What if the Jobs Are Never Coming Back?

By | April 4, 2010

An interesting tidbit from the Wall Street Journal last week:

The Government Pay Boom

America’s most privileged class are public union workers.

It turns out there really is growing inequality in America. It’s the 45% premium in pay and benefits that government workers receive over the poor saps who create wealth in the private economy.

And the gap is growing. According to the U.S. Bureau of Labor Statistics (BLS), from 1998 to 2008 public employee compensation grew by 28.6%, compared with 19.3% for private workers. In the recession year of 2009, with almost no inflation and record budget deficits, more than half the states awarded pay raises to their employees. Even as deficits in state capitals widen and are forcing cuts in services, few politicians are willing to eliminate these pay inequities that enrich the few who wield political power.

Now, I know there are some conventional explanations for why this might be happening, but let’s leave those aside for a moment. (We’ll come back to them, I promise.) Let’s hypothesize a thoroughly unconventional explanation.

For example, what if public payrolls are going up in response to a dying private sector job market?

Wow, I can actually feel the knees jerking from here.

WHAT? The private sector job market can’t die. It can be damaged by government meddling / greedy globalizing corporations (take your pick) but ultimately it’s a constant. There can be no economy without a private-sector job market, therefore we will always have one

Okay, sure. Leaving that logic alone and assuming that we will always have a private job market, is there any guarantee as to what size it will be? Is there any reason to think that it might shrink in size? We have to consider what is implied by all this talk about a jobless recovery. (If you have an hour to spare, this particular gloom fest is pretty eye-opening.) We are currently looking at about 10% unemployment; we know that that figure is actually low, because it doesn’t include all those who have given up looking altogether; and of the folks who actually do have jobs, 1 in 5 claim to be underemployed.

So what do we mean by a jobless recovery? We mean that the economy begins growing again, but we have no new jobs. (The recent upward turn is encouraging, but still roughly 8 million jobs shy of getting us back to where we were 2-3 years ago — and btw, a lot of what was created are temporary government jobs.) From a strict standpoint of efficiency, a jobless recovery is the best way to go. Look at it from the standpoint of an individual business: supposing you realize your business can achieve the same revenue with a headcount of 90 or a headcount of 100. Which would you do? If you say you would go with the headcount of 100 because you’re so nice, you better hope your competitors are equally nice. But even if they are, the overall economy is not nice — it’s a heartless bastard.

The efficiencies that can allow a company to get by with 10% fewer staff or an economy to get by with a 10% smaller employment base are many — better management practices, longer work hours, more highly motivated or better trained staff. But the big one has got to be automation. Historically, automation boosts productivity and reduces the need for human workers. Over the past four decades, our economy has made a massive shift to a highly automated, digitized substrate. As recently as a decade and a half or so ago, economists were still scratching their heads over when the big productivity gains would emerge from this shift. Then about five or six years ago, those productivity numbers started showing up. Some of us took this to be unambiguously good news. And, in fact, I still think it’s excellent news. But it may have something to say about the future of employment, and the need for our thinking around employment to change.

One of the models for our future economy that we’ve bandied about on this site over the years is what John Smart calls “taxing the machines.” The idea is that once virtually all economically productive work is taken over by automation, government is funded directly by the remaining productive entities and becomes the distribution channel by which the public gets paid, jobs having all been swallowed up by the machines. This is more or less the scenario that Martin Ford laid out for us our interview with him a few weeks ago.

In Ford’s model, the whole notion of “employment” as we have known it disappears.

Now, this idea strikes most of us as being fairly radical. And there are alternatives. One would be to provide massive incentives for businesses to create jobs even though they don’t really need people working for them. In other words, ask the private sector to create non-productive jobs. Another alternative is to have the government provide the payouts, but only in the form of wages. In other words, ask the government to create non-productive jobs. This could be one area –the creation of non-productive jobs — where the government has an advantage over the private sector. After all, they’ve been excelling at that for decades.

And, in fact, it’s possible that the rise in public sector wages noted above reflects the early stages of this kind of shift — although the creation of more jobs, rather than higher-paying jobs, would be a stronger indicator.

Unfortunately, our current mainstream political and economic ideologies have no room for dealing with this kind of possibility. It’s not part of anybody’s template. If we observe that public employee wages are going up, the responses will fall along the following lines:

The Libertarian / Conservative take: This is a shocking example of statists feathering their nests. All these excessive public salaries show the undue influence of public worker’s unions and reflect nothing more than waste — which diminishes or even prevents more productive economic activity.

The Liberal / Progressive take: What you see here is a necessary rationalization of the labor market. Public service positions often have higher value than private-sector jobs and therefore should demand higher pay. As an added bonus, these higher salaries help to offset the absurdly high salaries that CEOs and other corporate execs make!

Neither group is likely to see what’s happening as a defensive measure against a shrinking private sector job base, even if that is part of the actual explanation. Such an observation doesn’t support anyone’s main line of argument. It isn’t part of anyone’s template.

