Excitement abounds over the technological innovations that seem to arise daily, but that innovation won't necessarily translate to major job gains, says Nouriel Roubini, ace economist at New York University.
"New manufacturing technologies have generated feverish excitement about what some see as a third industrial revolution," he writes in an article for Project Syndicate
"In the years ahead, technological improvements in robotics and automation will boost productivity and efficiency, implying significant economic gains for companies."
So what's not to like?
"Unless the proper policies to nurture job growth are put in place, it remains uncertain whether demand for labor will continue to grow as technology marches forward," Roubini says.
Recent technological advances raise three problems, he argues. The advances tend to be "capital-intensive, thus favoring those who already have financial resources; skill-intensive, thus favoring those who already have a high level of technical proficiency; and labor-saving, thus reducing the total number of unskilled and semi-skilled jobs in the economy."
Bottom line: "the risk is that robotics and automation will displace workers in blue-collar manufacturing jobs before the dust of the third industrial revolution settles," Roubini writes.
"The gains from technology must be channeled to a broader base of the population than has benefited so far. That requires a major educational component. In order to create broad-based prosperity, workers need the skills to participate in the brave new world implied by a digital economy."
Meanwhile, former Federal Reserve Vice Chairman Alan Blinder, now a Princeton University economist, says that while productivity growth has been slipping in recent years, the trend isn't receiving the attention that it should.
If the current slide in productivity growth continues, it could take a major bite out of GDP growth, he writes in The Wall Street Journal
"Yet oddly, while enormous amounts of research, energy and chatter are poured into analyzing and forecasting the labor market, hardly anyone is talking about productivity — though that may be the greater source of uncertainty," Blinder says.
Productivity growth averaged 0.7 percent a year from 2010 to 2013, down from 2.6 percent in 1995 to 2010. The drop was "mysterious," he writes. Productivity rose at a 2.3 percent annualized rate in the third quarter.
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