Notes from Chapter 10: Society and Technological Change

TECHNOLOGY AND JOBS: MORE OF ONE AND LESS OF THE OTHER?

• Many technologies have led to the elimination of human jobs.
• Technological development has led to great increase in worker productivity.
  • 1900 — 1 hour labor = $1.00 of goods and services.
  • 1970 — 1 hour labor = $6.00 of goods and services (after adjusting for inflation).
  • At current levels of growth, today's productivity-level will be matched by 50% fewer workers in 2049.

• Computerized typesetting — typesetters jobs — 8,000 to 3,800 (1966-1978).
• Computerized banking — 35,000 transactions/day with 10% fewer tellers.
• Electronic synthesizers — studio musicians are back by a third.
• Steel production — 2002-2007 — up by 5%, employment down by 10%.
• Corn production — 2002-2007 — up by 30%, payrolls down by 10%.

The Technological Threat in Historical Perspective

• These developments are not new to our times (see also: Engels, Frederick. 1845. The Condition of the Working-Class in England in 1844 With a Preface written in 1892. Translated by Florence Kelley Wischnewetzky. London: George Allen & Unwin LTD.)
• 18^th Century — power loom forced many loomers out of a job (Their future loomed none too bright ahead of them... ;-).
• Opposition to new technology came not only from workers but also from officials.
• 1638 — Britain — banned use of "engines for working of tape, lace, a ribbon, and such, wherein one man doth more amongst them than seven English men can doe (sic)." (page 184).

A Case for Optimism

• Technological advance is NOT incompatible with high levels of employment.
• When considering effects of technological change on overall level of unemployment:
• Even if all available technology were used to full capacity -->
  • There would still be plenty of work to do.
  • People still need better food & housing.
  • Even among the affluent, the desire for more and more still exists.
• Technological advances will not lead to job losses if the demand for products/services increases at the same pace as productivity.
• Technological change often creates the need for new work to be done.

How Technology Creates Jobs

• Some technology has produced jobs that did not exist before.

COMPUTERS

• Most occupations held today did not exist one hundred years ago.
• Technological advance has created the need for new and better technologies.
• MP3 players, mobile devices, and e-readers (yet, where are the jobs going?).

"In 1963 one economist warned that American households were saturated with domestic appliances, resulting in a stagnant market for manufactured goods; the only significant new product was the electric can opener." (page 187).

• Today--HD-TVs, Blu-rays, wifi, etc.

Indirect Effects of New Technology on Employment

• The Automobile: greatest job generator of the 20^th Century.
  • 1 out of 7 jobs in American economy result from automobiles.
  • Legions of jobs tied indirectly to auto as well (sales, insurance, mechanics).
  • Few other technologies will be able to match auto in job generation.
• Jet airplane, computer, television all pale in comparison.
• Although these industries have not directly generated jobs, they have had indirect impact.
  • Air travel: tourism, hospitality sector, etc.
• Other technologies have a negative indirect effect: email versus the postal service.

The Machines Aren’t Ready to Take Over

• Stereotype of technological change: robots are going to take over everything.
• Only partially true: 1 robot/900 manual production workers (in 2008 there were 1.3 million industrial robots around the world).
• Machines, however, have replaced some human staffed positions.
• CAD-(computer-aided-design).
• CAM-(computer-aided-manufacturing).
• Flexible manufacturing systems- general purpose machines capable of a variety of tasks.
• Impressive, but very expensive ($3-4 million ea.) and not the norm for industry.
• Can also be problematic --> if machine breaks then everything stops.