So the problem is that — whomever you happen to agree with — if jobs are inherently disappearing, it might not matter all that much who wins out. The left can continue to be in charge and carry on with various stimuli and programs that create more public sector jobs, or the right can take over and start to slash taxes and spending. Whatever changes they bring about will be only temporary if the underlying reality is that going forward, whether the economy grows, shrinks, or stays the same, the number of private sector jobs is going to drop — especially if that reality is nowhere on either group’s radar.

Most of us would prefer to believe that what’s really happening is a shift in what we mean by “productive,” and that human beings will continue to have something to offer to the private sector both in the short term and the longer term. I certainly hope so. But hope, as it has been pointed out in recent years, is not a strategy. And if automation is going to come closer and closer to achieving human-level performance (intellectually as well as physically) we need to be ready to do some serious rethinking of how our economy works.

And we might, might, just need some new templates.

  • Leslie Kirschner

    In general, I don’t think that creating unproductive jobs, whether you call them public or private, makes a lot of sense for society. I do think it’s likely that “jobs” as we traditionally think of them are not going to return to the previous levels, though that doesn’t mean (at least in the intermediate term) that people won’t be doing productive things.

    There are other models that are emerging in many industries today which might look more like the future of work–using new communications, information and manufacturing technologies there may be more entrepreneurship, “electronic piecework” and temporary/project work as it becomes easier and easier to match up needs and skills, buyers and sellers, etc. People may become more responsible for their own “employment” and may work a variety of smaller “jobs” to make up a career or just earn a living.

    This type of change is highly disruptive in many industries, often less steady or certain for workers, and hard for many to adapt to so it may not be a smooth ride, and the role that government plays in enabling or easing a transition will likely contribute to the relative success of different nations or industries. Measures that help people to become more independent from traditional jobs and more flexible in both skills and definitions of work will probably be the best investment.

  • genomik

    I agree completely! Step back and do some reality checks. The robots are taking over. Seriously. Sure, competition from China undercuts America, but automation undercuts all countries labor forces.

    But thats good cos our current system is not very sustainable to Earth.

    This is the dream of automation, that we all get to kick back and watch butterflies and nature.

  • Orion

    I just watched a video on PopSci of a robot that folds towels. On its own. There’s nobody with a joystick in the background telling it how to fold towels, there’s a pile of towels on the table and it picks them up, one by one, and neatly folds them.

    The machine is probably 10-15 years away from working in a laundry. Maybe less. But even if it never takes one towel-folding job out there (assuming there are any) the point is made. If we can build a machine to fold laundry we can build one to do just about any routine, mechanical task. In a couple of generations 90% of the jobs we consider “essential” to full employment today could be done by machines. As much as I look forward to serving our robot overlords in the future I have to ask what exactly we’re going to DO with all that free time we’re about to be given?

  • http://www.blog.speculist Stephen Gordon

    I find this new possible template… disturbing. And, perhaps, premature. As you pointed out, the US had 6% unemployment a couple of years ago. And economists count 4 or 5% as normal transitional unemployment (the time it takes for workers to move from one job to another), so we basically had no unemployment. Everyone who wanted a job, had a job – or was on the way to one.

    I think the private sector is scared to death of the current leadership. In this climate few new projects get started, and existing projects get scaled back.

    But, assuming this template is correct, I would advocate in favor of alternative number one:

    “One would be to provide massive incentives for businesses to create jobs even though they don’t really need people working for them. In other words, ask the private sector to create non-productive jobs.”

    This could be a giant subsidized internship program – moving people up the ladder toward more productive jobs.

    It would have the advantage of keeping workers closer to possible productivity (than, say, a government job).

    And (over the welfare option) it would keep people working. Economists will tell you that the longer a person stays out of the work force, the more likely they are to become unemployable. Skills are lost, or the needs of employers have marched on.

  • mareeS

    We withdrew fom the working enonomy a few years ago and now live off our assets.

    You made an observation about skills not being replaced, and I think you are spot on.

    Our skills are not going to be replaced because younger people aren’t being trained into them. They have earned us a very comfortable later life, though.

    Sorry to younger people, but you need to look after yourself in older age.

  • http://www.mfoundation.org David Gobel

    Hi Phil – Remember my piece on simulflation? We are in an economic event horizon of similar magnitude to the one which started in 1453-5 with the invention of the printing press and the fall of the Byzantine empire. That led to modest changes in the first 50 years and then EXPLODED into the renaissance/discovery of the new world(s) – followed by the reformation which essentially spindled, folded, mutilated and shredded the entire social and governmental fabric of the world. This is happening right now as surely as physics – is.

  • subrot0

    This would be the time to be a contrarian. According to Warren Buffet, when there is fear in the streets, this would be a time to buy. In my case I plan to open a business now and sell to the only market that exists now, the federal government.

    I would take advantage of every subsidy, every entitlement, every regulation that helps me. I don’t see any other alternative.

    I have been laid off and I don’t think my job exists any more. So I have to make a job and this is the only thing that I can think of that makes sense.

