Technology and jobs

January 19th, 2014 at 1:00 pm by David Farrar

The Economist says:

INNOVATION, the elixir of progress, has always cost people their . In the Industrial Revolution artisan weavers were swept aside by the mechanical loom. Over the past 30 years the digital revolution has displaced many of the mid-skill that underpinned 20th-century middle-class life. Typists, ticket agents, bank tellers and many production-line have been dispensed with, just as the weavers were.

For those, including this newspaper, who believe that technological progress has made the world a better place, such churn is a natural part of rising prosperity. Although innovation kills some jobs, it creates new and better ones, as a more productive society becomes richer and its wealthier inhabitants demand more goods and services. A hundred years ago one in three American workers was employed on a farm. Today less than 2% of them produce far more food. 

That’s an astonishing figure.

… it seems likely that this wave of technological disruption to the job market has only just started. From driverless cars to clever household gadgets (see article), innovations that already exist could destroy swathes of jobs that have hitherto been untouched. The public sector is one obvious target: it has proved singularly resistant to tech-driven reinvention. But the step change in what computers can do will have a powerful effect on middle-class jobs in the private sector too.

Until now the jobs most vulnerable to machines were those that involved routine, repetitive tasks. But thanks to the exponential rise in processing power and the ubiquity of digitised information (“big data”), computers are increasingly able to perform complicated tasks more cheaply and effectively than people. Clever industrial robots can quickly “learn” a set of human actions. Services may be even more vulnerable. Computers can already detect intruders in a closed-circuit camera picture more reliably than a human can. By comparing reams of financial or biometric data, they can often diagnose fraud or illness more accurately than any number of accountants or doctors. One recent study by academics at Oxford University suggests that 47% of today’s jobs could be automated in the next two decades.

This got em thinking. Could cleaners be an endangered species? You already had automated vacuum cleaners that you can leave unattended. Could you end up with an automated toilet bowl cleaner? automated floor polisher? The higher the costs of manual cleaning go, the more likely it is that it will become cost effective to invest in automated cleaning.

At the same time, the digital revolution is transforming the process of innovation itself, as ourspecial report explains. Thanks to off-the-shelf code from the internet and platforms that host services (such as Amazon’s cloud computing), provide distribution (Apple’s app store) and offer marketing (Facebook), the number of digital startups has exploded. Just as computer-games designers invented a product that humanity never knew it needed but now cannot do without, so these firms will no doubt dream up new goods and services to employ millions. But for now they are singularly light on workers. When Instagram, a popular photo-sharing site, was sold to Facebook for about $1 billion in 2012, it had 30m customers and employed 13 people. Kodak, which filed for bankruptcy a few months earlier, employed 145,000 people in its heyday.

30 million customers and 13 staff. Incredible.

Anger about rising inequality is bound to grow, but politicians will find it hard to address the problem. Shunning progress would be as futile now as the Luddites’ protests against mechanised looms were in the 1810s, because any country that tried to stop would be left behind by competitors eager to embrace new technology. The freedom to raise taxes on the rich to punitive levels will be similarly constrained by the mobility of capital and highly skilled labour.

The main way in which governments can help their people through this dislocation is through education systems.

Absolutely.

Yet however well people are taught, their abilities will remain unequal, and in a world which is increasingly polarised economically, many will find their job prospects dimmed and wages squeezed. The best way of helping them is not, as many on the left seem to think, to push up minimum wages. Jacking up the floor too far would accelerate the shift from human workers to computers. Better to top up low wages with public money so that anyone who works has a reasonable income, through a bold expansion of the tax credits that countries such as America and Britain use.

It is a fair point. The more you push up the minimum wage, the more you may speed up the decline of entire industries such as cleaning.

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29 Responses to “Technology and jobs”

  1. duggledog (1,352 comments) says:

    Machines don’t require 4 weeks paid holiday, a week’s statutory holidays, a week’s sick leave, ACC, maternity leave etc.

    Unions (and socialist governments) did their jobs so well that employers of low skilled employees can’t afford to pay them anymore (unless there are a lot of employees in which case it can work) and spend all their time doing paperwork.

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  2. nasska (10,659 comments) says:

    If computers get too threatening & powerful we can organize them into committees…..that will do them in. :)

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  3. Kimbo (670 comments) says:

    Yes, we need education. But in what?