Technology, Jobs and The Changing Structure of The Economy

• Automated industrial processes have replaced many human positions.
• 15% of work force will be lost as computerization spreads.
• In the last 100 years, 2/3 of pre-1880 jobs have been lost to mechanization.
• Manufacturing jobs have declined regularly since 1948.
• BUT, new jobs have been created.
• In particular, the service sector has grown considerably.
  • 2012: 64,000 more primary and secondary occupation jobs than in 1950, 88.3 million increase in tertiary sector (services).
  • Neurosurgeons and shoeshiners.
  • "Personal element."
• For the first time in human history, more people are employed in the service sector than in the manufacturing sector.
• QUESTION: If the basis of human survival requires food, clothing, and shelter...How can the majority of the work force be employed in occupations that contribute nothing to production???
  • ANSWER: With the rise of industrialization, it takes less human labor to produce needed goods.
• Despite the rise of technology, there is a continued and growing demand for services.
  • Deptment Of Labor— the most needed jobs of the future are food service workers, nurses, cashiers etc.
• Also, we are human beings and we crave physical contact:
  • Education— although technology has played a role, lectures and discussions, over which a professor presides, is still the desired method for teaching.
    • Although a professor could lecture to 500 students and increase "productivity," it is typically less rewarding for the student and the teacher.
    • Kahn Academy works best when face-to-face interaction is combined with online learning (see also).
• Human beings still have a need to be entertained, comforted, and healed.
• Technology has affected many jobs— not always adversely.
  • Telephone Industry— operators eliminated when phone switching became automated.
    • If operators were used today, there would have to be 50 million.
    • The same is happening to the Postal Service--impact of email, etc.
    • Yet number of jobs in telephone job market has continued to expand because of advanced technology and increased demand.
    • We should expect the same in the area of information processing (the consumerization of information technology).

Technology and the Distribution of Income

• Softening the Blow:
  • Technology does destroy some jobs but it also opens up opportunities for new jobs.
  • New high-tech jobs often high paying.
• Some occupations see reduction in pay
  • Those workers with only a high school education or less (mechanization of low skill jobs).
  • Offset by increases in the service sector (also low pay).
• Growing wealth gap (linked to decline of manufacturing and rise of the service sector:
  • 1975: top 20% of households brought in 40.7% of the total income.
  • 2012: top 10% of households brought in 50.3% of income.
  • It's not just technology (directly), but overall organizational restructuring and the need for more a more highly educated workforce.
  • Impact on older workers with limited skills--not prepared to move into new jobs created.
    • Complicated by the "Graying of America" and the persistence of stigma attached to the elderly.
• The worker’s best defense against the changing tides resulting from technology is adaptability and versatility.

Technology, Globalization and Jobs

• Multinational and Transnational corporations.
• Outsourcing, off-shoring, and relocation
• Technological change (transportation and communication) essential to these processes.
• Some information-based jobs remain first-world countries based on need for education, but much work can be done efficiently and for less from afar.
• De-industrialization of the West.

Rebounding from Job Losses

• Technological change has not eliminated the need for work--even advanced technologies require skilled operators.
• Restructuring the work force.
• Job training programs: tax credits more generous for capital investment rather than investment in human capital.
• Searching for Work in the Digital Era. Aaron Smith. Pew Research Center: Internet, Science, and Tech, November 19, 2015 (pdf)

Ups and Downs

• So, jobs are lost through technological change, but new work is created--however the impact of the changes is always absorbed by people--some suffer, others gain.
• Eighty years ago, Detroit was built around the automobile industry. Today it is bankrupt
• Digital technology has led to the growth of Silicon Valley.
• Who is ready to move?

Questions (page 199):

1. List a few jobs that have been rendered obsolete by technological change. Are some of these jobs so unpleasant that they are better done by machines? On the whole, have more "good" jobs or "bad" jobs been eliminated by technological advance?
2. What new products and services have been created by technological advance during the past 20 years or so? To what extent are they "essential" parts of contemporary life?
3. Is there anything problematic about an economy that centers on the production of services instead of the production of goods? Is a country with such an economy in an inherently dangerous position when it confronts international economic and political competition?
4. In what ways is economic globalization similar to technological change in regard to job losses? Does it make sense to try to block either technological change or economic globalization in order to preserve jobs?
5. Should federal and local governments come to the aid of workers who have lost their jobs because of globalization and technological change: Is this a legitimate role of government? If so, what sort of policies and programs might be formulated to meet workers' needs?

Chapter 11