Technology and Unemployment, Part II: The Rising Tide

Nov. 20, 2013, 11:29 p.m.

With every period of radical technological change has come an equally significant shift in the landscape of where people work. Driving these evolving labor patterns has been advancing technology. This second part in my series for the Daily on technological unemployment examines why we will see technology eat the job market from the middle out.

In just the 1900s, a century including revolutions in computing, communications and transportation as well as the invention of “the x-ray, wind tunnel, arc welder, circuit breaker, transistor, Geiger counter, laser,…fiber optics, [and] stainless steel,” the U.S. labor force “shifted from industries dominated by primary production occupations, such as farmers and foresters, to those dominated by professional, technical, and service workers.” By 1999, farming employed less than three percent of workers, down from 38 percent in 1900, while “goods-producing industries, such as mining, manufacturing, and construction,” employed only 19 percent, down from 31 percent. On the other hand, the services sector employed a full 78 percent of the work force at the end of the century, up from only 31 percent at its start.

As the New York Times put it in a piece on the assembly of the iPad, “modernization has always caused some kinds of jobs to change or disappear…farmers became steelworkers, and then salesmen and middle managers.” Indeed, they add, “these shifts have carried many economic benefits, and in general, with each progression, even unskilled workers received better wages and greater chances at upward mobility.”

Alas, this trend cannot continue forever. In developed economies we have reached a point where each innovative cycle destroys more mid-level jobs than it creates, pushing the remaining jobs further out of reach for many of those left unemployed and increasing wealth and opportunity disparity.

Mid-level or middle-skill positions give the 73 percent of working-age Americans without a bachelor’s degree a chance to make a decent wage without advanced education. But it is the very factors that make mid-level jobs so attractive to workers — a decent wage coupled with lower education and skill requirements — that also render them so vulnerable to replacement by technology.

The way companies see them, mid-level jobs represent a sweet spot of savings — they have the perfect combination of higher labor costs and relative ease of automation. As Adam Davidson describes in the Atlantic, “common in factories” is the practice of investing “only in machinery that will earn back its cost within two years.”

While a worker “makes less in two years than [a] machine would cost…her job is safe,” but “if the robotic machines become a little cheaper” or demand goes up, “investing in those robots might make sense.” In our profit-driven economy, the only jobs that survive are those for which labor costs stay smaller than the decreasing costs of replacement technology.

At the same time as mid-level jobs are eliminated, technology often spurs job creation and wage increases for higher skilled positions, leading some to herald increased education as the solution to high technology induced job displacement. Trumpets the New York Times’ Thomas Friedman, “there are many things we need to do to buttress unemployment, but nothing would be more important than…[ensuring] that every American has access to post-high school education.”

While I can hardly say that I don’t believe in the power of education, this mindset fails to truly appreciate how far automating technology will reach.

In 1978 computer scientist Margaret Boden noted how a very basic program “for the diagnosis of peptic ulcers” was rated by patients as “more friendly, polite, relaxing, and comprehensible than the average physician.” She extrapolated, musing, “These chastening observations about the superiority of the personal habits of programs over those of human doctors can doubtless be expected also with regard to automatic lawyers, bureaucrats, and teachers.”

While we may not yet have automatic lawyers or teachers, today, companies like Blackstone Discovery are developing software that has brought the price of legal analysis of documents down by over 500 percent since just 30 years ago.

Startups like Narrative Science have programs that produce articles for actual publications, with quality improving so quickly that founder Kris Hammond expects a computer will win the Pulitzer Prize within the next five years.

Advancing technology is knocking more and more job-based rungs off the ladder to socioeconomic achievement, making it ever more unlikely that the already disadvantaged will be able to cross the skill gap to success.

And, none of us is immune. In the words of Carnegie Mellon robotics researcher Hans Moravec, “advancing computer performance is like water slowly flooding the landscape. A half-century ago it began to drown the lowlands, driving out human calculators and record clerks, but leaving most of us dry. Now the flood has reached the foothills, and our outposts there are contemplating retreat. We feel safe on our peaks, but at the present rate, those too will be submerged within another half-century.”

Contact Rahul Gupta at [email protected]

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