The Fuse

Report Provides Comprehensive View on the Cost and Benefits of Self-Driving Technologies

by Matt Piotrowski | June 13, 2018

  • AVs will add between $3 to $6 trillion in cumulative consumer and societal benefits to the U.S. economy by 2050.
  • The full labor effects won’t be felt until the 2040s, with the exact timing tied to AV deployment.
  • New policies, along with the strengthening of current programs, are necessary to mitigate the effects of unemployment.

The potential benefits of autonomous vehicles (AVs) could be widespread and significantly alter society and the way people get around. Low-cost mobility, fuel diversity, improved traffic safety, increased access to transportation for underserved populations, and decreased pollution are all possible impacts. One considerable worry, however, about the coming self-driving revolution is the negative effects on the labor market. After America’s working class has struggled since the Great Recession, public officials and others are concerned that driverless cars will cause job losses in certain industries. The negative effects, however, will not be as large as many analysts and economists now expect, according to a new report.

The negative effects will not be as large as many analysts and economists now expect.

SAFE’s groundbreaking report on AVs and the workforce, released Wednesday and developed in collaboration with leading transportation and labor economists, says that contrary to recent commentary warning of massive job losses, widespread AV adoption would not lead to long-term negative impacts on the labor market. “The benefits of AVs each year are far greater than the cost to workers over the next 35 years combined,” the authors conclude. The report estimates that total annual benefits of AVs could possibly reach as high as $800 billion by 2050, and cumulative consumer and societal benefits to the U.S. economy will be between $3 to $6 trillion.

“Self-driving technologies will have an enormously positive impact on our country, our economy, and our society. This is an opportunity too great to ignore and now is the time to prepare and implement policies that will unlock these myriad benefits and mitigate any negative impacts of this technological shift,” said Robbie Diamond, President and CEO of SAFE.

In the most pessimistic scenario, the effects of AVs may add only 0.06-0.13 percentage points to unemployment in the 2040s.

In the most pessimistic scenario, the effects of AVs may add only 0.06-0.13 percentage points to unemployment in the 2040s. In contrast, the Great Recession that began in late 2007 added 4.9 percentage points to the unemployment rate at its peak. From now through 2050, approximately 1.1-2.4 million jobs, as high as only 1.5 percent of the overall workforce, will be profoundly altered from AVs. To put this number into context, almost 8 million people last year were employed by companies that will grow with the adoption of AVs.

Sizable macroeconomic shift, for the better

The authors analyze important uncertainties surrounding AVs as they move from concept to reality and policymakers grapple with the issue and come up with solutions to unintended consequences. Similar to early discussions about other new technologies throughout history when they were first introduced, much of the focus on autonomy is on the downsides of its adoption. There will of course be significant macroeconomic shifts due to autonomy, but potential job losses should be balanced with sizable benefits from autonomy. In the case of new technologies, short-term challenges such as decreased wages, employers needing skilled labor, and some workers requiring retraining are more visible at first than the increased opportunities, for both workers and consumers. In the past, despite temporary unemployment when the technology first emerged, the economy eventually returned to full employment. “A key challenge is to contextualize any challenges and avoid overreacting to unrealistic predictions, which have been a consistent refrain alongside technological progress since the Industrial Revolution,” the authors write.

For the transition to occur as smoothly as possible, the earlier the adoption of autonomy in the transportation sector, the better.

For the transition to occur as smoothly as possible, the earlier the adoption of autonomy in the transportation sector, the better. This will precipitate the necessary public and private investments to mitigate any shocks the workforce experiences from job losses and requirements for workers with new skills. “Policymakers will need to face the challenge of how to upgrade workforce skills and reduce the impact on workers whose jobs may be eliminated,” the study says. The loss of a large number of jobs feels threatening, but it will not occur for decades and the unemployment increase won’t happen all at once.

If this transition is handled properly and the public does not think in terms of worst possible outcomes, AVs will increase labor opportunities over the longer term, for both high-skilled and low-skilled workers. Estimates that four million drivers in the United States will rapidly lose their jobs are overblown and “lack context, nuance, or grounding in labor market dynamics and the natural cycle of labor force evolution.”

Key takeaways

The following are key factors to understand the context of displacements from AVs and opportunities that are likely to emerge.

  • The full effects won’t be felt until the 2040s, with the exact timing tied to AV deployment.
  • Workers unemployed due to AVs will look to other positions created by the adoption of autonomous technology.
  • Companies that utilize AVs will need workers to service and perform maintenance on the vehicles or help people with disabilities use the technology.
  • Job openings will occur in companies that produce AVs or supplies and software for the vehicles.
  • Lower costs for products and services from the use of AVs will benefit the broader economy with higher demand and households with more disposable income.
  • Job losses will likely occur in concentrated areas. Despite specific pockets having to deal with outsized effects, the downside of AVs should not be trivialized and can be mitigated with robust, broad policies.

Key policy needs

As noted, new policies, along with the strengthening of current programs, are necessary to moderate the fallout, while lawmakers should remain flexible in case of any unforeseen changes. The paper recommends the following:

Comprehensive solutions: Policymakers and industry should look beyond just AVs. Other sectors may also be highly affected by other technological changes, and different areas of the country will need different solutions. “A single approach will be insufficient,” the report says.

A broad range of policies: Workers displaced from autonomous technology will occur across many regions and demographics. With this in mind, there will not be a “magic bullet” for the diverse set of needs for bolster the workforce.

Strengthening existing workforce development: The authors point out that more than 2,000 offices across the United States that help unemployed find jobs and proper training. Supporting unemployment insurance and the range of services available for displaced workers will be important government investments to help mitigate the effects on individuals and families.

Evidence-based solutions: Policymakers should continue to take into account new research and data collection when determining solutions.

Identify areas for additional study: It’s important that further analysis is conducted on industries that will be affected by AVs, the job markets available for unemployed drivers, and productivity gains from reduced driving times.

Conclusion

Although AVs are not yet in commercial use, there is intense public interest in them. They are poised to transform the modern transportation system, opening up new possibilities for underserved communities, reducing the number of traffic deaths, and cutting oil dependence through efficiency and fuel diversity. We at SAFE do not believe we have to decide between the numerous benefits of AVs and a stable labor market. With this report, SAFE emphasizes that delaying this technology is not the answer, as doing so will both weaken the nation’s ability to combat labor disruption and set back public welfare by denying important societal and economic benefits to be realized.

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