Posts Tagged ‘Artificial Intelligence’

Robots In The Manufacturing Sector – We’re Lagging Behind

Thursday, March 14th, 2019

In 2013, Oxford professors Carl Frey and Michael Osborne published what became a highly read, highly cited and highly criticized study suggesting that machines could replace 47% of America’s jobs over the following 25 years. This landed like a stink bomb on the robotic revolution.

The study, which examined more than 700 US occupations, found that jobs in transportation, logistics, and administrative and office work were at “high risk” for automation. “We identified several key bottlenecks currently preventing occupations being automated,” said Dr. Osborne when the study was released. “As big data helps to overcome these obstacles, a great number of jobs will be put at risk.”

Following the study, academics and pundits jumped into the middle of the debate to argue its conclusions. In 2015, Forrester Research’s J. P. Gownder authored The Future Of Jobs, 2025: Working Side By Side With Robots and updated it two years later in 2017. Gownder concludes that, yes, AI will replace many jobs, but it will also create many jobs. He suggests a net job loss of perhaps 9.1 million, or about 7% of the workforce. Seven percent isn’t 47%, but 9.1 million jobs are a lot of jobs. And a lot of people who could be swept away by the rise of the robots.

So, clearly, the robots are coming. And, just as clearly, there is now, and will continue to be, human collateral damage. We should do everything in our power to help the millions of people the robots will displace. It would be outrageously stupid, and immoral as well, not to do that.

But if you believe development and adoption of robots is essential to keep the country competitive and prosperous, then you should be concerned, because other countries are outpacing us. By long shot.

A new report from the Information Technology & Innovation Foundation (ITIF) finds the US ranks 7th in the world in the rate of robot adoption in the manufacturing sector.

When controlling for worker pay, the situation is even more bleak. In that case, we’re 17th in the world.

The report relies on International Federation of Robots data for industrial robot adoption rates but adjusted the rankings to control for differences in manufacturing worker pay. The decision to use robots usually weighs the cost savings that can be achieved when a robot can perform a task instead of a human worker, and those cost savings are positively related to the worker compensation levels. Higher wages lead to faster payback, making more robots a more economical investment.

On a compensation-adjusted basis, the report found that southeast Asian nations significantly outperform the rest of the world in robot adoption, with South Korea, Singapore, Thailand, China, and Taiwan the top five nations, in that order. Moreover, China’s rate of robot adoption is so high, fueled by massive government subsidies, that if China and South Korea’s respective growth rates continue, by 2026 China will lead the world with the highest number of industrial robots as a share of industrial workers, when controlling for compensation levels.

Robert Atkinson, ITIF’s President, has some sensible suggestions for how we can catch up. Policy makers should listen to him.

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Artificial Intelligence: Change On A Monumental Scale

Monday, February 29th, 2016

This morning, Joe Paduda, at Managed Care Matters, did the workers’ compensation community a service with his blog post What Job?, in which he writes about the likely prospect of many jobs disappearing due to Artificial Intelligence (AI).

AI is permeating every industry. For example, watch Motoman’s nearly human-free plant in Sweden as robots assemble, package, shrink wrap and ship thousands of Ikea bookcases, or a BMW plant in Germany as robots build the i3 electric car from scratch and with amazing precision, or CNN as its reporters show how Google’s driverless cars are navigating California and three other states.

This is one of the defining issues of our time, and one in which I am profoundly interested. I suggest it is not hyperbole to predict that we are on the verge of an epochal change, something like a kind of mass extinction, and what’s going extinct is an enormous number of jobs. This change might be even more significant than humanity’s evolution from an agrarian to an industrial economy.

Mr. Paduda cites the the Frey and Osborne paper from Oxford University’s Oxford Martin School that suggests up to 47% of jobs run the risk of going the way of the Woolly Mammoth by 2025. The paper is highly controversial and its conclusions have been hotly debated. Even so, the most conservative naysayers agree that the figure is at least 16% (but that figure doesn’t take into account the jobs that the AI revolution will create, estimated at about 9%, for a net job loss of 7%). So, you can see there’s a huge difference of opinion. Regardless, millions of jobs will be lost. Add into that mix the following, and you have a wicked brew for the future:

