Why a Robot Tax Won’t Work

  • 4 Min Read

Mitigating skills obsolescence requires creating more flexible and affordable avenues for people to acquire the skills they need.

Bill Gates thinks robots should pay taxes. He’s wrong.

In a February interview with Quartz, the Microsoft founder said if robots are taking people’s jobs, they should pay income taxes too: “Right now, if a human worker does, you know, $50,000 worth of work in a factory, that income is taxed and you get income tax, social security tax, all those things. If a robot comes in to do the same thing, you’d think we would tax the robot at a similar level.”

The idea is that the tax would mitigate skills obsolescence by funding the education and training of out-of-work workers for new jobs.

The problem is, this proposal is based on a flawed premise: that robots will displace people entirely from the jobs they are doing today.

While that may be true for some positions that are defined by a narrow set of replaceable skills—like cab drivers being replaced by autonomous vehicles—the broader reality might end up being a lot more complicated. As automation moves up the value chain into more complex activities, robots may take over some of a job’s tasks while leaving others. That won’t necessarily eliminate the job, but it will certainly change the portfolio of skills required for the humans working alongside the machines.

According to a study by the Organization for Economic Co-operation and Development (OECD), the latter scenario is more likely. A comparative analysis of the risk of automation for jobs in OECD countries found that the number of jobs that are totally automatable is relatively low — 9% across the 21 OECD countries. However, the study predicts that a more likely scenario is for machines to take over some tasks within existing jobs, freeing human workers to take on new, more complex, and higher value tasks.[1]

We’ve actually seen a version of what this might look like already with the advent of automated teller machines (ATMs).

When they were first rolled out in the 1980s, ATMs looked like they might seriously displace human bank workers. By 1985, the US had 60,000 ATMs and 485,000 bank tellers. By 2002, the number of ATMs has exploded to 352,000, yet we had 527,000 bank tellers. Despite the continued growth of ATMs, the Bureau of Labour Statistics (BLS) reports that the number of bank tellers also continues to grow. The US had over 600,000 bank tellers in 2008 and the BLS projects there will be 638,000 by 2018. Interestingly, the BLS also reports that there were over 150,000 people dedicated to computer, automated teller, and office machine repairers in 2008. In other words, the advent of ATMs created jobs for humans who could fix and maintain them. [2]

Of course, the job description for bank tellers has evolved considerably. Rather than doling out tens and twenties, the modern bank teller builds relationships with customers, offering advice on financial products like mortgages or auto loans. Machines have taken over the lower-skill tasks, and tellers now focus on the things humans do well—in this case, communicating effectively and building productive relationships with customers.

The ATM example points to a more likely future for automation and the workforce—machines will take over automatable tasks, humans will need to upskill, and humans will work side-by-side with machines. In this scenario, many of us won’t take on entirely new kinds of work, but we’ll need to add to our portfolio of current skills and prepare to take on more complex tasks as machines take over some of the more mundane tasks we’re doing today. Taxing the robots solves the wrong problem. We don’t need to create disincentives for automation. We need to make it easier for humans to learn the new skills they’ll need to prepare for emerging opportunities in their current fields.

That requires an evolution in our current approach to education and training: focusing on creating more flexible and affordable avenues for people to acquire the skills they need as automation makes some skills redundant and puts a new value on skills they don’t yet have.

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Ultimately, automation will allow workers to stop doing boring tasks — like dispensing money at the bank — that are better done by machines. That will allow all of us to focus on more interesting, productive work. Remember, once upon a time, business leaders had secretaries that typed their correspondence. Then came the personal computer, with applications like Microsoft Word that made it easy for all of us to do our own typing.

Today, a modern executive assistant is a capable gatekeeper, helping leaders stay focused on the things that matter. If we had taxed Microsoft Office, perhaps they’d still be part of the steno pool. That wouldn’t be ideal for workplace productivity or the elevation of executive assistants to more valuable roles. Then and now, the best ‘solution’ for productivity enhancements is for humans to do what we do well — learn and move up the value chain.

[1] Arntz, M., t. Gregory and U. Zierahn (2016), “The Risk of Automation for Jobs in OECD Countries: A Comparative Analysis”, OECD Social, Employment and Migration Working Papers, No. 189, OECD Publishing, Paris.

[2] The Economist: Are ATMs stealing jobs?

This post was originally published on LinkedIn Pulse