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Detroit

Robots took all of Detroits black jobs

A new study in the US from MIT and Boston University suggests that industrial robots, not Mexico, may be the bigger factor contributing to the high levels on unemployment in black communities.

Published: March 29, 2017, 9:02 am

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    Detroit

    Entitled “Robots and Jobs: Evidence From US Labor Markets,” the authors of the study found that the addition of 1 robot per 1 000 workers results in an 18-35 bps reduction in the employment-to-population ratio and 25-50 bps reduction in wages. BPS, or basis point refers to a common unit of measure for interest rates and other percentages in finance.

    Some scenarios estimate a huge spread of robots over the next decade, with the world stock of robots to quadruple by 2025. This would correspond to 5,25 more robots per thousand workers in the United States.

    But the impact is dramatic when job losses are heavily concentrated in only certain industries. The automotive industry, which employs 39 percent of existing industrial robots, is situated in predominantly black Detroit, formerly known as Motor City, and the future is looking even bleaker for jobs.

    The electronics industry too, employs 19 percent, metal products stands at 9 percent and the plastic and chemicals industry at a similar 9 percent, but the impact may be mitigated, racially speaking.

    Bloomberg noted on the study: “One additional robot per thousand workers reduces the employment-to-population ratio by 0.18 percentage points to 0.34 percentage points and slashes wages by 0.25 percent to 0.5 percent, based on their analysis. To put that in context, the U.S. saw an increase of about one new industrial robot for every thousand workers between 1993 and 2007, based on the study.

    “The employment effects of robots are most pronounced in manufacturing, and in particular, in industries most exposed to robots; in routine manual, blue collar, assembly and related occupations; and for workers with less than college education. Interestingly, and perhaps surprisingly, we do not find positive and offsetting employment gains in any occupation or education groups.”

    The authors also estimate that robots may have increased the wage gap between the top 90th and bottom 10 percent by as much as 1 percentage point between 1990 and 2007.

    An additional 3,5 million permanent jobs losses could occur over just the next 10 years which would increase the unemployment by over 2 percent.

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