Technological Unemployment

Definition

The term technological unemployment is used to describe the loss of jobs due to advances in automation and other technologies.  Technological unemployment is a form of structural unemployment, which is a permanent shift in the availability of certain jobs.

Explanation

The British economist John Maynard Keynes first used the term technological unemployment back in the 1930s.  A component of structural unemployment, technological unemployment occurs as processes that were traditionally performed by employees are automated to some degree, thereby lowering the number of employees required at a given level of productivity.

Automation and technological innovations oftentimes result in more cost efficient processes, fewer safety concerns, and a more consistent level of product quality.  The combination of lower costs and higher quality motivates companies to aggressively seek out these opportunities.

Studies demonstrate that job losses typically occur in those occupations that involve routine physical labor and are fairly easy to automate.  For example, the internet, email and instant messaging have decreased consumer demand for mail delivery by United States postal workers.  In this example, technological advances resulted in the permanent loss of these jobs.

While some economists argue technological advances will result in a sustained, higher level of unemployment, others believe new jobs will develop to absorb these displaced workers.

Related Terms

frictional unemployment, classical unemployment, natural unemployment, structural unemployment, Trade Readjustment Allowance, unemployment benefit