  • Douglas Cohen

    Human vanity will always find uses for buying power. People could easily end up paying most of their income for the sort of human services that machines, however computerized, really cannot do well (advertising, entertainment, health care, etc.) while society relies on highly automated factories and farms to produce the basic necessities of life for pennies a day. In that sense we could all end up making our living by “taking in each other’s laundry” and calling it productive work!

  • Ellen

    There’s a novella by Philip Jose Farmer, Riders of the Purple Wage that discussed this way back in 1967. The signs have been out there a LONG time.

  • http://www.mfoundation.org David Gobel

    A couple of ways to think about this:

    1.) If you are being sucked into a singularity, the worst thing you can do is to try to escape by trying to reverse course to blast away from it – you will simply pour more mass into the hole, marginally increasing its pull on you. Businesses are doing this by cost avoidance techniques. Cost avoidance causes the event horizon (‘sea level’) of the economy to shrink at all points leading to implosion of money supply, growth and vast acceleration of the very forces leading to the collapse such as technological substitution of labor inputs. Keynesian theory is a nice idea, but all it does is pour money into a dying or dead corpse.

    2.) The right approach when one is caught in a gravity well (I assert) is to *accelerate* toward the hole but at an angle that will -just-miss-it- with the goal *not* to improve the current economy, but instead to jump start the NEXT economic paradigm.

    How? By pursuing the solution and commercialization of heretofore UNMET NEEDS (sorry about the caps).

    This is one of the things we’ve been deliberately pursuing at the Methuselah Foundation. Want an example of an unmet need? Very long healthy human life. simple, clear, concise and will generate enormous demands for labor in the form of education, research, tech development, clinical delivery and at the same time gradual elimination of cost sinks such as dialysis. If we can add dozens of healthy years to life, it would/could moot social security (broke) and medicare (broker) and medicaid (brokest)…*and* it would keep taxpayers on the rolls – full net gain for everybody.

    This is why we became the founding investor in Organovo – the worlds first commercially available 3d tissue printer, have partnered with Silverstone solutions to vastly increase donor kidney availability and will be announcing the NewOrgan Prize tomorrow – with the goal of raising $10,000,000 for the creation of the first functionally equivalent autologous complex organ.

    So, we need to accelerate TOWARD the hole – just miss it – and enjoy the slingshot accleration effect, not try to escape away from it.

  • Ben White

    This would indeed be disturbing. But even an elementary understanding of economics would tell you it can’t happen.

    There will always be something to produce or some service that can be offered. There will be a price it can be offered at. Automation isn’t free.

    Government fixes prices, and unemployed folks can’t offer to work below a certain wage. They remain unemployed. Government taxes incomes and people need to charge employers more to stay even. Employers choose automation or foreign labor that doesn’t have the tax built in to the cost.

    Long term unemployment of otherwise productive people is a government-induced phenomenon.

    Automation and increased productivity allow more to be accomplished with less effort. More needs and wants are satisfied. But needs and wants are infinite (unless government artificially caps them) so there will always be more work to be done than people available to do it.

  • http://amybrownphotography.net amy

    I support my robot overlords. That’s why I work in a field that builds and maintains computers/networks. I am here to help usher in the future!

  • http://htp://webamused.com/foolippic Joshua Macy

    This is just the lump of labor fallacy.

  • John Davies

    Then why aren’t government jobs being automated too?

  • Lummox JR

    I don’t see automation replacing human labor completely any time soon, no matter how good robots get. I do think there’s a massive shift in our labor market going on, but that jobs will come back–not the original ones necessarily, but brand new jobs in a new or newly-growing industry. The question is, where will they come back? China might well be on a bubble now, but India still seems to be going strong. If the US can’t compete by providing a more business-friendly climate, the winners of this paradigm shift will not employ many US workers. For me, I see the next frontier being a new generation of manufacturing as material science finally catches up to the promises of nanotech and other emerging technologies. With the current state of America’s labor unions and regulatory structures though, it would take substantial incentives from Washington, and at the state and local levels, to make that equation balance in favor of new startups.

    Come to think of it, that represents a whole other possible conservative/libertarian perspective: Acknowledgment of the shift, but advocating free-market principles that are the only hope of taking advantage of that shift. Bloated public-sector unions are as much symptom as disease, but over-focusing on them misses the bigger picture.

  • http://metalutheran.blogspot.com Fearsome Tycoon

    Automation doesn’t result in a loss of jobs across the economy. It does result in temporary unemployment for the people who used to do what the machines now do, but those people end up working elsewhere, as automation frees up capital and resources to do other, previously neglected things. An example is how the medical industry has overtaken manufacturing.

    Another alternative is that automation results in far more of the good in question being available, resulting in an expansion of the industry, offsetting the job losses. An example is how Henry Ford devised a way of making a car that required far fewer laborers per car than prior automakers used. But this resulted in far more people buying cars, and the auto industry as a whole expanded its employment.

    Economies don’t need “jobs;” they need goods and services. Unnecessary jobs simply result in valuable resources being burned up rather than turned into useful goods and services.

