The Stupidity Of A Robot Tax

Many want to tax robots to fund programs for workers displaced by robots; the problem is no one can show where the displaced workers are

May 17, 2024

“There’s a lot of evidence you can sell people on tax increases if they think it’s an investment.” — Bill Clinton

In the past decade, many vocal individuals have pushed for a robot tax to support a social net for displaced workers. Individuals such as Mark Cuban, Elon Musk, and Bill Gates take the approach that Robots and AI will displace workers, so a tax on robots would help fund re-training programs to get those workers into new roles.

However, most politicians, such as former New York City Mayor Bill de Blasio and former UK Labour Party leader Jeremy Corbin, are taking more of an approach that it will create a disincentive for companies to not replace workers with robots and automation. This is nothing new; the US Senate almost introduced an automation tax back in 1940 out of the same concerns.

The problem, though, is that unlike in the past, when human labor appeared to be plentiful, fewer people are being born now, and the world population is rapidly aging. When pressed about where these displaced workers are, many wanting a robot tax can’t point to any displaced workers on any grand scale.

“The demographic winter is coming.”

This week, the Wall Street Journal published an article about the growing alarm about the global birthrate, which hit 2.32 births per woman in 2021, the latest international estimate from the United Nations. Demographers have stated that a country needs 2.1 to 2.2 births per woman to have a net-zero replacement rate.

In 2023, the United States reported a national birthrate of 1.62, while South Korea reported the lowest national birthrate of 0.72 births per woman. Many believe that the world in 2023 hit a birth rate of 2.15, which would put in the middle of the net-zero replacement rate ideal.

Many government leaders view this as a matter of national urgency. They are concerned about shrinking workforces, slowing economic growth, underfunded pensions, and the vitality of a society with fewer children. Smaller populations result in diminished global influence, prompting questions about the long-term superpower status of the U.S., China, and Russia. Some demographers predict that the world's population could shrink within four decades, a rare occurrence in history.

Jesús Fernández-Villaverde, an economist specializing in demographics at the University of Pennsylvania told the Wall Street Journal, “The demographic winter is coming.”

Tax law professor Xavier Oberson has proposed taxing robots to ensure continued government revenue, especially as the taxable income from human workers decreases. His suggestion involves taxing robot owners until robots can pay taxes themselves, pending further advances in artificial intelligence.

Can Displace People You Do Have

According to estimates from the Retirement Income Institute at the Alliance for Lifetime Income, more than 11,200 Baby Boomers in the United States will turn 65 every day—or over 4.1 million every year—from 2024 through 2027. Now, this does not mean that these Baby Boomers will automatically retire at 65, but compared to the number of high school graduates, we can see the gap forming.

These numbers indicate a relatively steady increase in high school graduates from 2013 to 2019, peaking at 3.77 million in 2019. (National Center for Education Statistics) (National Center for Education Statistics) (National Center for Education Statistics) (USAFacts) (The Texas A&M University System).

There are many signs that 2019 may have been the biggest graduating class of high school seniors the United States has ever had, and it is all downhill from here. So if 4.1 million Baby Boomers could potentially exit the workforce each year and only 3.7 million potential new hires are coming out of high school, we already have a gap. Again, not all Baby Boomers are retiring at 65, and not all graduating Seniors are going immediately into the workforce. However, we have an imbalance.

Over the next decade, the U.S. manufacturing sector is expected to face a significant skills gap, potentially leaving many jobs unfilled. Estimates suggest that the industry could require as many as 3.8 million new employees between 2024 and 2033 due to growth and replacement needs. However, if current workforce challenges are not addressed, about 1.9 million positions could go unfilled (Deloitte United States) (NAM). This shortage is primarily driven by a mismatch between the skills required for modern manufacturing roles and those possessed by the available workforce, which, as stated earlier, is shrinking.

Efforts to mitigate this gap include increasing investment in workforce training, leveraging technology, and forming partnerships with educational institutions better to prepare workers for the demands of manufacturing jobs (Deloitte United States). Despite these efforts, the potential for many unfilled positions remains a significant concern for the industry and the broader economy.

So, robots are not taking anyone’s jobs because there are not enough people to fill the jobs we already have and will have in the future. There is no question that we need to invest in training programs to upskill workers for the skills they will need. However, taxing the robots that keep things moving while those workers are upskilled is asinine.

During the COVID pandemic, robots kept warehouses and many factories operational, as companies had to limit the number of workers in certain areas. We should have learned this very key lesson - when we can’t have people do the task, then we MUST have the robots do it for us or pay the consequences.

Robots Create Jobs

A 2017 McKinsey report predicts that up to 800 million jobs could be replaced by automation by 2030. However, it also suggests that new jobs will be created, potentially offsetting these losses. The report indicates that about 60% of occupations have at least 30% of technically automatable activities, leading to job transformation rather than outright elimination. This report was supported by a 2019 report by Oxford Economics, which found that while robots are expected to displace around 20 million manufacturing jobs by 2030, the productivity boost they provide could generate economic growth and create new jobs in sectors like healthcare, technology, and services. The overall growth is expected to result in 133 million new jobs globally.