  • The rise of the Millennials, whose cultural and social thinking, as well as their total buy-in to AI technological development, is nearly diametrically opposed to today’s economic leaders, the Baby Boomers, who are now exiting the work force at the rate of one every seven seconds;
  • Rapidly increasing economic inequality throughout the workforce. For example, consider that since 1973 inflation has grown 533%, while hourly wages for non-farm US Production and Non-Supervisory employees, measured in constant 1984 dollars, have risen a whopping 4%;
  • Put that beside the Disappearing Act of US labor unions. Whatever you think of them, unions were good at negotiating hourly wages and other benefits like health care. But with only 6.7% of the private sector unionized today, that doesn’t happen anymore, so we’re left with a near total change in how we pay for health care today, as well as what we get for it, compared with how we paid and what we got for it in 1973. For example, we now have $2,000 (or more) deductibles, significant increases in employee premium contributions, the gold medal for the highest cost for health care in the developed world, way-over-the-top histrionics surrounding the Affordable Care Act, etc. You get the picture.
  • The increasing need for both cognitive and social skills in entrance level jobs on track for middle class wages (presuming there is a middle class). See The Increasing Complementarity of Cognitive and Social Skills, by Catherine J. Weinberger, University of California, Santa Barbara.
  • The continued accuracy of the 1965 technological development prediction, known as Moore’s Law. Simply stated, Gordon Moore, the founder of Intel, predicted that computing power would approximately double every two years, and it has – since 1965. Moore has recently revised his prediction to two and a half years through the next decade.
  • Finally, the rise of what can be called the “intellectual” robots as exemplified by IBM’s Watson, which, in addition to handily beating all-time champion Ken Jennings at Jeopardy, is already doing a better job of reading XRays, CT Scans and MRIs than human radiologists. And here’s something to ponder along that line: Many agree that a workers’ compensation claims adjuster with a lost time caseload of 100 to 125 claims has the ideal caseload (a few nights ago at a Central New Jersey Claims Association meeting I was talking with a motivated and energetic workers’ comp claims adjuster for a company that shall go nameless – but it’s respected and well-known – who told me she’s carrying 180, and that’s the norm for her group). How would Watson do on that? Watson, a machine that sounds like the Hal 9000, never sleeps and could analyze thousands, maybe more, of lost time claims a second. IBM says that human involvement with Watson is critically important, but how many people does that mean? After the initial intake with the claimant, how much claim management could shift to Watson? You may not agree, but it seems to me that more than a few workers’ comp claims adjusters may soon begin to resemble that long-gone Woolly Mammoth.

I’ll leave you with a question: Do you think it would have been appropriate if this subject had made it onto the agenda for the upcoming WCRI Annual Conference in Boston, March 10 and 11? Regardless of your answer, I’ll be there and will be happy to dive deep into the AI crease with any interested attendees.

Hope to see you there.

 

 

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From a Lonely Gate at O’Hare Airport

Monday, November 2nd, 2015

No trip is ever totally smooth. To prove the point, a couple hundred of humanity’s weary children  and I now sit at O’Hare’s Gate B9 waiting for a pilot to fly us home to Boston. Seems that the pilot originally scheduled has gone AWOL. Whatever the reason, he’s not here, so United Airlines is scrounging around for a replacement. None of the passengers has volunteered.

The rest of the trip has been excellent. I’m returning from Boise, Idaho, where I was honored to deliver the keynote address at the Idaho Industrial Commission’s Annual Workers’ Compensation Conference.

Commission Executive Director Mindy Montgomery, conference organizer Dara Barney and the rest of the outstanding Commission staff did a wonderful job pulling together a highly informative and stimulating day for more than 300 of Idaho’s workers’ comp professionals, including attorneys, claims adjusters, medical providers, agents and brokers.

And before we go any further, I want to publicly acknowledge a debt I owe to the Commission’s Chair, R. D. Maynard, who is also the current President of the IAIABC. In his opening remarks he used a phrase I’ve never heard, but which I intend to steal for the rest of my life. The phrase? In describing a smart person, R. D. suggested she was “smarter than a treeful of owls.”

In my hour and a half presentation (yes, that’s a long one) I didn’t come close to R. D.’s bon mot, but I did discuss three big picture issues and their relationship to workers’ comp:

  1. Rapidly accelerating artificial intelligence
  2. The generational changing of the guard as Baby Boomers pass the torch to Millennials
  3. The New Normal Economy.

I asked the attendees to what degree they thought our industry has or has not kept pace with these transformational issues. I suggested strongly that it has not. By the end of the presentation, most seemed to agree. It’s almost as if for the industry it’s business as usual, but for the industry’s customers, the employers who pay the bills, it’s full speed ahead toward tomorrow.

In the possibly absurd leap of faith that our Jetway’s umbilical cord to O’Hare will be brief, in this post I’m only going to address Item #1, above, the rapidly accelerating development of artificial intelligence.

During the Great Recession that began in 2008, American business lost 16% of its workforce, which forced a major re-evaluation of how business is done. Sixty percent of the jobs that were lost were lost by the middle class, but, according to the Federal Reserve Bank of St. Louis, only 22% of those jobs came back, the other nearly 40% dropping into significantly lower paying jobs. Why? Well, one reason is that beginning in 2010, we saw The Rise of the Robots. Since then, there has been a nearly exponential growth in the deployment of industrial robots and the artificial intelligence that is more and more governing them. Employers are realizing that fewer and fewer humans are needed to make high-quality, reliable products. And robots don’t get hurt and enter the workers’ comp system. You certainly insure them, but not with workers’ comp.