  • Barry D

    I am always amused by those who ask what we will do with all our spare time. I do not need to work, to find interesting, amusing, and challenging things to do, to learn, to enjoy. I pity those whose lives are so consumed with putting food on the table that they can’t even imagine what else there might be to do. This is the 21st century, and it’s truly sad that people in advanced economies choose to live essentially like medieval peasants.

    That brings me to another question. As a libertarian, I don’t know what to do with this, but what about the work week? It’s been a very long time since the 5-day week of 8-hour days became the standard.

    If anything, the modern salary culture in the private sector has undermined the idea of the 40-hour week. There is the expectation in some corporate cultures of a 60-hour average and all-nighters on occasion. It’s hard for me to see this as other than leasehold slavery — and the slaves volunteer. Our overextended credit-based consumer culture has helped cement this in a large segment of the population.

    It is hard for me to imagine what benefit there really is to all this automation, if people are “chained to their desks” or “living in airports” through most of their waking hours during their best years of life. What’s the point? More toys? Do you REALLY value an iPhone more than your life?

    What about changing the Industrial Revolution standard 40-hour week (or the modern de facto 50-hour week) to something reflective of modern, creative work, leveraged by automation? What about 32 hours? What about 24? Why not?

    For the record, I do work for a living — doing creative work, leveraged by automation. I enjoy what I do, but I wouldn’t want it to be the sum total of my experience of life. I currently do it 4 days per week, and I would have plenty to do with myself, and would really enjoy it, if I could earn my living in 3.

    Why not?

    Have we really come nowhere since the Industrial Revolution?

  • brad

    There would appear to me to be a third option. Where there are simply more entrepeneurs and private sector companies to develop new products and hire those displaced by automation. With the rise of the virtual company, Offshore design and manufacture, and web based sales. There would seem to be a place for a light footprint company that innovates, and minimizes overhead to produce a product. There are a lot of reasons why this type of company would peform better then traditional companies, for instance consider the environmental regulations for US manufacturers. Moving manufacturing overseans DOES have benefits to companies creating products. This sort of company would also avoid many of the combattive labor relations of brick and mortar companies. Everyone is a contractor, or investor. In summary, if the numbers of jobs per company are lowered due to automation, why not just increase the number of small to medium companies then create unproductive jobs in a static number of companies? Regulation of course could determine whether this trend would emerge. If the cost of regulation and uncertainty is greater then the benefits of starting such a company, who would take the risk inherant in starting the new virtual manufacturer?

  • Eric J

    Every time it gets more expensive for WalMart to hire a person, it gets cheaper to install a robot.

  • http://phelps.donotremove.net Phelps

    Someone still has to turn the machine on.

    I don’t think that the jobs will ever go away. Automation of housekeeping chores hasn’t relieved people of housekeeping; we are just able to more in the same amount of time.

    I think automation will go the same direction. It’s the service industry on steroids. So instead of it taking a maid all day to clean 5 houses, she runs a fleet of robots that clean 50 houses. That doesn’t mean that we have 1/10 the number of maids; it means it gets cheap enough that 10x as many people have a maid service.

  • Rachel

    If the jobs are not coming back and people are suffering, I think Herbert’s idea of a Butlerian Jihad might work too. But only if people are literally starving to death. Otherwise it could look like Huxley’s world.

    This is not to be facetious;I have this debate with my fiancee all of the time over which affects Joe Q Public the most – globalism or technology. If it is technology, the future will be based by the government’s reaction to it. Will they placate the public with bread and circuses or will they invent shovel-ready jobs a la FDR? Whatever government decides will influence our future.

  • fred

    In 1900 you could have made this similar argument:

    What will all the farm laborers do when every farm has a one man tractor/seeder/harvester that can handle 100,000 acres?

    The answer is, lots of new stuff. You don’t need the gov’t or the private sector to create ‘unproductive jobs’. There will be lots of productive jobs.

    We don’t know what they will be exactly. Look at starbucks, thousands of employee’s making custom coffee drinks, an almost instant new market whereto fore one did not exist before.

  • Stacy

    Automation doesn’t result in a loss of jobs across the economy. It does result in temporary unemployment for the people who used to do what the machines now do, but those people end up working elsewhere, as automation frees up capital and resources to do other, previously neglected things.

    This. For example, not so long ago, 60%+ of all people in the US worked in agriculture e.g. dragging plows through the fields, harvesting crops and taking them to market. Today only about 5% do, even though there are four times as many of us, we eat more than they did back then, and we are a net exporter of food i.e. we really are producing an order of magnitude more food today through productivity gains, not importing it.

    Or to look at it from another perspective, in the 1870s pundits predicted mass death-by-disease for New York City by 1950 ..because the streets would be choked with horse poop from all the horses needed to move the expanded population by that time.

    The future is always dominated by the unknown and un-thought of.

  • Sally Morem

    If we consider the possibility that this huge drop in employment is part of the automation trend that has been going on for decades (I think this particular recession was mostly due to government meddling, which unintentionally SPED UP automation trends), consider the further possibilities that government jobs themselves will also either be automated or be made redundant by other technologies in the private sector.

