Report: Wealthy tech firms create few jobs

Two years ago, a report from Oxford University’s Martin Programme on the Impacts of Future Technology made waves in the United States with its prediction that 47 percent of the 700 largest U.S. job categories could disappear in coming decades because of robots and advances in information technology. Now two Martin Programme economists, Thor Berger and Carl Benedikt Frey, have issued a new report that raises more questions about the impacts of technological gains on U.S. employment, especially in tech centers like Silicon Valley, Boston and Austin. The key findings:

A central contribution of this paper is to document employment opportunities created in entirely new industries – that appeared for the first time between 2000 and 2010 – associated with the arrival of new technologies.

 

These data are used to examine the determinants of new industry creation, showing that new industries are more likely to emerge in human capital abundant places and cities that specialize in industries that demand similar skills.

 

Yet, the magnitude of workers shifting into new industries is strikingly small: in 2010, only 0.5 percent of the U.S. labour force is employed in industries that did not exist in 2000.

 

Crucially, it is found that many new industries of the 2000s stem from the digital revolution, including online auctions, internet news publishers, social networking services and the video and audio streaming industry. Relative to major corporations of the early computer revolution, the companies leading the digital revolution have created few employment opportunities: while IBM and Dell still employed 431,212 and 108,800 workers respectively, Facebook’s headcount reached only 7,185 in 2013.

 

Because digital businesses require only limited capital investment, employment opportunities created by technological change may continue to stagnate as the U.S. economy is becoming increasingly digitized.

Uber an exception to grim picture — for now

But there is a California company that is an exception to the scenario outlined by Berger and Frey. It’s San Francisco-based Uber. Earlier this month, Uber CEO Travis Kalanick used a posting on his company’s web site to trumpet its claim to have created 1 million jobs around the world in 2015.

That trend isn’t necessarily likely to last, however. Uber, Google and other tech firms in California are leading the push to create self-driving cars.

This is from a September report on TechCrunch.

Uber poached around 50 scientists working on self-driving car technology at Carnegie Mellon University’s National Robotics Engineering Center earlier this year. Uber had been partnering with CMU to research building its own autonomous vehicles. But then it pulled from a massive venture funding war chest to hire away a lot of CMU’s talent for its Uber Advanced Technologies Center.

 

Now, Uber appears to be publicly trying to win back the good graces of the academic community by announcing a $5.5 million gift to CMU. The money will support hiring a new robotics faculty chair and three fellowships.

Google was also in the news on this front this month, ripping the California Department of Motor Vehicles for its proposed rules on self-driving cars.