Nice job you got there - too bad it won't last.
If you think I'm not talking to you, you're mistaken. I don't even have to know what your occupation is. I can think of at least five trends that threaten your job. One is what we remain in the middle of - a jobless recovery. Maybe you've already lost your job to that, and can't find another, or can't find a job that pays as well.
But maybe you believe in the business cycle, and that we'll all be singing Happy Days
Are Here Again in the near future, instead of the current chart-topper, There but for the Grace of God Go I.
Meet four other job-killing trends over the fold.
Not to keep you in suspense, here are four trends that are after your job:
1. Off-shoringOff-shoring is already familiar. Basically, it means moving jobs from a first-world country to a third-world country. It probably started in the late 1950s/early 1960s when jobs moved from the industrial northeast and midwest to backwaters like Mississippi, Texas and Florida. Companies weren't moving there for the nice weather - not so much as for the low-paid, non-union labor and lax regulation in areas like safety or pollution control.
3. Product design
Then jobs moved to Canada and Mexico, aided by NAFTA, and when those became too expensive or too regulated, to China, and when that became too expensive, Thailand, Viet Nam and Bangladesh, and if you thought the race to the bottom would end there, there's this:
My name is Tony Smith. I am President and CEO of Limitless Electronics, a company that I founded in April 2011, based in Seattle, Washington. And we design and manufacture consumer electronic products.Specifically, Cameroon, in Central Africa. Presumably Somalia was too expensive with too much government interference.
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And we also operate factories and we are building right now our hybrid office in Africa that will pretty much assemble different components that we are using to build our devices.
Some people claim that few or no jobs have been shipped overseas. For example, the jobs building the Apple II or the original Macs weren't shipped overseas. Apple just discontinued those products. All of its new products - iPods, iPads, iMacs, iPhones and everything else - are built in China by Foxconn. See? No jobs were transferred.
De-skilling doesn't seem like a job killer at first - you just take an existing job and re-structure it so it can done by someone with less skill or formal training. Teach for America will train you to be a teacher in five weeks, not four years of traditional college education. Medical judgment is replaced by evidence-based medicine, lack of need for skilled judgment means that nurse practitioners or physician's assistants, or eventually computers, can now do an MDs work (same price for an office visit, but a lot lower labor cost), or paralegals do what junior, and eventually senior, attorneys used to do.
Notice that none of those are manufacturing jobs - nearly any service job can be de-skilled, even if it can't be off-shored (and things like reading X-rays or producing legal documents are already off-shored too, and I have friends who get their dental work done in Mexico). Don't worry that the quality usually suffers - if you have enough money, your kids will be taught by a real teacher, and you can see a real doctor or lawyer. And as cynical as that sounds, it isn't meant to belittle nurse practitioners, physician's assistants or paralegals, or even computers, who can all perform vital services in a well-structured system - the idea behind de-skilling, however, is not to improve service delivery, but to reduce delivery costs.
And cost reduction is what's wanted here. Consider this: suppose you sell a product for $100 that costs $80 to make - $20 profit. Suppose you sell 1,000 of those, and make $20,000 profit. Now suppose you want more profit. You can increase sales by 1%, and you'll make another $200. Or you can cut costs by 1%, to $79.20, and make $800 more profit - 4 times the profit for 1% cost reduction vs. 1% increase in sales. And increasing sales is hard and risky. Cutting wages, or labor costs, is easy and certain. Increasing sales costs money too, for advertising or more salespeople, for example.
Cutting costs by driving wages down might cost very little, but there's a limit. And there are two more ways to cut costs and kill jobs at the same time (the two efforts being more or less the same thing): re-designing your product or automating. Technology is a job killer.
Again, be clear that this isn't just a problem for people in manufacturing - most service jobs can be re-designed to need fewer workers, or even automated out of existence. Both of these changes are in the realm of technology. For example, as Benjamin Braddock was advised in The Graduate ... Plastics!. Molded plastic parts allow you to build things that snap together, eliminating fasteners and the people who hold the screw-driver. You can mold in features to reduce the number of pieces to be handled and assembled, reduce the parts count. And one person can operate 3 or 4 injection molding machines which are highly automated.
If you can't get rid of the screws, make them intelligent
Each fastener is a mechanical device consisting of a pin or socket that locks into a male or female part and an actuator that releases the device.Expedia, Travelocity and William Shatner put travel agents out of work. You now pump your gas (offer not valid in Oregon) or do your own grocery checkout. Hollywood Video and Blockbuster employees have been replaced by Netflix employees stuffing envelopes, who will eventually be replaced by streaming video. One DJ tapes radio shows that are broadcast over dozens of stations across the country. There's no shortage of service sector examples. All brought to you by technology - re-designing or automating jobs out of existence.
