New Philadelphia Fed Study Suggests COVID-19 Accelerates Automation

Posted by Federal Reserve Bank of Philadelphia on September 29, 2020

In June 2020, Pennsylvania laid off 500 toll collectors after the interstate system temporarily went cashless. This is just one example that has increased concerns about whether the pandemic has accelerated the pace of automation. The Federal Reserve Bank of Philadelphia has released “‘Forced Automation’ by COVID-19? Early Trends from Current Population Survey Data.” This new research, led by Lei Ding and Julieth Saenz Molina, provides the first empirical analysis of the impact of COVID-19-induced automation on job losses.

Here are the major results from the study:

• Automatable occupations were among the most impacted by the massive pandemic-induced job losses. This includes jobs such as hotel desk clerks, shuttle drivers, retail salespersons,and parking attendants. As of August 2020, automatable occupations lost 4.2 more jobs per 100 than occupations with a low risk of automation. That is equivalent to 2.6 million precrisis jobs, which were thus exposed to an elevated risk of being permanently automated.
• The pandemic likely accelerated automation by displacing workers in automatable occupations that are more vulnerable to the pandemic. These are jobs that do not permit remote work, have a high risk of COVID-19 transmission, or are in the most affected sectors.
• The crisis has been particularly hard on automatable jobs held by minority workers, who were already vulnerable in the job market. By August 2020, automatable jobs held by minorities experienced 5.1 more job losses per 100 than those held by non-Hispanic whites.
• In case the COVID-19 crisis evolves into a prolonged economic crisis, there is a risk that the losses of automatable jobs could become permanent, similar to what happened during the recovery from the Great Recession.

Read the report: https://www.philadelphiafed.org/-/media/community-development/publications/discussion-papers/discussion-paper_automation.pdf?la=en

Overall, the results are consistent with the contention that COVID-19 has accelerated the process of automation in the U.S. This could lead to an unprecedented need for government interventions to support displaced workers and prepare for the complex workforce transitions ahead.

See more of our research on COVID-19 at https://www.philadelphiafed.org/covid-19.