“I will be the greatest jobs President that God ever created.”
@POTUS Donald Trump campaigned with this and won, partially due to the job-loss-induced frustration in places like the Rust Belt. Building a border wall and introducing import tariffs will help some, but they won’t fix the problem. Technology is the real villain, and many of the jobs lost over the past generation are gone forever.
What really happened to the disappearing jobs? A study from Ball State University revealed that only 13% of lost manufacturing jobs could be blamed on foreign trade, while the remaining 87% were due to technology. At least for the near future, they don’t see it getting any better.
Service/knowledge jobs have also been disappearing. Some loss is due to computers, which have increased the productivity of these workers several-fold. If your call to tech support goes through a series of number pushes on your phone to finally get a live person, you have experienced one example of this first-hand. Many of us frequently interact with ATM’s and Self-Checkout lines – two more examples of technology improving business productivity. Apple’s Siri can now take dictation for many documents and messages. Google’s translation program is fast and accurate. Massive Open Online Courses are disrupting the business of higher education. Automated online ordering is rapidly demolishing the brick-and-mortar business model. The perp-list is long and it’s growing.
The most common job in more than half of US states is “driver”; around 3.5 million people drive for a living in one way or another. Taxi drivers, mail carriers, short and long-haul truckers all make their living behind the wheel. The infrastructure supporting these drivers (gas stations, motels, restaurants…) employs some 50 million folks in total. Uber Freight’s autonomous fleet is about to bring some serious changes to this chunk of the economy. While self-driving vehicles may need gas or a battery charge, they probably won’t require a bed or a burger.
As for the technology that killed all those manufacturing jobs, robots are one obvious suspect. According to Boston Consulting Group, some robots used in the auto industry cost $8/hr to operate, compared to $25/hr (plus benefits) for a human worker. In 1980, generating $1M in US manufacturing required 25 jobs. Today it takes 5. Those 20 lost jobs didn’t go to cheap labor in China or Mexico – they just plain vanished. For many of those displaced folks, the only option was service sector employment at $12/hr and no benefits. Perhaps the economy can stumble along if we are all making each other’s lattes and cutting each other’s hair, but America will not be a happy place.
There is a trend here and it’s not a good one. A recent study on the workplace of the future found that half of today’s occupations will be gone by 2020. Technology is transforming blue collar manufacturing labor to white collar knowledge work, while the folks at McKinsey tell us that nearly half of this knowledge work can eventually be automated.
People are frustrated, and China is a popular scapegoat. It’s true that cheaper labor there is a factor in attracting American manufacturing, but technology is a bigger problem. Four years ago, China became the largest market for industrial robots in the world, and they are spending billions to develop their own. If the current trend continues, we will shift from buying a lot of stuff made in China by Chinese people to buying stuff made in America – by Chinese robots.
A commonly held belief is that manufacturing robots will require higher-skilled workers to design, build and maintain. Technology has that one covered too; an industrial robot named “Franka” can not only replace a human on the factory floor, but it can also replicate itself. Soon, training new hires will have an entirely different look.
Technology will spare no one, not even those of us who write about technology and jobs. The Associated Press, Yahoo and Fox all use robot writers to some degree. Automated Insights recently launched a beta version of its new free service based on Wordsmith, the technology it uses to generate stories for companies like the AP. (Rest assured that this column is written by a real human – at least for now).
History offers some insight into where this sea change may be leading. One of the ways in which economists describe trends places us in the third great technology wave. The first one – the Industrial Revolution that started in the late 18th century - used the power loom and the electric light to abolish jobs. The second, around 100 years later, began putting people out of work with the horseless carriage. Both of these waves of change ultimately improved the quality of life and created new work en masse to replace the old.
Waves 1 and 2 lured us into believing that new innovations automatically lead to greater numbers of better paying jobs. For the past 40 years, our economy has prospered and pumped out more stuff than ever, doing so with fewer employees and at lower wages. Corporate profits have been awesome – worker status, not so much. Why is Wave 3 different?
Innovative technologies go through a process of natural selection, and the survivors are those which add to our quality of life. Job creation is not a de facto participant in the evolutionary calculus. Beginning in the late 20th century, pervasive Internet, advanced robotics, and the expanding capability of Artificial Intelligence began to gain traction.
In Edison’s time it was all about bulbs and wires; today High Speed Internet is the new electricity. Without it, business is in the dark with no growth. From national economies to upstart entrepreneurs, the Internet has transformed communication, social interaction, and the overall flow of ideas and things all over the planet. Where is fiber-optic communications infrastructure the poorest? Those same frustrated rural precincts that helped sweep President Trump into office.
If the Third Wave is to be as beneficial to humankind as the first two, we will need help from the greatest job producer God ever made – Human Innovation.
Author Profile - Paul W. Smith, a Founder and Director of Engineering with INVENtPM LLC, has more than 35 years of experience in research and advanced product development.
Prior to founding INVENtPM, Dr. Smith spent 10 years with Seagate Technology in Longmont, Colorado. At Seagate, he was primarily responsible for evaluating new data storage technologies under development throughout the company, and utilizing six-sigma processes to stage them for implementation in early engineering models. He is a former Adjunct Professor of Mechanical Engineering at the Colorado School of Mines, and currently manages the website “Technology for the Journey”.
Paul holds a doctorate in Applied Mechanics from the California Institute of Technology, as well as Bachelor’s and Master’s Degrees in Mechanical Engineering from the University of California, Santa Barbara.