By Prakarsh Jain
Since the Great Recession officially ended, the productivity of American work force and those getting lucky enough to have jobs has risen smartly. Nevertheless, United States still has approximately two million fewer jobs than before, the unemployment rate is stuck at levels not seen since the early 1990?s and the proportion of adults who are working is four percentage points off its peak.
This job drought has spurred pundits to wonder whether a profound employment sickness has overtaken and from there, it?s only a short leap to ask whether that illness isn?t productivity itself. Have we mechanized and computerized ourselves into obsolescence?
Are we in danger of losing the ?race against the machine??
Are we becoming enslaved to our ?robot overlords??
Do ?smart machines? threaten us with ?long-term misery??
Have we reached ?the end of labour??
Of course, anxiety about the adverse effects of technological change on employment has a colourful history. In the early 19th century, a group of English textile artisans staged a machine-trashing rebellion. Their brashness earned them a place in the English dictionary, a term rarely used with positive connotations; but they had sincere reasons for concern.
Analysts have traditionally rejected what we call the ?lump of labour fallacy?: the supposition that an increase in labour productivity inevitably reduces employment because there is only a finite amount of work to undertake. While intuitively appealing, this idea is false.
In the 1900?s, approximately 41 per cent of the United States work force was in agriculture. On the other hand, in 2000, that share had fallen to about 2 per cent, especially after the Green Revolution. However, the employment to population ratio rose as women moved from home to market, and the unemployment rate fluctuated cyclically, with no long-term increase.
Labour-saving technological change necessarily displaces performing workers, which is where the gains in productivity come from; but over the long run, it generates new products and services that raise national income and increase the overall demand for labour. In early times, no one could foresee that a century later, finance, information technology, health care, consumer electronics, hospitality, leisure, and entertainment would employ far more workers than agriculture. As societies grow more prosperous, citizens often choose to work shorter days, take longer vacations, and retire earlier, but that too is progress.
So if technological advances do not threaten employment, does that mean workers have nothing to fear from smart machines?
Actually, NO and here is where the Luddites had a point. Although, many in 19th century Britain benefited from the introduction of newer and better-automated looms, such as unskilled labourers hired as operators, and a growing middle class who could now afford mass-produced fabrics, it is unlikely that skilled workers benefited overall.
Let?s now fast-forward to the present. The multi-trillion fold decline in the cost of computing since the 1970?s has created enormous incentives for employers to substitute increasingly cheap and capable computers for expensive labour. These rapid advances, which confront us daily as we check in at airports, pay bills on our banks? websites, or consult our smartphones for driving directions, have resuscitated fears that workers will be displaced by machinery.
Will this time be different?
A starting point for discussion is the observation that although computers are ubiquitous, they cannot do everything. A computer?s ability to accomplish a task quickly and cheaply depends upon a human programmer?s ability to write procedures or rules that direct the machine to take the correct steps at each contingency. Computers excel at routine tasks. These tasks are most pervasive in middle-skill jobs like bookkeeping, clerical work and repetitive production and quality-assurance jobs.
Logically, computerization has reduced the demand for these jobs, but it has boosted demand for workers who perform non-routine tasks that complement the automated activities. Those tasks happen to lie on opposite ends of the occupational skill distribution.
At one end are so-called abstract tasks that require problem solving, intuition, persuasion, and creativity. These tasks are characteristic of professional, managerial, technical, and creative occupations, like law, medicine, etc. People in these jobs typically have high levels of education and analytical capability, and they benefit from computers that facilitate the transmission, organization and processing of information.
On the other end are so-called manual tasks, which require situational adaptability, visual and language recognition, and personal interaction. Preparing a meal, driving a truck through city traffic or cleaning hotel room present mind-bogglingly complex challenges for computers. Nevertheless, they are straightforward for humans, requiring primarily innate abilities, as well as modest training. Robots cannot replace these workers, but their skills are not scarce, so they usually make low wages.
Computerization has therefore fostered a polarization of employment, with job growth concentrated in both the highest- and lowest-paid occupations, while jobs in the middle have declined. Astonishingly, overall employment rates have largely been unaffected in states and cities undergoing this rapid polarization. Rather, as employment in routine jobs has ebbed, employment has risen both in high-wage managerial, professional, and technical occupations and in low-wage, in-person service occupations.
Therefore, computerization is not reducing the quantity of jobs, but is degrading the quality of jobs for a significant subset of workers. Demand for highly educated workers who excel in abstract tasks is robust, but the middle of the labour market, where the routine task-intensive jobs lie, is sagging. Workers without college education are therefore concentrated in manual task-intensive jobs, which are numerous but offer low wages, precarious job security and few prospects for upward mobility. This bifurcation of job opportunities has contributed to the historic rise in income inequality.
How can we help workers ride the wave of technological change rather than be swamped by it?
One common recommendation is that citizens should invest more in their education. Spurred by a growing demand for workers performing abstract job tasks, the payoff for college and professional degrees has soared; despite its formidable price tag, higher education has perhaps never been a better investment. However, it is far from a comprehensive solution to our labour market problems. Not all high school graduates are academically or temperamentally prepared to pursue a four-year college degree. Only 40 per cent of Americans enrol for a four-year college degree after graduating from high school, and more than 30 per cent of those who enrol do not complete the degree within eight years.
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The good news, however, is that middle-education, middle-wage jobs are not slated to disappear completely. While many middle-skill jobs are susceptible to automation, others demand a mixture of tasks that take advantage of human flexibility. To take one prominent example, medical paraprofessional jobs ? radiology technician, phlebotomist, nurse, and technician are a rapidly growing category of relatively well-paid, middle-skill occupations. While these Para professions do not typically require a four-year college degree, they do demand some vocational training.
These middle-skill jobs will persist, and potentially grow, because they involve tasks that cannot readily be unbundled without a substantial drop in quality. For example, the frustration of calling a software firm for technical support, only to discover that the technician knows nothing more than the standard answers shown on his or her computer screen, that is, the technician is a mouthpiece reading from a script and not a problem-solver. This is not generally a productive form of work organization because it fails to harness the synergies between technical and interpersonal skills. Simply put, the quality of a service within any occupation will improve when a worker combines routine and non-routine tasks.
Following this logic, the prediction is that middle-skill jobs that survive will combine routine technical tasks with abstract and manual tasks in which workers have comparative advantages like interpersonal interaction, adaptability, and problem-solving. Along with medical paraprofessionals, this category includes numerous jobs for people in the skilled trades and repair, who are required to do more than type and file. Indeed, even as formerly middle-skill occupations are being deskilled or stripped of their routine technical tasks, other formerly high-end occupations are becoming accessible to workers with less esoteric technical mastery.
The outlook for workers who have not finished college is uncertain, but not devoid of hope. There will be job opportunities in middle-skill jobs, but not in the traditional blue-collar production and white-collar office jobs of the past. Rather, what is expected is to see growing employment among the ranks of the new artisans and skilled tradespeople of every variety. These workers will adeptly combine technical skills with interpersonal interaction, flexibility, and adaptability to offer services that are uniquely human.
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Prakarsh Jain is a graduate from Jai Hind College, Mumbai and a Chartered Accountant. In full-strength to continue his passion for studying, he moved on to take up Masters of Global Business in Investment Banking & Wealth Management from S P Jain School of Global Management.In addition, he also acted as a delegate at the World Islamic Banking Conference: Asia Summit. Email ID: [email protected]
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