    If so, and if we all value jobs so much, there is no place for anyone to run to get those jobs. They are gone forever. And they won’t be replaced (at least not very much) by service or technical jobs, because these will be automated before they can be created for people.

    Taxing the machines gets us closer to the concept and practice that may well solve the problem of disappearing jobs by leapfrogging the problem.

    Arrange (somehow, perhaps through higher tech fablabs) for everyone to begin owning the machines as individuals, families, small groups, investment clubs, mutual funds, or in some other way. As owners, we’d all be entitled to a piece of the machine-created action. And that’s the wealth we would live on in the meantime.

    I’ve said this before, and I might as well say it here, the ultimate solution will be nanotech very high tech fablabs that can build anything you want out of any raw material. At that point, economics as we’ve known it for thousands of years will disappear and no one would worry about jobs again.

  • Pat

    Yes and no. Two hundred years ago most people were needed in agriculture, simply to feed everyone. Agriculture got more efficient in all senses of the word, so now it feeds more people using less people. Those laid off from Agriculture got jobs in manufacturing, which most people worked in a century ago- then that too got efficient, and today we manufacture more and better stuff with fewer people. It may be that people are now moving into government jobs- but unless some way is found to improve efficiency in government then that is the end of us collectively getting wealthier. And government has little incentive to improve efficiency.
    Question is how many of those government jobs need to be done by government? Is it necessary that teachers all work for government? Ask a private school teacher. etc.

  • http://freealabamastan.blogspot.com Paul A’Barge

    Brad hit the nail: Off-shoring.

    Jobs might come back but also they might come back … somewhere else.

    Like more software jobs moving to India.

    Combine Off-shoring with automation and people in current jobs being forced by fear of job-loss to work longer hours and you can pretty much predict that jobs are not coming back.

  • Brad Hankinson

    I doubt automation will end human involvement in the economy, even if machines get into engineering, invention, and creative pursuits.

    If you can manufacture an engineer like an iPod, then you can suddenly start a business with more brainpower than NASA had to launch a mission to the moon.

    Today, you want to make a movie, you pull out a laptop and one-finger type out the screenplay. In an AI-automated future, with thousands of talented systems at hand, I make the damn movie, maybe over the afternoon.

    For creative people this (highly theoretical, not currently possible) future can almost be a utopia. Even for regular folks, someone has to sell the forty models of towel-folding-a-matons with bonus action packages, ship them, fix them, delivery them, insure them, etc. There will be jobs well into the future, if the government would only get the heck out of the way.

  • JG

    Joshua and Fearsome are exactly right. The economy (a free one anyway) is a dynamic environment in which supply of jobs will rise to meet demand for jobs. It is wrong to presume that there is some sort of finite limit on the number of jobs available in a free economy. The loss of manufacturing and labor intensive jobs will lead to higher demand for and supply of more creative and intellectually stimulating jobs.

    Schumpeter’s winds of “Creative Destruction” are always blowing. Given the right political and economic conditions, the jobs will definitely come back. They will just likely not be and, in fact, will be better than the jobs that have been lost.

  • Vadept

    I actually agree. We talk about unemployment from a decidedly twentieth century perspective, but the farther back in history you look, the more “employed” people have been. In an agricultural society, if you didn’t work, you died. Today, you can support a spouse and some children with just one job, and children wait longer and longer to enter the work force. Products grow cheaper, pay increases, more and more resources are available for less and less work, and so people turn to being web comic artists and stay-at-home moms, rather than working hard factory jobs.

    This is not a bad thing.

  • https://blog.speculist.com Phil Bowermaster

    Stacy wrote:

    Or to look at it from another perspective, in the 1870s pundits predicted mass death-by-disease for New York City by 1950 ..because the streets would be choked with horse poop from all the horses needed to move the expanded population by that time.

    Thanks, that’s one of my favorite stories (possibly apocryphal). It is cited at the Speculist all the time.

    The city planners got it wrong because their projection of the future was inextricably linked to their knowledge of how the world works in the present and assumptions about how things “will always be.”

    I have for a long time been a subscriber to the same assumptions that you, JG, Fred, Fearsome Tycoon, Ben White and others above make about the ongoing shift in where the value is in human labor. Up until now, when an old process was automated, it simply enabled the existing work force to move up the value chain and do even higher value work.That model is not only time-tested, but it fits my preconceptions about how things ought to work.

    I would suggest that if we’re going to look for multi-story piles of horse manure anywhere, a great place to start would be time-tested models that fit neatly with our own preconceptions.

    So for example when Ben snarks thusly:

    This would indeed be disturbing. But even an elementary understanding of economics would tell you it can’t happen.

    There will always be something to produce or some service that can be offered. There will be a price it can be offered at.

    …I can only reply that yes, there will always be horses and yes, they will always need to defecate. It is no doubt comforting to assume that our knowledge of economics is complete, that the laws of economics are immutable, and that no conceivable set of future conditions can place them in doubt or suggest that they might require revision. However, those who comfort themselves in that manner at least have to own that they might be the ones ultimately surprised by an unknown or un-thought of future.

