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.