    I think some of the most important skills are those that equip people academically, emotionally, and vocationally to be entrepreneurs.

    Then we will have wealth and job-creating people with the skills to create new businesses that no computer or machine could possibly foresee.

    Is the New Zealand education system geared towards that?

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  4. cha (3,779 comments) says:

    If things go the way they’re predicted to go WTF are people going to do to earn a living.

    http://www.gizmag.com/half-of-us-jobs-computerized/29142/

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  5. Kimbo (670 comments) says:

    “If things go the way they’re predicted to go WTF are people going to do to earn a living.”

    They said the same thing 200 years ago when the steam engine was invented.

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  6. Viking2 (11,128 comments) says:

    cha (3,162 comments) says:
    January 19th, 2014 at 1:33 pm

    If things go the way they’re predicted to go WTF are people going to do to earn a living.

    Either write blogs, fill in blogs or become politicans. :lol: :lol:

    by the way, as long as there are dirty bastards in this world there will be cleaners. Oh and some of ya need someone to wipe your own bums come retirement time. Image the iron fist of some mad robot completing that task for ya. Oops, computer malfunction, just removed your prostate for you.
    :eek:

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  7. MT_Tinman (2,989 comments) says:

    Better to top up low wages with public money so that anyone who works has a reasonable income,

    Fair enough.

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  8. adze (1,863 comments) says:

    “If things go the way they’re predicted to go WTF are people going to do to earn a living.”

    They said the same thing 200 years ago when the steam engine was invented.

    Kimbo, there is a large discussion that’s been going on in technology circles about that very question.
    The problem is not that new technologies haven’t been creating new types of skilled jobs, it’s that as computers and automation technology become more advanced, 1) the number of people required to fill the new roles is diminishing, and 2) the skill level required of a candidate in such roles increases with every iteration in the process.

    The other difference is that productivity is becoming decoupled from job growth:

    http://www.nytimes.com/2012/12/12/opinion/global/jobs-productivity-and-the-great-decoupling.html

    In particular, have a look at the chart at the top. This is a problem that won’t be solved by telling people to get more education.

    No-one is sure what the end result of this process will be, but one suggested interim solution has been a ‘universal basic income’ (UBI), which is something that Switzerland is going to hold a referendum on. Other possibilities are incentivising businesses to make employees shareholders; and/or making the first $10-20k of annual income tax free.

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  9. Reid (15,942 comments) says:

    It shouldn’t be too difficult to develop algorithms that precisely analyse political polls results and calculate the survey pool to a specified % of accuracy, they already have human-sounding VR AI’s that are capable of doing phone outs and getting the answers, hire a worker in Malaysia for $2 p.h. to type in the questions for the online versions, and DPF goes out of business along with the entire political polling industry.

    I wonder if he’ll still think it’s a great thing then.

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  10. jcuk (583 comments) says:

    Producing humans is such a long term proposition that birth control should have been promoted years ago and even then it would have been too late …. the world has existed for centuries on humans doing thing … unfortunately for that concept they happenned to invent computers… the result is that there are too many people in the world … both for the world and for the race.

    There is a limit to the amount of time humans can devote to play and I doubt the world can cope with increasing numbers of trippers going to exotic places, or even just Disneyland[s]

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  11. Yoza (1,536 comments) says:

    The article reads as more of a warning than a celebration of technological advance, the advent of the industrial age saw massive social upheaval on a global scale as a self-indulgent few sought to amass wealth and power at the expense of everyone else. This warning is emphasised in the last paragraph of the article:

    Innovation has brought great benefits to humanity. Nobody in their right mind would want to return to the world of handloom weavers. But the benefits of technological progress are unevenly distributed, especially in the early stages of each new wave, and it is up to governments to spread them. In the 19th century it took the threat of revolution to bring about progressive reforms. Today’s governments would do well to start making the changes needed before their people get angry.

    A similar paradigm to that which saw the Great Depression of the 1920s and 30s is now becoming more apparent as the ability of the well-heeled few to screw a disproportionate level of wealth out of the economy is having a detrimental effect on social relations within the class structure. It is becoming more difficult to pursue the fantasy that the rich ‘create wealth’ in the face of the observable reality that such wealth is stripped from the lower tiers of society to be concentrated in the highest tiers of the existing class system – the rich are getting richer precisely because everyone else is getting poorer. The advent of more sophisticated technology is doing little more than exacerbating an already obscenely dysfunctional social paradigm – hence the warning.

