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How Technology Productivity Kills Jobs

December 13 2011

 

 

by: Phillip Rawls and Jim Van Anglen

 

Technology is all about productivity. Getting more things done, faster, cheaper, with fewer people. This has been called the "Jobless Recovery". Here is why. Companies have spent billions of dollars on technology to gain productivity improvements, and it has worked. The bad news, for some workers, is that it has worked so well that some of those old jobs are never coming back. And, the new jobs that are created by technology may not be a good match for displaced workers. Take a careful look at this jobs chart.

 

Note how recessions (job losses) are becoming deeper and lasting longer. This chart measures job losses from the peak employment month. We are now 4 years into a job recession, and it is deeper and longer than any other recession in history. In fact, the last four recessions have been deeper and longer than others in previous decades. Why is that?

 

Travel agents, stock brokers, and record stores - Technology, specifically the Internet, has disintermediated and disrupted entire industries. When was the last time you used a travel agent? Doesn't everyone book their own flights and hotels online? Do you use a stock broker to buy stocks? I haven't used a stock broker in over 20 years. When was the last time you went to a store to buy music? Does anyone have a secretary anymore? When was the last time you went into a bank and talked to an actual person? Doesn't everyone use ATMs and bank online? All of these jobs have been severely disrupted and reduced by the Internet. Those jobs, and many more like them, are never coming back.

 

Preparing for the future - The new economy and new jobs all have a technology component. Auto mechanics today use more computers and electronics than college professors of 30 years ago. Manufacturing jobs today require knowledge of computerized inventory systems, production planning systems, test environments, digital scanning, RFID tags, and loads of other technologies. High schools need to teach kids how to use computers and information technology. There are very few "low skilled" jobs in this country. The technology bar has been raised significantly, and some are failing to reach it. Others are unaware that it even exists.


Health Care and Education - Health care and education are two of the largest sectors of any economy anywhere in the world. More people work in health care and education, and more money is spent on it, than almost anything else. Yet, these two sectors are probably the least efficient and productive. Technology has not been applied here in the same way it has in other major industries.

Labor unions dominate both sectors. Labor unions are all about preserving the status quo. They "protect jobs" by demanding "work rules" that effectively block technology improvements and productivity...because these improvements would reduce the need for some workers. Look at any job sector that is dominated by labor unions and you will see a lack of technology and productivity.

Who is right? - Politicians and government bureauocrats pontificate about jobs, but have no clue what creates jobs, or more importantly, what kills jobs. Unions talk about protecting jobs, but fail to realize how their work rules kill jobs. Perhaps they are right. Maybe protecting existing jobs and limiting productivity is the right way to go.

My view is that technology makes the world a better place. It makes things faster, cheaper, more productive, and opens limitless new opportunities. Technology facilitates creative destruction, destroying something old to create something new. It is that transition from old to new that we need to better manage. Our education system needs to prepare students for the new reality. Those old jobs are never coming back.

 

 

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Death by Technology

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