Technology and Jobs: More of One and Less of the Other? Volti Chapter Nine

Many technologies have led to the elimination of human jobs Many technologies have led to the elimination of human jobs technological development has led to great increase in worker productivity technological development has led to great increase in worker productivity hour labor = $1.00 of goods and services hour labor = $1.00 of goods and services hour labor = $6.00 of goods and services (after adjusting for inflation) hour labor = $6.00 of goods and services (after adjusting for inflation)

The Threat of Machine-Made Unemployment Computerized typesetting - typesetters jobs - 8,000 to 3,800 ( ) Computerized typesetting - typesetters jobs - 8,000 to 3,800 ( ) Computerized banking - 35,000 transactions/day with 10% fewer tellers Computerized banking - 35,000 transactions/day with 10% fewer tellers Electronic synthesizers - studio musicians are back by a third Electronic synthesizers - studio musicians are back by a third

The Technological Threat in Historical Perspective These developments are not new to our times These developments are not new to our times 18th Cent. - power loom forced many loomers out of a job 18th Cent. - power loom forced many loomers out of a job (Their future loomed none to bright ahead of them... heh, heh!) (Their future loomed none to bright ahead of them... heh, heh!) Opposition to new technology came not only from workers but also from officials Opposition to new technology came not only from workers but also from officials Britain - banned use of "engines for working of tape, lace, a ribbon, and such, wherein one man doth more amongst them than seven English men can doe." Britain - banned use of "engines for working of tape, lace, a ribbon, and such, wherein one man doth more amongst them than seven English men can doe."

A Case for Optimism Technological advance is NOT incompatible with high levels of employment Technological advance is NOT incompatible with high levels of employment When considering effects of technological change on overall level of unemployment: When considering effects of technological change on overall level of unemployment: Even if all available technology were used to full capacity --> there would still be plenty of work to do Even if all available technology were used to full capacity --> there would still be plenty of work to do People still need better food & housing People still need better food & housing Even among the affluent, the desire for more and more still exists Even among the affluent, the desire for more and more still exists Technological advances will not lead to job losses if the demand for products/services increases at the same pace as productivity Technological advances will not lead to job losses if the demand for products/services increases at the same pace as productivity Technological change often creates the need for new work to be done Technological change often creates the need for new work to be done

How Technology Creates Jobs Some technology has produced jobs that did not exist before: COMPUTERS Some technology has produced jobs that did not exist before: COMPUTERS Most occupations held today did not exist one hundred years ago Most occupations held today did not exist one hundred years ago Technological advance has created the need for new and better technologies Technological advance has created the need for new and better technologies "In 1963 one economist warned that American households were saturated with domestic appliance, resulting in a stagnant market for manufactured goods; the only significant new product was the electric can opener." "In 1963 one economist warned that American households were saturated with domestic appliance, resulting in a stagnant market for manufactured goods; the only significant new product was the electric can opener."

Indirect Effects of New Technology on Employment The Automobile: greatest job generator of the 20th Century The Automobile: greatest job generator of the 20th Century 1 out of 7 jobs in American Economy result from auto 1 out of 7 jobs in American Economy result from auto legions of jobs tied indirectly to auto as well (sales, insurance, mechanics) legions of jobs tied indirectly to auto as well (sales, insurance, mechanics) Few other technologies will be able to match auto in job generation Few other technologies will be able to match auto in job generation Jet airplane, computer, television all pale in comparison Jet airplane, computer, television all pale in comparison Although these industries have not directly generated jobs, they have had indirect impact Although these industries have not directly generated jobs, they have had indirect impact

The Machines Aren’t Ready to Take Over Stereotype of technological change: robots are going to take over everything Stereotype of technological change: robots are going to take over everything Only partially true: 1 robot/340 manufacturing production workers Only partially true: 1 robot/340 manufacturing production workers Machines, however, have replaced some human staffed positions Machines, however, have replaced some human staffed positions CAD - (computer-aided-design) CAD - (computer-aided-design) CAM - (computer-aided-manufacturing) CAM - (computer-aided-manufacturing) Flexible manufacturing systems - general purpose machines capable of a variety of tasks Flexible manufacturing systems - general purpose machines capable of a variety of tasks Impressive, but very expensive ($3-4 million each) and not the norm for industry Impressive, but very expensive ($3-4 million each) and not the norm for industry Can also be problematic --> if machine breaks then everything stops Can also be problematic --> if machine breaks then everything stops

Technology, Jobs and The Changing Structure of The Economy Automated industrial processes have replaced many human positions Automated industrial processes have replaced many human positions 15% of work force will be lost as computerization spreads 15% of work force will be lost as computerization spreads In the last 100 years, 2/3 of pre jobs have been lost to mechanization In the last 100 years, 2/3 of pre jobs have been lost to mechanization Manufacturing jobs have declined regularly since 1948 Manufacturing jobs have declined regularly since 1948 BUT, new jobs have been created BUT, new jobs have been created In particular, the service sector has grown considerably In particular, the service sector has grown considerably Neurosurgeons and shoeshiners Neurosurgeons and shoeshiners For the first time in human history, more people are employed in the service sector than in the manufacturing sector For the first time in human history, more people are employed in the service sector than in the manufacturing sector

Technology, Jobs and The Changing Structure of The Economy QUESTION: If the basis of human survival requires food, clothing, and shelter...How can the majority of the work force be employed in occupations that contribute nothing to production? QUESTION: If the basis of human survival requires food, clothing, and shelter...How can the majority of the work force be employed in occupations that contribute nothing to production? ANSWER: With the rise of industrialization, it takes less human labor to produce needed goods ANSWER: With the rise of industrialization, it takes less human labor to produce needed goods Despite the rise of technology, there is a continued and growing demand for Despite the rise of technology, there is a continued and growing demand for services services Dept. Of Labor - the most needed jobs of the future are waiters, nurses, cashiers etc. Dept. Of Labor - the most needed jobs of the future are waiters, nurses, cashiers etc. Also, we are human beings and we crave physical contact Also, we are human beings and we crave physical contact Education - although technology has played a role, lectures and discussions, over which a professor presides is still the desired method for teaching Education - although technology has played a role, lectures and discussions, over which a professor presides is still the desired method for teaching Although a professor could lecture to 500 students and increase "productivity“ it is typically less rewarding for the student and the teacher Although a professor could lecture to 500 students and increase "productivity“ it is typically less rewarding for the student and the teacher Also, human beings still have a need to be entertained, comforted, and healed Also, human beings still have a need to be entertained, comforted, and healed Technology has affected many jobs - not always adversely Technology has affected many jobs - not always adversely Telephone Industry - operators eliminated considerably when phone switching became automated. Yet number of jobs in telephone job market has continued to expand because of advanced technology and increased demand Telephone Industry - operators eliminated considerably when phone switching became automated. Yet number of jobs in telephone job market has continued to expand because of advanced technology and increased demand

Softening the Blow Technology does destroy some jobs but it also opens up opportunities for new jobs Technology does destroy some jobs but it also opens up opportunities for new jobs The worker’s best defense against the changing tides resulting from technology is adaptability and versatility The worker’s best defense against the changing tides resulting from technology is adaptability and versatility Most importantly, Most importantly, TECHNOLOGICAL CHANGE HAS NOT ELIMINATED THE NEED FOR WORK - even advanced technologies require skilled operators - even advanced technologies require skilled operators