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  12. Harriet (4,513 comments) says:

    “…..There is a limit to the amount of time humans can devote to play and I doubt the world can cope with increasing numbers of trippers going to exotic places, or even just Disneyland[s]…”

    People play about doing all sorts of things. Walking, reading, taking the time to cook better food, and going to visit friends, relations, and the beach. Some even play about with the likes of computers and mathmatics. Bill Gates was one. Spending more time with their children doing the same is another. All of which don’t cost a great deal. The quality of local dramas and operas and the like may go up too.

    It’s hardly a turning point in history.

    btw: In just 70yrs the population returns back to where it is today. Just look at the demographics of each country.

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  13. davidp (3,540 comments) says:

    >The more you push up the minimum wage, the more you may speed up the decline of entire industries such as cleaning.

    This story made me laugh this week. Back in October, unions and state government managed to obtain a living wage for some workers at a New York casino. “The average pay under a new three-year contract will immediately jump to $20.50 an hour, or nearly $40,000 a year, according to the Hotel Trades Council. Wages will increase further in the second and third years of the contract.” Workers loved it: “Ms. Nixon, a customer relations representative at Resorts World Casino in Queens, had just learned that she would be making $40,000 a year, up from $22,300. “It’s life-changing,” Ms. Nixon, her voice cracking, said on Thursday. “I can finally feel relieved.” ”

    http://www.nytimes.com/2013/10/28/nyregion/ruling-doubles-paycheck-for-1375-employees-at-high-grossing-queens-slot-parlor.html?_r=0

    But, come January: “On Monday, about 175 employees of the buffet restaurant in the slot-machine and electronic gambling casino in Ozone Park learned that the restaurant had been closed and that their jobs no longer existed.” Workers didn’t love it: “Sally Navarro, 25, a former hostess at the buffet whose weekly earnings jumped to $707 from $320 after the October contract, said after the meeting that she did not know how she would pay her bills, or tuition for the nursing school she plans on attending.”

    http://www.nytimes.com/2014/01/09/nyregion/after-winning-a-raise-175-casino-workers-in-queens-lose-their-jobs.html?_r=0

    So how stupid are union members? Union officials essentially said they wanted a symbolic victory that would stick it to the man, with the union officials keeping their high paid jobs but the casino workers losing their low paid jobs and putting them on to the dole. And the union members agreed to it. It’s the dumbest thing since drunk driver and Green Party spokeswoman Robyn Malcolm tried to close down the NZ film industry.

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  14. slijmbal (1,211 comments) says:

    Yoza. you really are marxist to the core and are trying to re-write history to your idiotic beliefs.

    The industrial revolution provided better (though awful to us) jobs and lives, which is why people flocked to the cities to get away from the feudal, poverty full lives they had in the villages and farms. It broke the back of the aristocracy’s lording over the peasants and indirectly led to democracy, improved health, welfare system etc

    Back to the real world …..

    The whole destruction of jobs meme has been a major staple of SF for decades on the back of several books and studies predicting this in the 70s.

    The hollowing out of jobs whereby, what historically would have been called, semi-skilled jobs in the UK are disappearing does appear to be happening leaving either low skilled or high skilled jobs. This drives down the wages for semi and low skilled jobs (supply and demand). Supply and demand is driving up wages for high skilled jobs.

    We need a level of sophistication in robotics for many minimum wage jobs that I predict would take many decades yet for them to be at risk. Consider the immense cost to automate what is basically a reasonably structured task of driving. An automated cleaning machine would need to cost very little to be economically viable.

    But any kids of school age I would be recommending going in to a skilled trade or a skilled profession.

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  15. Peter (1,578 comments) says:

    Read Who Owns The Future, by Jaron Lanier.

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  16. Yoza (1,536 comments) says:

    slijmbal (1,079 comments) says:
    January 19th, 2014 at 5:33 pm

    Yoza. you really are marxist to the core and are trying to re-write history to your idiotic beliefs.

    I’m more inclined to the philosophical social analysis of the anarchists, Marx and his cronies were too authoritarian for a large swathe of the original socialist organisation and the following schism produced very different political objectives.