  • GaryS

    The problem may be worse than you think, because a smaller and smaller percentage of the population possess the simple reasoning skills needed to work in a modern company.

    As an example,I sometimes deal with people who are having problems with a client’s equipment. Since it’s expensive to fly someone out to “wherever”, an attempt is made to get the customer to help with the problem resolution via instructions and phone calls.

    Unfortunately, it is the rule rather than the exception that the people who we are dealing with have essentially no logical reasoning skills. We email simple instructions, basically saying “turn this knob and write down what happens, then turn down that knob and again write down the indications”. Amazingly, a high percentage of these interactions turn into “oh look, a squirrel” moments. Just as bad, many don’t seem to be particularly motivated or interested in their jobs.

    We’re not dealing with minimum wage people, almost all are relatively well paid, and many are supervisors and managers. I’m frequently dumbfounded by what happens.

    My (more or less uninformed) guess is that a high percentage of the “push the button”, “load the machine” type jobs have already disappeared and the loss rate is increasing. But conversely, the demand for people who can think logically and figure out why the machines suddenly went crazy is increasing.

    It’s just that the total number of the second type needed by industry is a lot less than the people who want work.

  • jt

    GaryS has hit the nail on the head. Sooner or later, the robots will malfunction, triggering a call to tech support. When everyone else is unemployed, the tech support guys will still have job opportunities as far as the eye can see.

  • DensityDuck

    jt: Except that GaryS is saying that there won’t be very many of those jobs. There are plenty of smart people who do things well, but there aren’t going to be many troubleshooting jobs for them to do–unless we specifically mandate a minimum failure rate for machinery!

  • AndyJ

    A year ago the papers were full of reports about how the US had 75% of the economy was driven by the service sector. They also cited 70% of the jobs as being in the service sector… Why the whining about manufacturing jobs-? Commodities -ALWAYS- flow to the lowest cost provider… Manufacturing is a commodity business… We do not choose any product by it’s place of manufacture. We choose our purchases by a variety of values important to us… including price…but MOST IMPORTANTLY we choose them for the customer service… Would Toyota have had a 41% jump in sales if they had said “screw it. They bought cheap and they got cheap”… We buy based on service… Now about the economy… when will we stop talking about manufacturing and start talking about service-? This is not 1930, 1950, 1970 or even 1990…

    Oh, and while we’re talking economy and jobs-how come 82% of the unemployed are men-? I thought it was gonna be 50-50 splitting of everything… or was that just the good deals?

  • Chris T

    Hmm, lots of blank slate thinking here. The problem is not that there won’t be any tasks that all people can fill, it’s that the only type of jobs (repetitive) a substantial fraction of the labor force is capable of filling will be done more efficiently by machines.

    The reason why this did not apply the Industrial Era is because production and large sections of the rest of the economy requires computation. The only sources of computation until ~1980 were humans. Electronic computers are capable of filling a larger and larger portion of that role across the ENTIRE economy every year.

    Mass production is repetitive by definition and automation is making humans entirely unnecessary in it (beyond telling the machines what and how much to produce, which only requires one or two people). The idea that all displaced workers will somehow be able to move into creative type jobs is a dangerous fantasy.

  • Stacy

    However, those who comfort themselves in that manner at least have to own that they might be the ones ultimately surprised by an unknown or un-thought of future.

    Anything’s possible, but actually history does suggest that the one thing that really is immutable is human nature, and since economics is really a behavioral science it’s not unreasonable to extrapolate that the basic laws of economics are also immutable.

    Humans have been inventing new labor-saving technology ever since the first monkey worked out that he could open coconuts more easily with a sharp rock, and probably for all of that time people have been predicting the arrival of stasis, where everything that needs to be done, has been done. It has never happened. People always think of new things to do, and if the automation of old jobs has left them with the time and resources, they’ll do it.

  • Ben White

    What if economics stops working? People would have to stop wanting better lives for that to occur.

    If that’s the premise of the discussion, then what are the jobs for? Penance?

  • Chris T

    The main problem for observing automation’s effect on labor markets is that it’s slow. Not only must computational power reach a certain point for a particular task, but people must figure out how to use it for that task, then it must be built and deployed. This takes time and will happen on the margins at first. The only signs of it would be companies taking somewhat longer to hire after recessions and slower wage growth. Over time, automation is deployed to larger and larger sectors of the economy, depressing wages as people compete for non-repetitive jobs (human-services, creative-type).

    At some point, automation becomes capable of doing the majority of repetitive work and the economy begins to shed those jobs rapidly, especially in industry (post 2000: 4 million jobs lost in manufacturing). The resulting glut of unskilled workers creates massive downward pressure on wages in the remaining unskilled industry – services. Service companies take advantage of the low wages and the low price of goods and hire a large number of employees. The problem is, they do so well beyond what the economy actually demands, and the jobs disappear when a recession hits. This is when structural unemployment begins to rise.

