology, these changes will disorder professional and service-sector
jobs radically faster than globalization disrupted the manufacturing sector in
the 20th century and the agricultural sector in the 19th century.
Richard Baldwin is a professor of International Economics
at the Graduate Institute, Geneva, and a former senior staff economist for
President George H. W. Bush’s Council of Economic Advisors. This article is
adapted from his book, “The Globotics Upheaval: Globalization, Robotics, and
the Future of Work,” to be published Feb. 8 by Oxford University Press.
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