America’s workforce and the self-driving future: Realizing Productivity Gains and Spurring Economic Growth from Securing America's Future Energy (SAFE)
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In the last several years, the development and adoption of autonomous vehicles
(AVs) has emerged as a central policy subject, both in the United States and across
the world. The vision of a future where vehicles drive themselves has captured
the imagination of the public, promising the potential for significant improvements
in roadway safety, economic productivity, accessibility, and reducing fuel
consumption and accompanying emissions.
At the same time, some have expressed concern about the long-term impacts of
the technology, most intensely with regard to the question of the potentially farreaching
impacts of the technology on the U.S. labor force. The individual identities
of Americans are often intertwined both with the vehicles they drive and their
occupations. The potential significant changes on both fronts in the years and
decades to come is, understandably, an unsettling prospect for some.
To ensure that policy decisions are made on the basis of solid evidence, SAFE
engaged us to answer a series of questions that cut to the core of these issues.
The questions were:
1. What precedents should we look to in thinking about the impacts AVs will have
on society and the economy?
2. What are some concrete examples that illustrate the nature and magnitude of
the economic and social benefits that AVs can offer?
3. What will be the medium- to long-term impacts of vehicle automation on the
workforce? Upon what will the scale and timing of those impacts depend?
What steps can be taken today to ensure the best outcome for both the public
that stands to gain from AVs and the workers whose jobs could be impacted?
These questions were selected because of the importance of improving the social
impact of the technology, the potential for impacts on the labor force, and the
importance of these considerations to policymakers in weighing AV regulation. A
deeper knowledge of the broader economic impacts of AVs will help to encourage
constructive choices in a resource-constrained world.
Over the last six months, we divided these questions amongst this group, with
a report dedicated to each question. We performed independent and rigorous
research utilizing well-accepted methods of economic analysis that culminated
in three reports—referred to in this brief as the Compass Transportation report
(focused on the question of precedents), the Montgomery AV benefits report
(focused on the benefits of AVs) and the Groshen employment report (focused
on the employment impacts)—that each addressed one of the questions posed
above.
The authors state
Although they are not yet in widespread commercial use, there
is intense public interest in autonomous vehicles (AVs).
Much of the focus has been on the broad societal benefits
this technology can offer. AVs also have the potential
to influence society in a way unseen since the invention
of the automobile. In addition to dramatically reducing
traffic accidents and roadway fatalities, AVs hold the
promise of improved mobility—critical for economic
growth and quality of life. AVs can dramatically improve
the lives of communities underserved by our current
transportation system and those most vulnerable to its
inefficiencies, namely Americans with disabilities, seniors,
and wounded veterans.
However, some have raised concerns about the potential
for AVs to negatively impact workers and exacerbate
wealth inequality. SAFE believes that AV-related
labor displacement concerns—many of which have been
expressed sensationally—must be addressed seriously
rather than merely dismissed out of hand or repeated
without verification. In response to these concerns, SAFE
commissioned a panel of highly regarded transportation
and labor economists to conduct a fact-based and
rigorous assessment of the economic costs and benefits
of AVs, including labor impacts.
The commissioned research painted a detailed outlook
for the future economic and labor market impacts
of AVs. They found:
• AVs have many of the characteristics of “catalyzing
innovations” whose positive impacts are felt broadly
throughout the economy.
• Significant economic benefits from the widespread
adoption of AVs could lead to nearly $800 billion in
annual social and economic benefits by 2050, mostly
from reducing the toll of vehicle crashes, but also
from giving productive time back to commuters,
improving energy security by reducing dependence on
oil, and providing environmental benefits.
• A study of traffic patterns and job locations found that
some economically depressed regions could see improved
access to large job markets for their residents
through the deployment of AVs.
• AVs will create new jobs that will, in time, replace jobs
eliminated by automation. Strong workforce development
infrastructure can both mitigate employment
disruption and speed the evolution of worker skill
requirements that will contribute to full employment
and economic growth.
• There is significant time before the impacts of AVs on
employment are fully realized. Simulations of the impact
of AVs on employment showed a range of impacts that
would be felt starting in the early 2030s but would only
increase the national unemployment rate by 0.06–0.13 percentage points at peak impact sometime between
2045 and 2050 before a return to full employment.
• The economic and societal benefits offered by AVs
in a single year of widespread deployment will dwarf
the cost to workers incurred over the entire multidecadal
deployment of AVs when measured in purely
economic terms. The benefits of AVs are sufficiently
large to enable investment of adequate resources in
assisting impacted workers.
• By pursuing a rapid deployment of AVs, combined with
investments in workforce policies that seek to mitigate
costs to workers and policies that address other
risks or costs that might emerge alongside greater AV
adoption, the United States can enjoy the full benefits
of AVs as soon as possible while simultaneously preparing
the workforce for the jobs of the future.
Economic and Societal Impact
Many of the most compelling benefits of autonomous
vehicle technology will be intangible or undetectable
from modeling designed to capture
incremental gains. Any economic estimates of these
benefits should be understood as an attempt to
capture just a portion of gains from AVs. This conservative
microeconomic analysis estimates economic
benefits of up to $800 billion per year with
full deployment of AVs. Utilizing the projections for
AV deployment that SAFE developed, the value of AV
benefits through 2050 will likely be between $3.2
trillion and $6.3 trillion. This is a partial estimate
looking at a narrow set of case studies—a full estimate
would likely be significantly higher.
A projection of the annual consumer and societal
benefits of AVs is in Figure A. The breakdown of these
benefits (upon full adoption) is in Table A.