    We are now at that point. Manufacturing does not require a large number of people and all remaining unskilled (retail, cleaning) positions are proportional to the needs of the human population.

  • MDarling

    Wrong. Wrong. Wrong.

    There was absolutely no guarantee that in the pre-industrial era mechanizing agriculture was going to lead to the industrial where the major labor force could start manufacturing. In fact, that only worked in localized economies and now that Korea and India and China ag workers are making cars, US auto production is never going to employ as large a % of Americans as it once did. It may not even employ as many people.

    So when we can automate industry- there is no guarantee that productive jobs will be there. There may be. I hope there is, cause it’s gong to be a painful transition if there’s not. Not painful because the robots starve us or because we won’t have shelter, but because we don’t know how to organize an economy with wages and we’re not ready to pay wages to the unemployed.

    I love the Starbuck’s example. So my brother in-law who used to assemble engines for Chrysler- who has now been downsized into make latte’s at Starbucks – gets to adjust from $60k/yr to $18k/yr. It’s ok because his mortgage lender is going to reduce the balance on his loan, right?

    No, I know- we’ll be medical providers to each other.

    ps. Government is not the enemy.

    And for those on and on about how gov’t is 100% unproductive, or always less productive than the private sector- hooey.

    And on and on and on.

  • Chris T

    Smart people will be able to shift into creative-skilled and human-skilled positions. Human demand for creativity is infinite and will eventually absorb these people.

    It’s the people who can ONLY do repetitive and low skilled service jobs that are in trouble (whether due to biology or otherwise). They make up a substantial fraction of the population, if not the majority. They will not tolerate being on the low end of the economic scale with no prospect to advance.

  • TTT

    America’s most privileged class are public union workers.

    I disagree. They are the second most privvied.

    The most privileged class are single women :


  • https://blog.speculist.com Phil Bowermaster

    MD –

    Who exactly is wrong, wrong, wrong? I agreed with pretty much everything you wrote. :-)

    A couple of things I should clarify across the board:

    1. I’m not a big fan of the scenario where everybody gets a government check every week.

    2. I’m also not a big fan of scenarios where businesses or government just make jobs up.

    Of those first two, I think I’d prefer that we just get paychecks straight up. There’s something awfully Sisyphean about all of us forced to take jobs that we KNOW are meaningless.

    3. Further, I don’t much care for Martin Ford’s refinement (not discussed up to this point) where we all get welfare checks based on educating ourselves or being environmentally correct. I don’t want to be paid based on some Big Brother brownie point system.

    4. I like Sally’s idea where we all make our own stuff using our own nanofactories. Sooner the better!

    5. I love the idea of more people being entrepreneurial and carving out niches for themselves. But even stipulating that there is a limitless market for this sort of thing, not everyone is cut out to do it. Some people can learn how, but I don’t think everyone can. Certainly, not everyone is inclined to.

    6. I think I said this earlier, but just to be clear — I prefer the scenario where everything works out organically, where no level of automation is any more of a threat to the long-term viability of human participation in the economy than that first monkey improving his coconut technique. I’m just not as thoroughly convinced that that’s the case as I used to be.

    7. I think that Dave, Barry, and Vadept raise some excellent points.

    8. I very much doubt that either the laws of economics or of human nature are immutable. But even if they are, I think our understanding of them is something short of perfect.

  • Xiaoding

    I hear a lot of “teach a man to fish” type comment s here. But what if the man has an IQ of 90, and fishing requires an IQ of 140?

    When the robots can put up drywall, the game is up.

    We are rushing headlong, into a very violent, and very bloody, upheaval. The dumb folks will not be happy with a pittance, in a public slum. For their WHOLE LIFE. And class mobility in America, is next to zero now. You die poor, your children die poor.

    They may be dumb, but they can throw gasoline at the houses they don’t own, and put bombs in the street, and aim missiles to shoot down the planes they can’t ride, to blow up cars they don’t own, and make suicide vests to kill the people who do own those things. And guess what? Not everyone in the lower classes is an idiot, and there are always sympathizers in the upper classes, who despise what society has become.

    The solution? The non-workers must be paid the same as the workers. Or the workers children will never know safety.

    Or the productive, the intelligent, will be forced to slaughter millions, and enslave the rest. I don’t care what you say, that changes ya.

  • http://wheretheresawilliam.blogspot.com Will Brown

    As one of the resident crank commenters around here, let me just say that I would have gotten here sooner but I was distracted by my admittedly parochial focus on my not-quite-robotisized-yet manufacturing job.

    Let me also say, “Good one, Phil!”; you managed to capture at least half-a-dozen competing concepts in one seeming straight forward title. Well done.

    Easiest to reiterate my own positions first (which have been topics for discussion on The Speculist before). The economy is the sum of human interaction, it uses the abstract concept money as a mechanism to document that exchange, and jobs – individual occupation for the purpose of obtaining remuneration – are a principal expression of human social intercourse. Efforts to manipulate the economy always reflect the desires (and benefit) of the manipulator, and doing so usually requires alliance with sufficient number of others to overcome countervailing desire such that no single viewpoint actually dominates the economy as a whole (or even “locally” for very long).