Two examples:

  1. At an Ikea factory in Sweden, book case components are assembled, packaged, shrink-wrapped, palletized and made ready for distribution 24 hours a day without the touch of a human hand.
  2. Since defeating Ken Jennings on Jeopardy, IBM’s Watson has continued to learn at a faster and faster pace. Today, Watson seems more like a thinking person, whoops, excuse me, make that thinking machine, than most humans.

In Idaho, I challenged the attendees to ponder how long it would be before some forward thinking insurance hotshot cottons on to the idea that Watson might make a great claims adjuster. Think about it. Handling no more than 125 open claims today is pretty much considered  ideal. Watson could handle thousands – 24 hours a day.

I’m not suggesting that we are on the cusp of watching claims adjusters suddenly go the way of the Wooly Mammoth. No, there is a nuance to the claims process that human beings possess and robots, such as Watson, don’t — yet. But it seems inevitable to me that Watson and his brothers and sisters will continue to learn at an ever faster rate, to the point that they will, at some point in the not too distant future, acquire the nuance displayed by today’s best adjusters.

And what about the armies of highly-trained and, in some cases, highly-paid people populating the many pockets on the workers’ comp health care pool table?

The point is that big change is not coming; it’s here. So, the question becomes – What is the more than 100-year-old workers’ compensation industry doing about it? What is the plan?

Before wheels up (yup, we’re finally getting off the runway), I’d like to congratulate both Bob Wilson, of workerscompensation.com, and Mark Pew, of Prium, for their spellbinding (I’m not exaggerating) presentations at yesterday’s Idaho conference. It was a privilege to be on the same program with these workers’ compensation thought leaders.

I’ll post this sometime after getting safe and sound to Boston, “the home of the bean and the cod, where the Lodges talk only to Cabots, and the Cabots talk only to God.”

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The AI Robotic Tsunami: Coming To A Workplace Near You!

Wednesday, August 26th, 2015

In 2013, Oxford professors Carl Frey and Michael Osborne published what became a highly read and highly cited study suggesting that machines could replace 47% of America’s jobs over the next 25 years. To say that they got the business world’s attention is a little bit like saying Ted Williams was a pretty good ballplayer.

The study, which examined more than 700 US occupations, found that jobs in transportation, logistics, and administrative and office work are at “high risk” for automation. “We identified several key bottlenecks currently preventing occupations being automated,” said Dr. Osborne when the study was released. “As big data helps to overcome these obstacles, a great number of jobs will be put at risk.”

Consider transportation. As of July 17, 2015, more than 20 Google self-driving cars have logged more than 1.9 million miles around California streets and have yet to cause an accident, although they’ve been hit 14 times by other cars, 11 of those hits being rearenders. So, how long do you think it will be before the transportation industry latches onto the self-driving phenomenon as a way to cut costs and increase productivity?

And logistics? Even now, Amazon and other retailers are flying drones around their warehouses delivering material for shipment, work that, before Dronedom, actual human beings performed, albeit more slowly and, every once in a while, with a bit of breakage.

And can we ignore IBM’s Watson, or Rethink Robotic’s Baxter (The AI parents just have to give their artificially intelligent children human names, don’t they?)?

The productivity increase is awesome, indeed. But the trade-off is a human job.

Of course, someone has to keep the drones flying. And someone has to keep Google’s cars humming along. This is a point the good Drs. Frey and Osborne did not examine deeply in their 2013 paper- that as jobs are eliminated due to automation, other jobs, more complex in most cases, will be created. This from the paper:

Our findings imply that as technology races ahead, low-skilled workers will move to tasks that are not susceptible to computerization – i.e., tasks that require creative and social intelligence. For workers to win the race, however, they will have to acquire creative and social skills.

But, hang on a minute. Just when we begin to think that Fritz Lang’s “Metropolis” is a’comin round the corner like an out-of-control, self-driving 18-wheeler, Forrester Research released yesterday The Future of Jobs, 2025: Working Side-By-Side With Robots (the study may be purchased from Forrester for $499.00). Authored by Forrester analyst J. P. Gownder, the paper only looks out ten years, compared to Frey and Osborne’s 25. Even so, Gownder’s prognosis is nowhere as bleak as the Oxfordians’. They postulate a total job loss of 71 million. Gownder, using government data and many interviews with business execs, academics and pundits, suggests a net job loss of 9.1 million, or 7% of the workforce.  Where I come from, J. P., that’s a lot of jobs, but I take your point.

Notwithstanding the competing research, what we can say is that big change is not coming; it’s already here. This is an industrial era evolution. There have been many before. Remember that before the automobile, there was a thriving market for buggy whips.

This is one of the topics I’ll be covering on Thursday, October 29, in my Keynote Address to the Idaho Industrial Commission’s 2015 Annual Seminar on Workers’ Compensation. I’ll be discussing how artificial intelligence, along with two other emerging employment issues, is impacting workers’ compensation and how smart employers can deal with it successfully.

Meanwhile, here’s a little something for workers who awaken one day to find their newest work partner is no longer Homo Sapiens, but rather Ratus Robotus.

Workers who adjust survive.
Many of them even thrive.

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