Robots are working their way into our lives, and taking over our jobs. A comprehensive new report out of Oxford Economics looks at the rise of the robotic workplace, and the impact it will have on the job market and productivity. This is a worldwide phenomenon, and one that will transform many industries, including real estate.
This report, “How Robots Will Change the World,” is primarily focused on how they will change the job market. (1) According to researchers, they have tripled in number over the past 20 years to around 2.25 million. That figure is expected to grow exponentially to 20 million by the year 2030. The bulk of those robots, or about 14 million of them, will be in China, which the report refers to as the “world’s workshop.”
The Rise of Robots
Oxford Economics Chief Economist, Adrian Cooper, says the implications of this robotic revolution are “immense.” He says, “The rise of robots will boost productivity and economic growth. It will lead too, to the creation of new jobs in yet-to-exist industries, in a process the report calls “creative destruction.” But, existing business models across many sectors will be seriously disrupted. And tens of millions of existing jobs will be lost, with human workers displaced by robots at an increasing rate as robots become steadily more sophisticated.”
As real estate investors, we know that individual markets depend on strong job growth. With robots destroying jobs, and prompting the creation of new ones, there’s sure to be some challenges in determining the strengths and weaknesses of various job markets. After all, robots don’t need housing. Humans do, so if you’re investing in an area with more robotic displacement, there could be more of a disruption.
Robots Will Take and Create Jobs
This report says, the impact may be greater in lower-income regions. It says, on average, new robots replace twice as many jobs in lower-income areas compared with high-income regions. That number is 2.2 humans to one robot compared to an overall average of 1.6 humans to one robot, or in higher-income areas, 1.3 humans.
The report also points out that robotics will boost productivity and economic growth, and that will create new employment opportunities. Researchers expect the rate of job destruction to be roughly equal to the rate of job creation. They say, a 1% increase in the use of robots typically translates into a .1% in output per human worker.
Overall Positive Effect
Researchers say, the robotic revolution will have an overall “positive” effect. The report offers an example, “Boosting robot installations to 30% above the baseline forecast by 2030 would lead to an estimated 5.3% boost in global GDP that year. This equates to adding an extra $4.9 trillion per year to the global economy by 2030 (in today’s prices)—equivalent to an economy greater than the projected size of Germany’s.”
What physical jobs are at risk? As an example, the report says that warehouse jobs are a prime target. Amazon has demonstrated that trajectory, since robots are now a big part of its warehouse and order fulfillment operations. As for other occupations, researchers say robots will most easily replace people who do repetitive tasks. The report says, “It will be difficult for machines to replace humans in service sector occupations that demand compassion, creativity, and social intelligence. Physical therapists, dog trainers, and social workers are likely to remain secure in their jobs, for instance.”
The report says, robots will create a “displacement effect” on manufacturing jobs, but will also reduce production costs and give consumers much greater spending power. It says, the idea that robots will cause massive job losses are somewhat misplaced, because they will add more value to the economy than they take. But the positive and negative impacts will differ from region to region.
Robotic Displacement Trends
Researchers identified several trends in reference to the regional impacts, along with a Robot Vulnerability Index.
Trend #1 suggests that existing inequalities will intensify because regions that have the most exposure to the effect of robotics will likely see slower GDP growth.
Trend #2 suggests that major cities will not feel any immediate effects because they have more diversified economies with less dependency on manufacturing jobs.
Trend #3 suggests that displacement in rural regions could have more wide-reaching effects because regional economies may be tied to these operations.
Robot Vulnerability Index
So, which states are the most vulnerable?
According to the Robot Vulnerability Index, Oregon has the biggest challenge ahead. The report says, the state has had big success transitioning into the production of high-tech components, but still depends on manufacturing, especially in the Portland area. Parts of Louisiana, Texas, Indiana, and North Carolina are also more vulnerable than other states in the nation. The states that are least vulnerable include Hawaii, Washington, D.C., Nevada, Florida, and Vermont.
Physical robots are also coming into the service sector. The report talks about how robots are affecting different industries, including healthcare, retail, hospitality, transport, construction, and farming. Virtual robots are also infiltrating the service sectors.
Amy the AI-Powered Real Estate Agent
Amy the AI-powered real estate agent is one example. TheMove.com introduced her last year. It said in the press release that it’s difficult to tell the difference between the service she provides and a real agent. (2) In fact, the company says she often outperforms her human counterparts because she has “a fail-proof memory, superior artificial intelligence, and demonstrates a perfect track record of callbacks.” She is also fast, and responds to customer inquiries in less than five minutes, and can quickly match buyers to local agents.
CEO Sam Singh says, “Amy is just another brilliant example of the future that comes from integrating intelligent AI technology within the real estate marketplace. Amy is smart, fast and reliable without missing out on those key human features customers come to expect in friendly & dedicated customer service.”
Robots, like Amy, may be able to help in an administrative fashion, but they won’t have the kind of human skills needed for higher-level transactions. Oxford researchers say there are certain skills in which “humans demonstrate a distinct advantage over robots.” Among them are more interactive skills like negotiation, persuasion, and customer service.
Navigating the changes that robots will escort into our lives will take input from many sources including business leaders, educators, technology companies, policy-makers, and the impacted workers. Among the things that workers can do is to understand the human skills that can make a job “robot proof,” adopt a “lifelong learning” mindset for skill upgrades, and show support for the development of job flexibility.
We’ll help keep track of the impact on real estate. There’s also a ton of information in the report (see link below).