Scottish inventor John Shepherd-Barron sat sulking in his bath tub.
He’d just got back from his local bank where he’d arrived a minute late to withdraw money. It’s the 1960s and back then banks closed their doors at 3.30pm, apparently on the dot.
There had to be a quick, straightforward way for people to get their own money, anywhere in the world and not just during office hours.
That’s when John thought of a chocolate bar dispenser. If these vending machines could distribute chocolate, why couldn’t we have something similar to hand us our money?
The rest is history. On the 27th June 1967 a Barclays branch in Enfield, north London, unveiled the world’s first “automated teller machine”. It was an instant hit as it often ran out of money over the weekend.
But it also caused concern. Weren’t these cash machines going to put bank tellers out of a job?
Half a century after the first ATM was installed, automation still weighs on people’s minds. With all the advances in artificial intelligence (AI), they fear robots are going to displace the workforce.
What’s interesting is that cash machines created more jobs than they took away. And there’s growing optimism this will be the same for AI technology.
Robots create new and better jobs
Robots are getting cleverer by the day.
Bookkeepers, clerks, and cashiers have seen machines take over their daily tasks. Computer programmes have even started writing newspaper articles.
First they came for blue-collar workers, now they’re after white-collar jobs. “Virtually no job is safe,” warns the International Data Corp.
Let’s get back one moment to automation in the world of banking.
The introduction of ATMs initially had a negative effect on jobs in banking. The average number of tellers needed to operate a branch went down.
But when ATMs became widely deployed in the 1990s employment in banks went up again. That’s because ATMs made it possible for banks to operate branches at lower costs. So they started opening more branches, and created more jobs overall.
The quality of the bank teller’s job improved too. They could leave all that counting they used to do to the machines and got new responsibilities in sales and customer service.
It’s an example of the positive effect of automation economist James Bessen mentions in his book Learning by Doing.
Bessen believes that just as automation in banking ended up being a good thing, creating more and better jobs, fears about huge job losses due to AI are overblown.
Sure, there will be people whose job will be made redundant. But overall our world will be better because of the progress we’re making in the area of AI. Just as in banking, we’re seeing lots of new jobs thanks to automation as well.
“There are fewer telephone operators now, but more receptionists; there are fewer typesetters, but more graphic designers, and desktop publishers,” Bessen points out.
“Graphic designers using computers became more productive than typesetters, so automation facilitated the shift of work from typesetters to graphic designers.”
The notion that computer automation inevitably leads to major job losses may therefore not be backed up by empirical evidence.
Winners and losers
Bessen is not alone in thinking that AI will ultimately have a positive effect on jobs.
Over the next 20 years, AI is going to create 7.2 million jobs whilst making 7m jobs redundant, claims a new PwC report.
Still, in spite of all the optimism about AI expanding the job market rather than shrinking it, there are a couple of problems.
One of the issues is that the jobs AI creates aren’t necessarily in the same line of work, or even industry, as the jobs they replace.
There will be “winners and losers” with some sectors gaining jobs while in others automation really will go at the expense of workers.
Healthcare, science, communications, and education will be the “winners” in terms of job creation, while manufacturing and transport are expected to be the main victims of AI.
Another big concern is the effects robots and computers might have on wages. A Barclays study on the effects of automation on the global workforce concludes that robots won’t steal our jobs, but they may suppress our wages.
By making jobs easier to do, they’re basically turning what was previously considered “skilled labour” into unskilled professions. If it no longer takes special skills to do a job, it has a negative effect on people’s pay.
But even that study underlines the many positives of AI. It states 15.8 million jobs have been created, if you count both jobs won and lost, because of computer technology in the past 40 years. AI is also unlikely to reduce the number of jobs.
“Automation often lowers costs to produce goods and services, which in turn increases demand for them, resulting in new job growth.
“It is also common for technological advancements to create entirely new related industries and professions.”
Barclays analysts further echo Bessen when they say AI will boost productivity and wages once the technology has been fully embedded in the economy.
Automation allowed bank tellers to move on to better things. Perhaps AI robots aren’t the enemy of workers either.