The new wave of employment

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In 1930, while the world was "suffering a strong attack of economic pessimism," John Maynard Keynes wrote an upbeat article, "Economic Possibilities for our grandchildren". He claimed that there would be a middle ground between revolution and stagnation that would make the grandchildren much wealthier than their grandparents. But the road would not be exempt from challenges.


One concern Keynes admitted was a "new disease": "technological unemployment… due to our discovery of means of economizing the use of labor outrunning the pace at which we can find new uses for labor." His readers may not have heard of the problem, he claimed — but they were fated to know much more about it in the years that would follow.


Nowadays, most economists put such concerns aside. By increasing productivity, they argue, any automation that generates savings of using manual labor will increase results. This will generate demand for new products and services, which in turn will create new jobs for the displaced workers.


During most of the 20th century, those arguing that technology brought more jobs and prosperity seemed to be winning the debate. The income in Britain almost doubled between the beginning of the common era and 1570. It then tripled between 1570 and 1875. And more than tripled again between 1875 and 1975. Industrialization did not eliminated the need for workers. On the contrary, it has created sufficient employment opportunities to absorb the explosive growth of the population during the 20th century


For a function to be replaced by a machine, it helps if the activity performed is highly routine. Therefore, it is logical to watch the disappearance of production line jobs and some types of accounting services that ended up giving space to robots and the spreadsheets. Jobs that cannot be described through a series of stereotyped tasks however — such as those intellectually challenging, as management of co-workers and teaching of children, or more crafty, such as organization and cleaning of workplaces — have grown as a percentage of total employment.


Such processes of modernization have constantly and relentlessly reduced the job offer of the manufacturing sector in most rich economies. The offer of employment in U.S. manufacturing sector is decreasing sharply since the 1950, from almost 30% to less than 10%. At the same time, the job offer in the service sector rose from less than 50% of the total to nearly 70% (source: US Bureau of Labor Statistics).


We are facing once again a highly disruptive period of economic growth according to Erik Brynjolfsson and Andrew McAfee, professors at MIT, in what they call “the second machine age ". As the first great era of industrialization, they argue, it will bring enormous benefits — but not without a period of disorienting and uncomfortable changes.

A surprising progression of inventions seems to confirm their thesis. Ten years ago no one would think that a car could be driven by a computer, since it was considered the kind of human activity that computers would never master. Now that Google has presented us in California with cars that run without drivers there is no doubt that this is possible, although no one can predict when this will be available to the market.


To be almost able to “think alone” will not cause the computers to no longer do manual labor; it will only result them to be better at it. The designers of the latest generation of industrial robots speak about their creations as ways to support the workers, rather than replacing them; But there is no doubt that technology will be able to do a bit of both — probably a little more. A taxi driver will be a rarity in many places by 2030 or 2040. That sounds like bad news for journalists who depend on this more than reliable source for local events — but will there be many journalists left to worry about this? Will we still have airline pilots? Or traffic police? Or soldiers?


Still there will be jobs. Even Frey and Osborne, whose research talks about 47% of the categories of work being extinct on the automation within the next two decades, accept that some jobs — especially those currently associated with high levels of education and higher wages — will survive.


An amazing fact: according to a report by the U.S. Department of Labor 65% of today's students will be employed in positions that will still be created. It also means that many workers currently employed need for the first time since the industrial revolution to start thinking about how they will do to earn a living in 10 or 20 years. Rapid technological change is changing the skill requirements for most jobs. The same way the manufacturing industry saw a change of job offer for people without qualification fall from 80% 30 years ago to 12% today, in the next decade we will see a significant drop in job offers for people without qualification in all sectors.


Many other positions can stick around for a while, but the expectations and qualifications will evolve. Let us take as an example the function of librarian. The digitalization and the Internet require less physical presence, but the search of a vast collection of resources and information is still scary to many people. While the Librarian of the past was an expert of the Dewey decimal system, the new librarian needs to be a digital Archivist, savvy with searching of useful sites and keywords.


Accountants need to be aware as well. The traditional accountant, working only with the preparation and submission of tax forms no longer exists. Consumers and businesses will only retain accountants that know how to offer them advice on business and finance, not just filling out and archiving forms.


In short there is and there will be jobs, but the demands are changing. And you, how do you see yourself in this scenario?