    The industrial revolution provided better (though awful to us) jobs and lives, which is why people flocked to the cities to get away from the feudal, poverty full lives they had in the villages and farms.

    The migration from the rural areas to the factories and sweat shops brought its own horror stories, the wages and conditions were similar to what those in ‘developing’ nations are being forced into now.

    It broke the back of the aristocracy’s lording over the peasants and indirectly led to democracy, improved health, welfare system etc

    The aristocracy were sidelined by the bourgeoisie in Western Europe before the industrial revolution ratcheted up into high gear. The improvements in health and welfare were the direct consequence of the social organising of activists and the determination of the working class to participate in a more meaningful way in the political system. It is foolish to pretend improvements in health, welfare and political participation were granted in acts of ruling elite benevolence or the mystical consequence of technological advances.
    All human rights improvements were fought for, hard.

    The whole destruction of jobs meme has been a major staple of SF for decades on the back of several books and studies predicting this in the 70s.

    Really? And which SciFi novel predicted the off shoring of jobs, the large scale collapse of the financial system and the subversion of the political process to serve corporate interests?

    The hollowing out of jobs whereby, what historically would have been called, semi-skilled jobs in the UK are disappearing does appear to be happening leaving either low skilled or high skilled jobs. This drives down the wages for semi and low skilled jobs (supply and demand). Supply and demand is driving up wages for high skilled jobs.

    The UK has ended up with a bloated, over paid, financial sector and a service class of which they continually demand cheaper output. Similar themes have occurred in New Zealand with the successful attempt to drive down the wages and conditions of the lowest paid 80% to benefit the lifestyles of the wealthy few. It has little to do with technological advances and more to do with the self serving agenda of an increasingly out of touch ruling elite, technological improvements have only served to increase the rate at which the chasm between the 1% and everybody else has been growing.

    If history is anything to go by, it does not end well for the ‘fortunate’ few.

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  17. ExtremeRightisright (23 comments) says:

    Eventually society will reach the point where nearly all management, production and government will be conducted by computers and robots. And it will maintain itself and self propagate with little oversight.
    Humans will be free to engage themselves in leisure at all times and limitless consumption will be available to all.

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  18. OneTrack (2,598 comments) says:

    Yoza – “If history is anything to go by, it does not end well for the ‘fortunate’ few.”

    Yoza’s party will destroy all the machines, declare all the “rich pricks” enemies of the people and then send them to do hard labour tilling the fields by hand. Viva le revolution.

    That’s if you dont get denounced by your neighbours as a climate denier, in which its straight up against the wall. 10:10.

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  19. Psycho Milt (2,261 comments) says:

    Hang on. It’s an article that outlines how for several centuries now, technological advances have meant the elimination or drastic reduction in numbers of some jobs but the creation of new and better jobs, and declares that this was indisputably a good thing (which it was). And yet their conclusion is that we’d better keep wages low or some jobs might be eliminated or drastically reduced in number? Did they read their own article?

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  20. snowy (106 comments) says:

    Smash the machines, they are the enemy of the people

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  21. Yoza (1,536 comments) says:

    OneTrack (1,444 comments) says:
    January 19th, 2014 at 9:10 pm

    Yoza’s party will destroy all the machines, declare all the “rich pricks” enemies of the people and then send them to do hard labour tilling the fields by hand. Viva le revolution.

    That’s if you dont get denounced by your neighbours as a climate denier, in which its straight up against the wall. 10:10.

    I think the wealthy are superfluous to requirements and their constant demand that humanity take them seriously will ultimately expose them as ‘enemies of the people’. They are the masters of their own demise, the more successful they are the worse things become for everyone else.
    Even without the terrifying consequences of runaway climate change there would have to be a dramatic shift in social and economic relations to accommodate a more dynamic sophisticated interconnected world, a world that is attempting to maintain a paradigm of perpetual economic growth within a closed system of diminishing resources. The real argument now with climate change is how fast it is happening, the old IPCC worst case scenarios have become the most optimistic outlooks. Todays climate change deniers were insisting the sun, the moon and all the planets orbited the Earth not so long ago.

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  22. itstricky (1,558 comments) says:

    A serious tech. article for once DPF, not just a – what’s the best Apple to buy?

