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Is technology to blame for chronic unemployment?
European researchers say some apps on Android smartphones leave passwords, bank accounts, credit cards, and other sensitive info vulnerable to theft.
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Most of us assume that at some point the economy is going to kick into gear. That unemployment will eventually drop below 6 percent, and that job creation will return to its previous clip of 200,000 a month. But what if we're stuck at a new normal of high unemployment and low job growth? It's possible because technology might just have gotten the best of us.
It used to be that new technologies generated lots of new jobs for those displaced from old ones. After farms were mechanized, Americans moved to factories. After manufacturing declined -- in part due to technologies that dramatically cut the cost of shipping goods -- we moved into services.
But new technologies have been eating away at services, too. Gas station attendants are long gone and telephone operators and bank tellers aren't far behind. Endangered too are office clerks and secretaries, publishing jobs, and people providing any expertise or information that can now be digitized into a computer.
We still have plenty of jobs in retail sales, education, and health care -- but these are also among the least efficient parts of our economy and pressure is building to cut costs. Here again, technology is leading the way. In the next decade, it seems likely that many retail sales workers will be being replaced by online sales. We're about to see a wave of online courses and classrooms -- supplanting some teachers.
Health care has to become more efficient. So patients will carry their own medical files on memory sticks. We'll also have personal health apps, allowing us to self-diagnose -- even measuring our own blood pressure and other vital signs.
All this is good for us as consumers -- but as workers we're putting ourselves out of business. At this rate, 50 years from now, a tiny machine may satisfy all our needs. Call it the "iEverything." The only problem: none of us will be able to afford it because we'll all be unemployed.
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Robert Reich is absolutely wrong on this. Technological improvements maximize production and lower costs. If they didn't, they would never be adopted. This creates greater profits or savings which allows further consumption or investment in other industries. Technology might cause unemployment in the industry affected but it generally increases aggregate employment. If it does decrease aggregate employment it is generally voluntary as individuals can work less to achieve the same standard of living, which is a GOOD thing; it's why most of us no longer work 18-hours-a-day doing back-breaking work.
As a professor of public policy, what is he advocating here? That we should hinder technological innovation? That technologies from the past were harmful to societies? He is shortsighted here. We don't have a clue what the new jobs will be 50 years from now, just as 50 years ago we had no idea what the jobs of today were going to be. This piece is simply neo-Luddite nonsense and has no basis in economic history.
See below for my full critique:
http://betterlivingthroughliberty.com/2012/10/15/robert-reich-is-shortsi...
The thing that Reich is missing is that while we deploy more and more technology to automate production and eliminate touch labor, we also drive down prices of those items. So instead of having to be rich to own a fancy machine a common person can own one. So if I make less money, but the cost of the things I need to live go down even more, I'm richer. That is to say, I can labor less, and live with more. You see this in real life in new technology where productivity gains are much higher than the countering inflation. More mature items and those with increasing regulation have increasing prices.
The other side of the coin is that in an actual free market, something we don't have, wages in sectors of labor in surplus would be permitted to fall to their clearing price. This would stem the off shoring of jobs because that labor could be obtained inexpensively here in the US. What we have instead is a mandating of an arbitray floor on wages, no matter how much in surplus they are. We then pay those people that have been rendered unemployable because their value is less than the mandated compensation with unemployment benefits and other assistance to idle their labor. We can sustain this for some limited period of time by borrowing money so we can as a country consume more than we produce.
The other thing about a skills gap is mostly nonsense. A real business with real need will train people that they CAN find that are close. People looking for excuses will claim the skills gap or lament they can't hire people for difficult work for what amount to below market wages. "There must be a shortage of doctors because I can't find one that will work for $10/hr."
There are jobs available. The problem is that there is now a huge gap in skills and the jobs that need to be filled. This problem is occurring in the blue collar side as much as it is in fields like mine (marketing). Technology is changing the way we work faster than the educational systems can adapt their curriculums.
I would rather take a high school grad and teach them on the job then have them waste 4 years in college learning about social media from a professor who has no clue what they are talking about. There is a reason why online schools are popular. They can adapt to the rapidly changing world we live in, and hire people who are thought leaders in the industry to teach courses people need to be successful in their chosen career.
The issue becomes a domino effect from there. Poor education leads to slower evolution in all industries to adapt to changing technology, which effects quality of work...like in health care...which forces consumers to take their health into their own hands because they are tired of the mistakes and can't trust providers anymore. Someone identifies that and capitalizes on the need, pushing technology further. This requires people who can understand this new technology which creates jobs...based on a way of thinking and problem solving that isn't taught in US schools. Boom...gap. Unemployment seems to go up. But it is not because there isn't jobs. There isn't qualified labor. That is different.
