The Fuse

Autonomous Vehicles: Boom or Bust for U.S. Jobs and Economic Growth?

by Matt Piotrowski | December 07, 2016

There’s a natural paradox when it comes to innovation—while it often brings unexpected benefits to society, it can cause disruptions and upheavals at the local and individual levels, creating particular risks in the labor market. Given the staggering number of jobs connected to cars and driving, autonomous vehicles will take these risks and rewards to new levels.

To explore some of these issues, experts discussed their outlooks on the impacts of autonomous vehicles at the Brookings Institute this week, with speakers disagreeing on the shape of things to come.

There’s a natural paradox when it comes to innovation—while it often brings unexpected benefits to society, it can cause disruptions and upheavals at the local and individual levels, creating particular risks in the labor market.

Clifford Winston, Searle Freedom Trust Senior Fellow at Brookings, argues that self-driving vehicles have the potential to address government’s failure in reducing congestion, and this, in turn, will have huge positive implications for the U.S. economy. Looking at California, Winston says a 50 percent reduction in congestion as a result of autonomy will increase GDP, boost jobs, lift wages, and bring about growth in freight. Altogether for the state, the number of jobs will rise by 1.7 percent annually, while GDP is set to rise by a robust $35 billion. And, he added, when extrapolating the finding for California for the rest of the country, the benefits are even more eye-opening: 3 million new jobs and growth of $267 billion in GDP.

Given these expectations, Winston said that the broader positive effects should keep critics from being absorbed by the disruptions that will occur in the labor force.

“Here, we’re really talking about an efficiency phenomenon, a new technology,” Winston said, reinforcing how beneficial the new efficiencies from an automotive revolution will be on economic growth. “So what happens? Instead of either celebrating the potential phenomenon or saying how can we have this, we turn all this into a social policy question: What about redistribution of labor?”

“No one is going to get elected thinking about policies to protect people who are going to lose jobs because of the introduction of autonomous vehicles.”

He notes how disruptions occur frequently in the marketplace, with the new innovations and shifts in demand ending up being an overall positive. “Ultimately, this (the redistribution of resources from technological changes) will be a decision at the ballot box,” Winston noted. “And I don’t think voters are going to care about it at all. No one is going to get elected thinking about policies to protect people who are going to lose jobs because of the introduction of autonomous vehicles.”

Ted Gayer, vice president and director of Economic Studies at Brookings and panel moderator, countered that the issue of job losses from technology will be a significant political issue given their impact on car manufacturers, auto workers, truckers, taxi drivers, and insurance companies.

Robert Hahn, nonresident senior fellow in Economic Studies at Brookings, was much more sober than Winston about the positive effects of autonomous vehicles, but argued they should go forward despite potential downsides. While discussing ride-sharing services such as Uber, he noted how opportunities for drivers will “evaporate.” Even though we shouldn’t want to “put the genie back in the bottle” with regards to self-driving cars, the country needs to “think hard” about positions lost due to the new technology. Kenneth Leonard, the director of the Intelligent Transportation Joint Program Office at the Department of Transportation, highlighted the large number of people in the disabled and elderly communities who cite mobility as their single obstacle to becoming employed. With self-driving cars, these segments of the population will see large economic benefits by being able to find employment. “If self-driving becomes an option for those people…there’s a group of people who can go from receiving benefits to earning income and paying taxes,” he said.

Autonomy sooner rather than later

The pace of knowledge and resources being poured into the autonomous space is accelerating, but it’s still far from certain when self-driving cars will become mainstream. Representative Earl Blumenauer, a Democrat from Oregon, in his keynote address at Brookings, touted the benefits of self-driving cars in regards to safety and mobility and believes the transition will occur faster than most think. But with that changes come challenges, not least of all the need to build adequate infrastructure for autonomous cars.

His message was strikingly different than Winston’s. Blumenauer said that the loss of jobs from autonomy could result in a “political crisis,” pointing out that there are 12 million people or more whose livelihood depend on automobiles, whether through manufacturing, designing, selling, or operating them.

Blumenauer said that the loss of jobs from autonomy could result in a “political crisis,” pointing out that there are 12 million people or more whose livelihood depend on automobiles, whether through manufacturing, designing, selling, or operating them.

Besides the possible loss of jobs, the funding of necessary infrastructure for the new type of vehicles may not be sufficient. While there will be numerous benefits from autonomous vehicles, such as energy efficiency and a sharp decline in car accidents, revenues from the gasoline tax and fines for traffic violations could decline relatively sharply, reducing funds for infrastructure development. It’s a fair bet that those revenues will likely dry up as autonomous vehicles will be electric, decreasing funds from gasoline taxes. With vehicles driven by algorithm instead of humans, fines from activities such as speeding will also go away, creating a need to find new sources of government revenue.

In his impassioned speech, Blumenauer covered a long list of ways that autonomy will improve our lives for the better, but repeatedly warned of managing the unintended consequences and reiterated that the new system will have to benefit everyone. “We have to be more purposeful about [the move to autonomy],” he told the audience. “Because if we don’t do this right, there will be all sorts of unintended consequences.”

 

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