Accident Reduction: In 2010, the National Highway
Traffic Safety Administration (NHTSA) estimated
the economic costs of car crashes to be $242 billion per
year. When quality-of-life costs are added into the estimate,
the total value of societal harm was approximately
$836 billion per year. Extrapolating these values based
on more recent crash and driving data puts the annual
societal cost of crashes at over $1 trillion today. Using
a conservative methodology in which we assume AVs
would only address crashes resulting from a gross driver
error (e.g. distraction, alcohol, and speeding), the annual
benefit would exceed $500 billion. Given that human
error contributes to over 94 percent of accidents, benefits
could exceed this amount.
Reduce Oil Consumption: Oil holds a virtual
monopoly on vehicle fuels, with petroleum accounting
for 92 percent of the fuel used to power the U.S.
transportation system. By precipitating a shift away
from petroleum as the dominant fuel source, AVs can
substantially reduce America’s reliance on oil. An analysis
of the energy security and environmental benefits of
increased EV uptake as a result of AV deployment supports
an estimated $58 billion societal benefit.
Congestion: Crashes are a major source of road
congestion and improved safety from AVs and better
throughput (e.g. through reduced bottlenecks) could
significantly reduce the current costs of congestion:
Close to 7 billion hours are lost in traffic and over 3 billion
gallons of fuel similarly are wasted every year.
Improved Access to Retail and Jobs: SAFE
modelling of road speeds around specific retail establishments
found that the increased willingness of shoppers
to travel—even by just two minutes each way—could
increase a mall’s customer base by nearly 50 percent
in some instances. Additionally, SAFE modeling identified
numerous economically disadvantaged localities for whom better transportation options would lead to
greater employment opportunities. For a group of four
struggling cities (Gary, IN, Benton Harbor, MI, Elmira,
NY, and Wilmington, DE), SAFE modeled how increased
traffic speeds from AV adoption and greater willingness
to travel could impact the number of jobs within reach.
An illustrative example is in Figure B.
The Effect of AVs on the U.S. Labor Force
From the automobile to the internet, history has demonstrated
time and again that new technologies lead
to sizable economic and social benefits in the long run.
However, with significant change always comes the
specter of potential loss, particularly in the short term.
Like many new technologies before it, the public discourse
around AVs has witnessed a significant focus on
potential downsides, often with considerable exaggeration.
However, the potential losses must be balanced
with the benefits from highly significant improvements
in safety, reductions in vehicle crash fatalities, gains in
productivity, reduced congestion and increased fuel efficiency
that will result from AV deployment. Indeed, the
benefits are sufficiently large to enable investment of
adequate resources in assisting those affected.
A study of historical precedents for the impacts of
new technologies found a common pattern: Adoption of
new technologies improves productivity and increases
quality of life. Widely adopted technologies can transform
our way of life and improve economic well-being
at a national scale. Often, technological progress leads to
improved opportunities for workers in the short term; a
recent study found that the rise of e-commerce has, on
net, improved jobs for high school graduates.1 However,
the impacts of those technologies can also present temporary
challenges for the workforce, both for employers
needing skilled workers, and for workers whose skills may
no longer be as competitive in the labor market.
In the absence of concrete estimates, the media
and public have a tendency to concentrate on the
worst possible outcome. A recent report claimed that
“more than four million jobs will likely be lost with a rapid
transition to autonomous vehicles.”2 The methodology
used to develop this number was simply to count driving
jobs in the United States and assume that they would be
rapidly lost as AVs deploy. Such assumptions and conclusions
lack context, nuance, or grounding in labor market
dynamics and the natural cycle of labor force evolution.
Using the scenarios SAFE provided for the adoption
of AVs, the Groshen employment report modeled
the technology’s impact on the workforce. The study
concluded that AVs would not lead to the long-term
loss of jobs, although some number of workers could
experience unemployment and wage losses. As there
are far more professionally employed truck drivers than
professionally-employed car drivers, impacts would be
tied more closely to the adoption of very high automation
in trucks (defined as no driver “in the loop” for most
of operation). In contrast, partial
automation or teleoperation of
trucks is not likely to have significant
negative impacts on the workforce.
Figure C and Table A contextualize
the job loss within a broadly
understood metric—the unemployment
rate. Relative to a baseline of full employment,
the advent of AVs are projected to increase the unemployment
rate to a small degree in the 2030s and to a
somewhat larger degree in the late 2040s, with a peak,
temporary addition to unemployment rates of 0.06–
0.13 percentage points. Table A contextualizes the size of this employment impact with the shock of the recent
Great Recession and a previous mild recession.
Policy steps to address the evolution of the labor
market must ultimately be placed in the context
of the broader impacts of AVs in order to ensure
the best outcome. Due to the large-scale societal
benefits from the deployment of AVs, policies to
address labor force issues must carefully consider
their potential impact in delaying the deployment
and thus the benefits of AVs.
Delaying the deployment
of AVs would represent a significant and deliberate
injury to public welfare. Rather than delaying
the benefits, policymakers could ensure that the
interests of the people who may lose jobs are well
protected through effective mitigation programs.
Figure D illustrates the importance of balancing
these two priorities. It plots both the conservative
projected AV benefits and the range of projected
wages that will be lost to individual workers due to
AV-related unemployment. The range of projected
wage loss reaches as high as $18 billion in 2044 and
2045. However, it is essential to note that this goes
hand-in-hand with projected social benefits well in
excess of $700 billion for each of those years. In
fact, not only are the social and economic benefits of
AV deployment significantly more than their costs to
workers on an annual basis, but the benefits of AVs
each year are far greater than the total cost to workers
over the next 35 years combined (illustrated by
the middle range of this graph)
