AP Investigation - Technology Killing Millions of Middle Class Jobs

[KenFSU]

http://jacksonville.com/news/national/2013-01-28/story/ap-investigation-technology-killing-millions-middle-class-jobs

NEW YORK â€" Five years after the start of the Great Recession, the toll is terrifyingly clear: Millions of middle-class jobs have been lost in developed countries the world over.

And the situation is even worse than it appears.

Most of the jobs will never return, and millions more are likely to vanish as well, say experts who study the labor market. What’s more, these jobs aren’t just being lost to China and other developing countries, and they aren’t just factory work. Increasingly, jobs are disappearing in the service sector, home to two-thirds of all workers.

They’re being obliterated by technology.

Check out your groceries or drugstore purchases using a kiosk? A worker behind a cash register used to do that.

Buy clothes without visiting a store? You’ve taken work from a salesman.

Book your vacation using an online program? You’ve helped lay off a travel agent â€" perhaps one at American Express Co., which announced this month that it plans to cut 5,400 jobs, mainly in its travel business, as more of its customers shift to online portals to plan trips.

Software is picking out worrisome blots in medical scans, running trains without conductors, analyzing Twitter traffic to tell where to sell certain snacks, sifting through documents for evidence in court cases, recording power usage beamed from digital utility meters at millions of homes, and sorting returned library books.

Year after year, the software that runs computers and an array of other devices becomes more capable of doing tasks that humans have always done. For decades, science fiction warned of a future when we would be architects of our own obsolescence, replaced by our machines; an Associated Press analysis finds that the future has arrived.

‘’I have never seen a period where computers demonstrated as many skills and abilities as they have over the past seven years,” says Andrew McAfee, principal research scientist at the Center for Digital Business at the Massachusetts Institute of Technology and co-author of “Race Against the Machine.”

The global economy is being reshaped by machines that generate and analyze vast amounts of data; by devices such as smartphones and tablet computers that let people work just about anywhere, even when they’re on the move; by smarter, nimbler robots; and by services that let businesses rent computing power when they need it, instead of installing expensive equipment and hiring IT staffs to run it. Whole employment categories, from secretaries to travel agents, are disappearing.

“There’s no sector of the economy that’s going to get a pass,” says Martin Ford, who runs a software company and wrote “The Lights in the Tunnel,” a book predicting widespread job losses. “It’s everywhere.”

The numbers startle even labor economists. In the United States, half of the 7.5 million jobs lost during the Great Recession paid middle-class wages, ranging from $38,000 to $68,000. But only 2 percent of the 3.5 million jobs gained since the recession ended in June 2009 are midpay. Nearly 70 percent are low-paying jobs; 29 percent pay well.

In the 17 European countries that use the euro as their currency, the numbers are even worse. Almost 4.3 million low-pay jobs have been gained since mid-2009, but the loss of midpay jobs has never stopped. A total of 7.6 million disappeared from January 2008 through last June.

Some occupations are beneficiaries of the march of technology, such as software engineers and app designers. But, overall, technology is eliminating far more jobs than it is creating.

To better understand the impact of technology on jobs, The Associated Press analyzed employment data from 20 countries; and interviewed economists, technology experts, robot manufacturers, software developers, CEOs, and workers who are competing with smarter machines.

The AP’s key findings:

■ Over the past 50 years, technology has drastically reduced the number of jobs in manufacturing. Robots and other machines controlled by computer programs work faster and make fewer mistakes than humans. Now, that same efficiency is being unleashed in the service economy.

■ Technology is being adopted by every kind of organization that employs people â€" in large corporations and small businesses, established companies and startups, schools, hospitals, nonprofits and the military.

■ The most vulnerable workers are doing repetitive tasks that programmers can write software for â€" an accountant, an office manager, a paralegal reviewing documents.

■ Startups account for most of the job growth in developed economies. Thanks to software, entrepreneurs are launching businesses with a third fewer employees than in the 1990s.

■ It’s becoming a self-serve world, where we use software to do tasks ourselves.

The lingering pain of the Great Recession is not entirely a result of technology’s advances. Other factors are keeping companies from hiring â€" partisan gridlock in the U.S., for instance, and the debt crisis in Europe, which led to deep government spending cuts.

But to the extent technology has played a role, it raises the specter of high unemployment even after political troubles lift and economic growth accelerates.

In the U.S., the economic recovery that started in June 2009 has been called the third straight “jobless recovery.”