Why does China have our jobs? "Like dude, omg they like speak totally more languages and stuff. They like do wicked math really young and like totally respect authority and work like hard and stuff." Ugh. Apple probably manufactures in china because Americans want their devices on the release date. When was the last time any 20 something did what they were told to do on time, the first time in our country? *eyes rolling*
If you want to fix the issues our country is struggling with you need to fix what's really broken. We can't survive a 21 st century world cranking minds through a horse and buggy school system that expects little more of them than showing up drug and weapon free.
Klynn,
I think a lot of which you mentioned was right on, dude, but there are hundreds of thousands or maybe even millions of people who are labeled "over qualified" and are working below their existing capabilites. I know, I'm one of them. Throw in some age factors and I'm unhireable. So there is a huge inventory of people working below their capabilities, people looking for work at the right level/salary and then a larger group, who have given up on finding a job, almost any job. These are the people that could run the Apple manufacturing plants, operate the machinery, program the robots and computers, do all the planning/scheduling, and still meet the release dates. We/Apple could start now. Any new product that comes out, will be built here in the U.S. and then gradually as older products get up dated, they could also be built here. Eventually all Apple products would be manufactured here in the United States. And I'm not trying to pick on Apple, but they are at the head of the line, great product, amazingly profitable, and a culture of people that will only use Apple products, can't lose.
Another example. A few years ago I wrote a "paper" on the United States becoming the world leader in Solar energy, 1 roof at a time. Just take the mentality of our parents and grandparents, during World War II, and as a people,decide we are going to be the world's leader in designing, manufacturing and the installation of solar panels on most American homes, fulfilling the existing home needs, but also, taking the surplus energy created and sending it back into the grid. Don't need no stinkin batteries! I believe, if the government made the decision and funded it, same as the money lent to the Auto Industry, we could in 6 months have created millions of jobs. From the planning, purchasing of components, manufacturing, shipping, installing on homes and the upgrading of power systems to be able to receive this energy and sell it back to the grid, and many other jobs, we could reduce the unemployment rate in half.
The solar panels would have to be cheap, generic, something like a VW Beetle in it's day. All panels would utilize the same components whether built in Orlando or Oshkosh. Simple design, simply constructed and easily installed. The government would give these to people, lease roof space, and send all the surplus energy back into the grid, at market price. Eventually, this product could be sold world-wide, to developing countries, to help them with their energy needs.
I'm way off topic, but I had to show that we can get ourselves out of this mess, with the existing resources we now have and with the additional income generated from these solar farms, could increase the monies spent on Education, received from income tax, sales tax,etc., from all these new jobs that were created by this Solar Boom!
Rich
Robert,
I heard a few months ago on NPR, that if Apple transferred their manufacturing back to the U.S., it might add another $10-$60 per device and most likely in the $30 range. People like Apple and their products, but would REALLY like Apple if they created a few hundred thousand jobs here. I don't think the slight bump in cost would deter most consumers from buying/using Apple devices and the slight loss of profit would hardly effect Apple's bottom line, either. So why aren't we, as Americans, demanding companies like Apple, to bring those manufacturing jobs, back into the United States?
Rich
The bump in price would deter some consumers, perhaps a small amount, but you, like Reich, are not looking at the secondary consequences. Increased prices means less money available for the consumption of other goods or services or for investment. You might increase manufacturing jobs by requiring Apple open factories, but you will necessarily destroy jobs in other fields to do it. Shipping manufacturing jobs to China is a good thing, insofar as it lowers prices for consumer goods, because it allows labor to move into more productive or desired areas domestically, which are usually easier jobs with shorter hours. Everybody wins. Only looking at one consequence of a policy or the consequences for only one group is a fallacy that needs to be destroyed.
So the suggested "fix" to this is???? Ban all innovation? Or require goods and services to be shipped by placing them on the backs of people who will walk them one mile then pass them off to someone else till they get to the store? That would employ a lot of people.
What is really happening is jobs that don't make economic sense are going away. This frees up people to move into more productive work, frees up money to be spent on productive items, and lowers the cost to consumers allowing them to better allocate their limited funds in ways that make them better off.
We would see this in the form of lower prices, but our money has been losing value every year (inflation) so it takes more to buy the same amount.
Given the enormous mountain of cash that Apple, for instance, is sitting on and the fact that the manufacture of iPhones and the like require considerable manual labor input, I have to wonder what the economics of that manufacturing process would look like if they employed domestic workers instead if shipping jobs over seas.
Obviously Apple could not make the wildly high level of profits it has enjoyed with its current manufacturing arrangements, but I'd be curious to know what kind of profit margins they might be able to attain if those jobs were instead in the US, even considering that they would likely need to charge more for the devices.
When I was a kid, back in the pre-"Jetsons" age, we went to World's Fairs to be amazed by futuristic displays of life in a technological age. A common theme of most exhibits was that all those new appliances, devices and robotics would give us all lots more leisure time .
Even then, I wondered where people would get the money necessary to enjoy all that "leisure time" and buy all those techno-wonders if machines did everything and people did nothing.
Increasingly, the reality is that we won't.
Robert Reich is right.
"Leisure time" is another way of saying "unemployed."
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