Opinion: Workers will simply try to survive, rather than prosper, as tech takes over the economy
Opinion: Workers will simply try to survive, rather than
prosper, as tech takes over the economy
An assumption was that new jobs in new industries would
take up displaced workers — but that hasn’t happened
Published: Oct 24, 2016 9:36 a.m. ET
For most people, a secure, well-paid job is the
difference between a reasonable life and penury. Today, changes in the
structure of the work force driven by globalization and technology make this
objective increasingly elusive.
Technology has exacerbated declines in employment and
incomes by eliminating tasks and “de-skilling” many jobs.
Robotics and complex computerized equipment has
successfully replaced skilled labor. Computer software is now replacing
journalists, synthesizing news items electronically by crawling the internet.
Even traders in financial markets are being replaced by automated algorithms.
In the late-20th century, global supply chains allowed
lower-paid workers to displace expensive counterparts in more developed
countries. Initially, this occurred in manufacturing industries requiring
limited skills. Over time, it encompassed more skilled jobs, spreading to
services and professional work.
While there are well-paid jobs for a small portion of the
workforce with the required skills, the vast majority of new employment is in
the low-paid service sector.
Communications, which allowed cheap real-time
transmission of voice as well as near-instantaneous transfers of vast amounts
of data and increasingly high-definition images, initially facilitated the
relocation of production. Increasingly, it allows relocation of services such
as engineering, architectural, accounting or legal services and even medical
procedures.
In combination with remote command-and-control technology,
originally developed for military applications, it is now possible to control
highly automated production lines and even mines from distant sites.
Those changes affect incomes and the availability of
jobs. U.S. median earnings have not increased since 1975 in real terms. Average
real Japanese and German household incomes have been stagnant for more than a
decade. U.K. factory incomes haven’t risen since the late-1970s, after
adjusting for inflation.
All workers, irrespective of profession and skill, now
face what John Maynard Keynes called “technological unemployment.” A much-cited
research study by Oxford University found that 47% of all employment (80
million jobs in the U.S. and 15 million in the U.K.) are threatened by
automation.
A common assumption was that new jobs in new industries
would take up displaced workers. Unfortunately, the reality has been different.
The number of people employed in technology has remained
modest, around 5% to 6% of the workforce. By one estimate, only 0.5% of the
U.S. labor force is employed in industries that did not exist in 2000. In
Silicon Valley, only 1.8% of workers are employed in new industries.
One reason is that many new industries are not
labor-intensive, and when they are, the tasks are outsourced to the cheapest
supplier in the world. A leading technology company like Google has only around
60,000 employees worldwide.
Many of those subject to “involuntary separation” (the
Orwellian term for losing your job) are unlikely to find new employment.
Textile or assembly-line workers are unlikely to reinvent themselves as
knowledge workers, technologists, bio-engineers, financiers or other
professionals.
Education is not a guarantee of employment. The cost of
training has risen sharply, leaving many individuals with substantial student
debt. Many new graduates are unable to obtain work in their selected areas, and
starting incomes are around 10% to 12% lower than they were five years ago,
compounding the problem of higher and increasing student debt.
Mobility of labor is restricted by family, social and
financial commitments, such as home ownership. Globalization never embraced the
free movement of people, being limited to the movement of capital, goods and
services. In reality, mobility exists only for a small number of skilled
individuals, who can trade up to countries with greater opportunities and
higher rewards by using their abilities and training.
Even if feasible, such a transition requires adequately
funded retraining facilities. The complexity and dynamism of the new economy
means that employment opportunities for retrained people are not guaranteed.
For those who find jobs, the threat of under-employment or unemployment is
constant, making it difficult to make long-term plans and achieve long-term
financial and personal security.
The economic arguments do not factor in the inefficiency
and high costs of constant re-education and re-training of workers with
particular skills who may not want to change occupation. It also fails to
acknowledge that cheaper goods and services can only be achieved by reducing
the input cost, including labor. While innovation and productivity improvements
contribute, a reduction in employment or income levels is necessary to decrease
labor costs.
While there are well-paid jobs for a small portion of the
workforce with the required skills, the vast majority of new employment is in
the low-paid service sector, such as retail, security and health care. Youth
unemployment remains high.
A large part of the population are now members of the
“precariat,” a shortened version of the term “precarious proletariat” used in
Japan to describe workers without job security who now make up over 30% of the
country’s workforce as companies cut labor costs.
Changes in the workforce affect the nature of society. In
the brave new world, a small elite, say, 5%, enjoy the significant wealth and
control of much of its resources. They employ another stratum of people, say,
20%, to administer their affairs as well as control the precariat, 75% of the
population.
Connections, beauty and brains will permit upward
mobility, though movement between the groups may become more difficult. In the
new economy, the precariat survives rather than prospers in an essentially
subsistence existence.
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