But that’s a misnomer. After the recessions that ended in 1991 and 2001, jobs lost were slow to return, but they all returned within three years.

But 42 months after the Great Recession ended, the U.S. has gained only 3.5 million, or 47 percent, of the 7.5 million jobs that were lost. The 17 countries that use the euro had 3.5 million fewer jobs last June than in December 2007.

This has truly been a jobless recovery, and the lack of midpay jobs is almost entirely to blame.

Fifty percent of the U.S. jobs lost were in midpay industries, but Moody’s Analytics, a research firm, says just 2 percent of the 3.5 million jobs gained are in that category. After the four previous recessions, at least 30 percent of jobs created â€" and as many as 46 percent â€" were in midpay industries.

Some of the most startling studies have focused on midskill, midpay jobs â€" think travel agents, salespeople in stores, office assistants and back-office workers like benefits managers and payroll clerks. An August 2012 paper by economists Henry Siu of the University of British Columbia and Nir Jaimovich of Duke University found these kinds of jobs comprise fewer than half of all jobs, yet accounted for nine of 10 of all losses in the Great Recession. And they have kept disappearing in the economic recovery.

What hope is there for the future?

Historically, new companies and new industries have been the incubator of new jobs. But even these companies are hiring fewer people. The average new business employed 4.7 workers when it opened its doors in 2011, down from 7.6 in the 1990s, according to a Labor Department study released last March.

Technological innovations have been throwing people out of jobs for centuries. But they eventually create more work, and greater wealth, than they destroy. Many economists are encouraged by history and think the gains eventually will outweigh the losses. But even they have doubts.

“What’s different this time is that digital technologies show up in every corner of the economy,” says MIT’s McAfee, a self-described “digital optimist.” “Your tablet [computer] is just two or three years old, and it’s already taken over our lives.”

Occupations that provided middle-class lifestyles for generations can disappear in a few years. Utility meter readers are just one example.

As power companies began installing so-called smart readers outside homes, the number of meter readers in the U.S. plunged from 56,000 in 2001 to 36,000 in 2010, according to the Labor Department.

In 10 years?

That number is expected to be zero.

Read more at Jacksonville.com: http://jacksonville.com/news/national/2013-01-28/story/ap-investigation-technology-killing-millions-middle-class-jobs#ixzz2JI83DiDh

Really interesting, though not entirely surprising, story.

Just curious as to what you guys think the long term implication is.

Will these advancements (like other eras of rapid technological growth) fuel the development of entirely new job sectors and opportunities? Or, as advancement races forward while the labor market continues to increase, will technology continue to supplant human labor, ultimately leading to a society where unemployment is astronomical while those that control the machines control the vast majority of the wealth?

[bill]

All shills making excuses for this god awful administration.

[BridgeTroll]

All shills making excuses for this god awful administration.

bizarre.

yep...

[TPC]

Times change and we are in the middle of the technology revolution. I eventually see the middle class shifting to more tech oriented jobs.

[JeffreyS]

All shills making excuses for this god awful administration.

Seriously no matter what your politics. To think someone would suggest that technology has no impact on jobs is worrisome.  Find your front door exit and look around at the world.

[Dog Walker]

How many people were employed in craft breweries ten years ago?  How many were working in small cheese making operations?  How many nail salons were there?  How many cell phone stores?

See a trend here?  Creative destruction again.

Goods and services are fragmenting and getting more local and more individualized.  Chain restaurants are closing, but more and more local restaurants are opening.  Department stores have been dying for decades, but smaller boutiques have exploded in number.

Next time you want jewelery you might not go to Zale's but a local 3D printing store and print out a design that you made using Tinkercad (https://tinkercad.com/).

Call it the atomization of jobs; everything getting more particularized as technology begins to eliminate the advantage of larger and larger conglomerations of people and goods.

[JeffreyS]

I do believe there is some real creative mitigation going on DW but there is no getting around as more jobs can be automated or semi-automated it takes less people to meet societies wants and needs.

[Dog Walker]

Just because we can't predict it doesn't mean it's not going to happen. 

I'm old enough to have seen a couple of waves of creative destruction and innovation.  Saw Gateway, Roosevelt and Regency Malls being built and downtown die.  Saw Gateway and Roosevelt remodeled and Regency die and downtown beginning to grow again.  Saw containerization (Invented in Jacksonville) make our downtown waterfront obsolete and government building take the place of the waterfront wharves and warehouses.  Now seeing the  government buildings move off of the waterfront and ?? taking  their place.