    Business, that is non-government economic activity, exists to provide ownership with profit on investment. This basic model provides an extraordinary range of potential for creative inclusion of other’s profit opportunity within the paradigm, but the fundamental requirement remains primary (see GM and Chrysler as two recent examples of failure to observe this requirement for primacy, says the union member). Government, OTOH, exists to regulate or otherwise intrude upon this inherant human procilivity to exchange to personal advantage. If “jobs” are indeed necessary (and I’m about to argue that they may well be), the functional intent of the occupation is critical to economic (and thus human society generally) success. Business won’t provide jobs except as doing so increases the likelihood of investor/owner profit; government jobs always reduce the potential for profit in some fashion/to some measurable degree.

    That all said, current human beliefs regarding personal employment, the nature of money, economic theory and practice as well as established social intercourse mechanisms and metrics (nation states, faiths, etc) are all subject to (and influenced by) the collective perception people have regarding the personal viability of the economy for themselves and their social order (community, ethnicity, country, etc). If enough people think the economy is good (or even only enough people held to be influential by sufficient others), it doesn’t matter how badly you personally are missing out on the widespread opportunity available. The converse is of course equally true; if enough people don’t believe the economy (market, currency, national GDP, whatever) is opportune for them, then it won’t be, because they won’t participate in the economy and it will fail.

    The idea Sally mentioned of gradual transition to ownership of the automated means of manufacture (both individually and jointly) strikes me as the most likely means to the least-disruptive transition away from the present economic iteration. Like the devil, the desires that motivate the choosers reside in the details whereby we attempt to manipulate the changes.

    Success will come when enough of us believe in the changes wrought to convince the rest to participate cooperatively in the altered economy.

  • Orion

    When the robots can put up drywall, the game is up.

    Well then, the game may be up.

  • http://silencedmajority.blogs.com/silenced_majority_portal/ Nyc Labrets

    Thanks for the mention of the video of the automated electronic food ordering kiosk prototype that you mentioned on your show last night.

    It’s here in Munich, Germany and as of the last couple of days, still operational, here’s the link to it so people can see it for themselves:


    The thing to remember is that when these kiosks do get deployed, it’s not just going to be McDonald’s that does it, but every other fast food restaurant will have to implement a similar device if they want to stay competitive in a cut-throat market. For those that don’t it will become too expensive for them to stay in business.

    There are 3.5+ million people working in the fast food business right now and for those that are cashiers, a sizeable percentage, will lose jobs that won’t be replaced. And it won’t just be fast food cashiers that go the way of the Dodo, because other cashier jobs in the service sector, such as every supermarket and big box retail store will switch over to.

    Now you’re starting to get into massively huge numbers, and that’s just one tiny section, with more on the way. Such as automated warehouses on the back-end that use RFID Inventory controls, not only to track the items on the shelves, but to stack and move around those items throughout the warehouse. The Gap Clothing store already has an RFID Warehouse that works like that in operation.

    There is nothing, absolutely nothing, in the US economy set-up to handle so many job losses happening practically at once.

    Now as far as the idea of cutting everyone a Government check goes as being a bad idea, why is that thought so?

    To begin with, over 50% of the US Population doesn’t have a job to begin with, because they’re either too young, too old, in school, disabled, or living off of an inheritance or stipend of some sort.

    In the Census from the year 2000 about 115 million American workers took home wages of 4 trillion dollars, for an average of about $35K a year.

    Now I’m going to round up to $40K per year for the year 2010 and lets assume that each wage earner supports at least 1 person, so we have 2 people living off of $20K each.

    That averages out to $400 per person, or $10 an hour for a 40 hour week.

    That’s about what my 70 year old mother now gets from Social Security, btw.

    Why not just give people that money to live on, with no strings attached?

    The argument that you ‘have to work to live’ is already demonstrably not true, since, again, almost 2/3rds of the American population, 185 million people, in the year 2000 didn’t have a job.

    I mean otherwise what’s the point of automating in the first place, if not to relieve the burden of the 1/3rd of those that do work jobs?

    Certainly it is a much better idea than the current alternative, which under the social rules we have in place right now governing this, means that without a job they end up homeless and starve in the streets.

  • Genomik

    Fascinating concept. I question the need for jobs at all. I certainly could have a great life not working. I do not need much, in college I was close to broke most of the time and it was great! Why not have a world where nanotech provides us with rudimentary belongings – like an implanted google search engine. Then we could just enjoy nature or the matrix. Seriously, people could put their efforts towards seeing and interacting with nature. Nature is gods work afterall. Its som massively complex that a person could spend their whole life researching nature and still not finish much – like EO Wilson.

    So I think that the question of jobs is a false one. We dont need jobs, just implants, healthcare and nature.

  • dantealiegri

    Regarding the “Takes an IQ of X” comment, remember IQ is not a static measure. Kids even now take classes in high school that were one only taught in college.

    With further optimization in education, what an average person knows, leveraged with wikipedia, for instance, will solve the problem.

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