One only has to look at the introduction of ATMs in the Banking Industry. While many of the same types screamed that tellers would lose their jobs. The data pointed to the complete opposite.

Starting in the mid-1990s, nearly half a million ATMs were installed across the United States. Many initially believed that this technology would eliminate bank teller jobs. Contrary to expectations, since 2000, the number of teller jobs has increased and grown faster than the labor force overall.

The introduction of ATMs reduced the number of tellers needed at an average urban bank branch from 21 to 13. This reduction in staff made it cheaper to operate branches, encouraging banks to open more branches due to deregulation and marketing needs. Consequently, the demand for tellers increased, offsetting the job losses that automation might have caused.

This pattern is seen in various occupations where technology is introduced. For example, scanning technology in cash registers led to an increase in cashier jobs. Similarly, the use of electronic discovery software in legal offices since the late 1990s resulted in more paralegal positions.

The role of bank tellers shifted from cash handling to focusing on customer relationships and marketing. Tellers now require higher interpersonal and marketing skills, making them part of the "customer relationship team."

The same will and is already being seen as robotics are being introduced.

We Need More Robots AND More Skills Training

To summarize all of this. We can all agree that we must protect human workers and create pathways to returning to the workforce when they are let go by their existing companies. However, that should not be done by taxing robots (even if we could all agree on WHAT a robot is in the first place).

If we want to fund upskilling programs through a tax, then we should tax businesses that lay off people to raise their profit margins. Many companies underinvest in their own training programs, so we should create incentives to award those who invest in upskilling programs.

Instead of blaming robots, maybe it is time to look at CEOs who make 300x what their frontline employees do. Wall Street seems to like companies that make short-term moves to maximize profits but underinvest in their long-term success, like robotics.

In other words, look at those that are really displacing workers and not the technology.

Robot News Of The Week

Sony wants a stake in the surgical robotics market

Sony has developed a microsurgery assistance robot for surgical procedures on small tissues. The robot can automatically exchange surgical instruments and replicate the movements of a surgeon's hands. It aims to address challenges in conventional surgical assistant robotics and be used in a wide variety of surgical procedures.

Sony had its latest surgery robot on display at ICRA in Japan

ABB Robotics launches 2024 Robotics AI Startup Challenge

ABB Robotics has launched a global competition to accelerate the development of artificial intelligence systems in robotics. The 2024 Robotics AI Startup Challenge invites participants to submit ideas and systems in three areas: natural language programming, skill learning, and autonomous decision-making. The Zurich-based company aims to foster innovation and collaboration with pioneering startups worldwide.

A previous ABB challenge resulted in the acquisition of Sevensense, a Swiss startup that developed AI-enabled 3D vision navigation technology for autonomous mobile robots (AMRs). ABB plans to fully integrate Sevensense’s technology into its AMR portfolio based on its purchase of ASTI Mobile Robotics in 2021. By harnessing the power of AI, ABB is designing the next generation of robots to be more intuitive, adaptable, easy to use, and efficient.

Robotics Hub Opens in Denmark

Universal Robots (UR) and Mobile Industrial Robots (MiR) have opened a new 215,000-square-foot robotics hub in Odense, Denmark. The hub is designed to accelerate innovation in advanced robotics technologies through collaborative work.

Robot Research In The News

Disney's Robots Use Rockets to Stick the Landing

Making an entrance by falling from the sky is dramatic but presents challenges. The sudden stop at the end and loss of control over orientation make it difficult. This poses an intriguing challenge for the entertainment robotics team at Disney Research.

Exploration-focused training lets robotics AI immediately handle new tasks

Reinforcement-learning algorithms in systems like ChatGPT or Google’s Gemini can work wonders, but they usually need hundreds of thousands of shots at a task before they get good at it. That’s why transferring this performance to robots has always been hard. You can’t let a self-driving car crash 3,000 times so that it can learn crashing is bad. But now, a team of researchers at Northwestern University may have found a way around it. “That is what we think is going to be transformative in the development of the embodied AI in the real world,” says Thomas Berrueta, who led the development of the Maximum Diffusion Reinforcement Learning (MaxDiff RL), an algorithm explicitly tailored for robots.

A woman performs maintenance on a robotic arm.

Robot Workforce Story Of The Week

Students Graduate College Before High School

Oakland High School’s Early College partnership with Motlow State Community College allows students to graduate with an Associate of Applied Science (A.A.S.) in Mechatronics while obtaining their high school diploma. Through this opportunity, Oakland dual-enrollment students can immediately transfer to the workforce upon completion of high school. Oakland will see six of its seniors graduate from the program this year with college degrees. Motlow’s Early College Mechatronics program combines mechanical, electrical, fluid power, computer, and automation technology to prepare students for a variety of careers. Students acquire hands-on experience with robots and qualify for internship and apprenticeship opportunities throughout the state.

Pictured: Brody Harrison, Dominic Duong, Booklyn Moore, Kellita Bowles, Motlow Dual Enrollment Director Sally Pack, Kayleigh Moreing, and Jon Vazquez.

Robot Video Of The Week

Unitree takes the top prize for this week in robot videos with this one on their latest creation G1 Humanoid. We got to see the little guy up close at ICRA in Japan this week and he definitely drew the crowds. Read the full write-up here.