    Surely you aren’t giving Dotcom legitimacy are you? This isn’t a sligh sight that Dotcom actually has a point? Have your masters in the Blue house given you some new material to peddle? I shall watch your future tech postings with interest…

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  23. wreck1080 (3,730 comments) says:

    They had a couple of guys from MIT discussing this on 60 minutes the other week.

    People from the legal profession are being put out of work as computers can automate discovery. IBM’s watson outperforms humans — imagine when watson can fit into a smartphone.

    These MIT researchers posit that American jobs may never return previous levels due to rapid advances in automation.

    Ironically, they also said that machines are becoming so good that jobs exported to China may return to the USA as Chinas cheap labour advantage is increasingly negated by robotics and software.

    I find it fascinating, and the social upheaval will be massive. I figure that the loss of lesser skilled jobs may also be causing the widening gap between poor/rich. ie, the middle class is being wiped out by robotics and cheap chinese workers.

    The also didn’t think that machines would take over the world as in the terminator. However, if machines can eventually think and meet some criteria of intelligent lifeforms, then why not?

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  24. Mad_ike (7 comments) says:

    Some interesting choices for NZ as a country – do we embrace tech and try to stay competitive, or stick heads in the sand, trot out “living wages” and end up like North Korea. Trouble is, the former would require courage and political vision…

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  25. redqueen (456 comments) says:

    Only three comments to make here:

    1) The Economists bias towards Anglo-American policy, with a socialist bent, is duly noted (yes, more tax credits to maintain a ‘standard of living’, God forbid anyone would solve supply side problems). Equally, don’t tax people too much (as capital and skills are mobile), but who will pay for these tax credits?

    2) The recurring them, per usual, is that somehow less jobs will be created. Employment is, now, greater than ever before (numerically) and output is vastly increased through the capital employed as well. This is after all the upheavel created by computers. While we face an ageing population, we hear doomsay about how machines will be doing all this work. The lack of consistency is overwhelming sad.

    3) The belief persists that we know what will happen in the future. Current technological trends are fine, but the media portrays technology as though there is an easy picking of winners. Today’s technical solutions will, tomorrow, probably seem silly. The idea of quantifying job losses, in the future, based on technology is comical. If we’d done that in 1914, looking 50 or 100 years ahead, I think the results would have been a grand laugh.

    So making these sorts of predictions, while great for articles, are of limited value beyond the simple statement that ‘All things will, invariably, change’, but tempered by the caveat ‘All this has happened before; all this will happen again’.

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  26. itstricky (1,558 comments) says:

    The also didn’t think that machines would take over the world as in the terminator. However, if machines can eventually think and meet some criteria of intelligent lifeforms, then why not?

    Probably because there’s one gigantic gap between “data processing” and “self aware”. “Intelligence” is one factor that isn’t the be-all-and-end-all. They won’t knock the self or the emotions off off in a hurry, given they’re not someting that you can just dream up software for; it involves human discovery and evolution first.

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  27. 103PapPap (125 comments) says:

    This points out the critical importance of educating your children. If they are bright enough, send them to university, otherwise get them trained in a trade that will be around for a long time (builders, plumbers, electricians, nurses et cetera).
    If they are untrained they are going to end up on the bottom of the heap.

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  28. artemisia (208 comments) says:

    Trades are changing too. Recently heard of a block of apartments that were shipped in from China. Modular, ready to plug and play, including fittings and even furniture. Quality not fantastic but will get better for sure.

    Capital Coast Health hired a bunch of midwives from the Philippines couple of years ago to meet a shortage. Think I heard there were 12. Qualifications and work ethic – very good. Beats training midwives here at great cost, then watching them leave the country or the profession after a few years.

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  29. Yoza (1,536 comments) says:

    artemisia (182 comments) says:
    January 20th, 2014 at 2:39 pm

    Capital Coast Health hired a bunch of midwives from the Philippines couple of years ago to meet a shortage. Think I heard there were 12. Qualifications and work ethic – very good. Beats training midwives here at great cost, then watching them leave the country or the profession after a few years.

    The problem here is the assumption that it is not ok for New Zealand to train midwives at great cost only to have them poached by more affluent foreign health systems, but it is ok for the New Zealand health system to poach midwives trained at great cost from less affluent economies.

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