[If_I_Loved_you]

Technology isn't just killing middle class jobs. A lot of people who work in warehouses are losing their jobs to "Robot's help run warehouses" http://www.youtube.com/watch?v=NLEmsyPv144

[Ocklawaha]

All shills making excuses for this god awful administration.

bizarre.

yep...

The national media may indeed be playing the hand of a shill for the presidents policies, socialism only works until you run out of other peoples money.  Historically human nature demands a radical reduction in population, usually hand in hand with a technological leap forward.  An administration that penalizes entrepreneurship, business and success, is usually the one at the receiving end of the population cleansing. We will only buy off China for a season and then the bill will come due.

Isn't this what you meant?

[spuwho]

Anyone who took history classes in college will have read about the impacts of the Industrial Revolution. Anyone who watched the opening ceremonies for the London Olympics will have seen the dramatization of how it changed life in just greater England.

Back then, there were many calls from people that we had "gone too far" and allowed industrial processes to take over what had been human driven manual processes.

Going back even further, there have been all kinds of technological forces that have caused huge shifts of change in how mankind produces, supports and maintain his needs. The Bronze Age, weapon development by the Sassanids to defeat the Eastern Roman Empire at Constantinople, their subsequent fall generations later as the Ottomans couldn't embrace the newer technologies. The rifled cannon that made Third Era forts worthless in the US. That is just in defense technology.

The Gutenburg Press and the revolution it opened in publishing, revolution that extended all the way to Thomas Paine and the American Revolution. It allowed a flow of information never possible before.

Printing allowed a common education, which allowed religion to become more than just a secret society held by the few, but available to all through the removal of Latin (Catholic Church example).

When telephony technology became affordable, the mass outsourcing of call centers to Middle Asia, and with voice over IP technology and the rebellion against poor english skills, it has brought those affordable jobs back.

Yes, technology has always been at the forefront of retiring old skill sets and fostering the emergence of the new. This always causes turnover and upheaval in the middle class as people attempt to understand where things are going and prepare. I think what bothers people is that the current growth of technology is accelerating the changes ever faster.

This was true for the Industrial Revolution and it is no different now in our current Technology Revolution.

[JeffreyS]

Wow I had no idea people were willing to bury their heads in the sand about this topic. Really "technology always changes and it simply transitions to new jobs" no muss no fuss I guess.  Pollyanna thinks you guys are being naive.

I know we still have plenty of people who think polluting the atmosphere won't cause atmospheric pollution.
I know people still think if we just give the rich tax cuts they will invest that money here rather than in lower cost countries.
However what kind of blinders must one wear to think automation, databases, processing power and enhanced communications won't offset more jobs than they create.
Of course you don't try to diminish tech advances but this is a trend not some future prediction so we can at least look at it truthfully.

I am sorry if you think that violates some theology you have about socialism.  The article is not about that however just pointing out the degree to which something that is obvious is happening. 

I have been busy with a new project installing unmanned C-store/ Lunch counters into large employers lunch rooms.  Easy interface touch screens make this a wave you will see more of.  Yes one cafe has boomed now supplying products for what used to be several. I have hired new people to service these projects so there is some mitigation but net it takes less people to bring more products to market.

[ronchamblin]

The ongoing reduction in jobs for the working population is an interesting problem in that it is a type of joblessness which has never existed before in history, surely not on the scale we are witnessing.  The cause is I presume a result of new technologies and greater efficiencies in production or manufacturing, farming, transportation, robotics, and in the service industries.  I’m wondering about the relation between technology driven joblessness, and the necessity of an increasing socialism of some kind.  Will a kind of socialism become necessary to balance the needs of citizens against the technology driven lack of jobs for the workforce?


"Chuck Norris is always on top during sex because Chuck Norris never f*cks up."

[ronchamblin]

How probable is it that continued unemployment will produce a host of new low-paying jobs which would allow the classic unemployed to supplement incomes and satisfy needs not met by the items supplied by a possible encroaching socialist system? 

Will a socialist system encourage a growth or a decline in the population?  If neither, should some kind of population control be exercised in the interest of societal health and the standard of living of its citizens?     
   

“When you look back and see only one set of footprints, that’s when Chuck Norris was carrying you.”

[peestandingup]

http://techcrunch.com/2013/01/26/america-has-hit-peak-jobs/