Tech Transformers

AI could boost productivity but increase wealth inequality, the White House says

SoftBank Group Corp.'s Pepper the humanoid robot performs during a demonstration at a media briefing in Tokyo, Japan, on Thursday, May 19, 2016.
Kiyoshi Ota | Bloomberg | Getty Images

Artificial intelligence (AI) technology has the potential to boost productivity but increase wealth inequality and wipe out millions of jobs, a research report by the White House claimed on Tuesday.

An increasing number of industries are set to be impacted by automation technology over the coming years which could displace jobs, a fear that has been voiced by academics and business leaders.

Auto companies are developing driverless cars while factories could are seeing the increased use of robotics, which has the ability to eat into jobs. But many developments are at the early stage and the impact of automation technology could affect different industries are varying speeds.

Deloitte uses artificial intelligence tech to boost productivity
Deloitte uses artificial intelligence tech to boost productivity

"Because AI is not a single technology, but rather a collection of technologies that are applied to specific tasks, the effects of AI will be felt unevenly through the economy. Some tasks will be more easily automated than others, and some jobs will be affected more than others—both negatively and positively," the White House report said.

"Some jobs may be automated away, while for others, AI-driven automation will make many workers more productive and increase demand for certain skills. Finally, new jobs are likely to be directly created in areas such as the development and supervision of AI as well as indirectly created in a range of areas throughout the economy as higher incomes lead to expanded demand."

Researchers across the world have given varying estimates about the size of job losses. One recent estimate by Forrester suggests 6 percent of jobs could be wiped out thanks to AI in the next five years. The White House report cites a 2013 study from Oxford University suggesting 47 percent of U.S. jobs are at risk due to AI, while the Organisation for Economic Cooperation and Development (OECD), estimates only 9 percent of jobs are at risk of being completely displaced. The White House report suggests that lower-skilled and less-educated workers could feel the heat the most.

"This means that automation will continue to put downward pressure on demand for this group, putting downward pressure on wages and upward pressure on inequality. In the longer-run, there may be different or larger effects. One possibility is superstar-biased technological change, where the benefits of technology accrue to an even smaller portion of society than just highly-skilled workers," the report said.

"The winner-take-most nature of information technology markets means that only a few may come to dominate markets. If labor productivity increases do not translate into wage increases, then the large economic gains brought about by AI could accrue to a select few. Instead of broadly shared prosperity for workers and consumers, this might push towards reduced competition and increased wealth inequality."

Three policy responses were proposed by the U.S. government to help with the transition:

  • Invest in and develop AI which includes developing the technology in areas such as cyber-defense, as well as boosting education in this area
  • Educating and training Americans for the future
  • Aid workers in the transition and empower workers to ensure broadly shared growth. This can be done by modernizing the social safety net, which could include "more robust interventions" from the government, such as further strengthening the unemployment insurance system.