What is "technological unemployment"

n. Unemployment caused by technological advances. This includes machines and software substituting for human labor, advances in efficiency negating the need for friction-based jobs, and increased data availability undermining professions that rely on information asymmetry.

Technological unemployment is the loss of jobs caused by technological change. Such change typically includes the introduction of labour-saving machines or more efficient processes. Historical examples include artisan weavers reduced to poverty after the introduction of mechanised looms. A contemporary example of technological unemployment is the displacement of retail cashiers by self-service tills.

That technological change can cause short-term job losses is widely accepted. The view that it can lead to lasting increases in unemployment has long been controversial. Participants in the technological unemployment debates can be broadly divided into optimists and pessimists. Optimists agree that innovation may be disruptive to jobs in the short term, yet hold that various compensation effects ensure there is never a long term negative impact on jobs. Whereas pessimists contend that at least in some circumstances, new technologies can lead to a lasting decline in the total number of workers in employment. The phrase "technological unemployment" was popularised by Lord Keynes in the 1930s. Yet the issue of machines displacing human labour has been discussed since at least Aristotle's time.

Prior to the 18th century both the elite and common people would generally take the pessimistic view on technological unemployment, at least in cases where the issue arose. Due to generally low unemployment in much of pre-modern history, the topic was rarely a prominent concern. In the 18th century fears over the impact of machinery on jobs intensified with the growth of mass unemployment, especially in Great Britain which was then at the forefront of the Industrial revolution. Yet some economic thinkers began to argue against these fears, claiming that overall innovation would not have negative effects on jobs. These arguments were formalised in the early 19th century by the classical economists. During the second half of the 19th century, it became increasingly apparent that technological progress was benefiting all sections of society, including the working class. Concerns over the negative impact of innovation diminished. The term "Luddite fallacy" was coined to describe the thinking that innovation would have lasting harmful effects on employment.

The view that technology is unlikely to lead to long term unemployment has been repeatedly challenged by a minority of economists. In the early 1800s these included Ricardo himself. There were dozens of economists warning about technological unemployment during brief intensifications of the debate that spiked in the 1930s and 1960s. Especially in Europe, there were further warnings in the closing two decades of the twentieth century, as commentators noted an enduring rise in unemployment suffered by many industrialised nations since the 1970s. Yet a clear majority of both professional economists and the interested general public held the optimistic view through most of the 20th century.

In the second decade of the 21st century, a number of studies have been released suggesting that technological unemployment may be increasing worldwide. Further increases are forecast for the years to come. While many economists and commentators still argue such fears are unfounded, as was widely accepted for most of the previous two centuries, concern over technological unemployment is growing once again.