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Wilson believes that intelligent fastening changes how platforms are put together: “It’s about taking the power of computing down to the level of the basic building block, which is the fastening device.” He adds that the technology offers a new way to create intelligent tools and fastening devices with electronics built into each component. Automating each of the components allows software to control the entire assembly process so that humans would not be required to perform construction and maintenance. “We are talking about reinventing the way that things get assembled,” he maintains.
Laura Clawson front-paged a great article, Low-wage manufacturing is on the rise, which is well worth reading. In the comments section there was some discussion of the fact that people have been telling scary stories about automation killing jobs probably since the time of the Luddites. Kurt Vonnegut wrote his first book on just that topic - Player Piano - in the late 1940s (when he worked for General Electric).
But there is an instance of an entire industry's employment automated and re-designed away: agriculture. In the 19th century, it's estimated between 70% to 80% of the workforce was engaged in farming. Today it's 2% or less, and almost entirely due to technological advances. It's true that some of those 75% of ag jobs that disappeared were replaced by food processing jobs - slaughterhouses, making Wheaties, bakeries, etc. - but on nowhere near the scale at which jobs ceased to exist.
And to underscore the changes technology - automation and re-design - is having now, the AP is running a 3 part series on the topic, the first part, Recession, tech kill middle-class jobs ran today. From the article:
Most of the jobs will never return, and millions more are likely to vanish as well, say experts who study the labor market. What's more, these jobs aren't just being lost to China and other developing countries, and they aren't just factory work. Increasingly, jobs are disappearing in the service sector, home to two-thirds of all workers.It isn't just the Apple II assemblers or people on the line at GM or Ford:
They're being obliterated by technology.
Some of the most startling studies have focused on midskill, midpay jobs that require tasks that follow well-defined procedures and are repeated throughout the day. Think travel agents, salespeople in stores, office assistants and back-office workers like benefits managers and payroll clerks, as well as machine operators and other factory jobs. An August 2012 paper by economists Henry Siu of the University of British Columbia and Nir Jaimovich of Duke University found these kinds of jobs comprise fewer than half of all jobs, yet accounted for nine of 10 of all losses in the Great Recession. And they have kept disappearing in the economic recovery.It isn't just in the US either - the trend is worse in Europe (unemployment approaching 12%, still in recession) and even affecting places like Japan. And it will affect the current low wage countries - like China - as wages and living standards rise. In fact many compainies maximize the bang for the buck by heavily automating at the same time they build new plants - or outsource to contract manufacturers - in low-skill, low-wage countries. Even Foxconn, the Apple contract assembler infamous for recent worker suicides, is planning to install a million robots in the near future.
Economists, on the left at least, bemoan the fact that while industry has seen dramatic productivity increases (think about the fact that during a recession and declining sales, US companies have increased profits by as much as 33% - see the cost reduction example above, again), the productivity increases haven't trickled down to worker paychecks, which, in real dollars, are a few hundred dollars below their 1970 levels. But while in the past, productivity improvement came from workers working harder and smarter, today that improvement comes from capital investment - and fewer workers, besides. Under our current systems of economics and politics, the returns from those improvements flow to the people who made the investments.
For the short-term, we need to get Americans working again, even if it isn't at the wage-levels they held previously. But in the long run we need to plan for an economy where not everyone will have a job, and not everyone will be able to earn their daily bread through their labor, no matter how energetic or hard-working they are. In a culture where food, clothing, shelter, and for many, even medical care depends on having a job, and where the safety net, already inadequate, continues to shrink, joblessness equates to homelessness, hunger, and early death. We need to devise ways for everyone to survive at a decent standard of living in the face of not enough jobs - decent jobs, at least - for everyone.
If we weren't in a global economy, we might talk about slowing productivity growth, reducing automation and even innovation. When you have competitors not foregoing those things, it becomes impossible to compete, just as when your competitors will labor for $1 a day instead of $20 an hour and benefits you need for a middle class existence, minimum.
It's the challenge for this century that no one is talking about, and there are no easy solutions, and probably no solutions without significant changes to our cultural framework and social structure. Although we can look to countries like Haiti to see the ultimate endpoint of failing to address the problems. It's, admittedly, a long way to get there, but we're already on the road, and there are no exit ramps unless we figure out how to build them. But I'm sure there are a few people living well in Haiti, and you might just be one of them.
Perhaps you've heard that Apple, and some other companies, are moving jobs back to the US, and anticipate a manufacturing or even employment renaissance here. Again, from the AP article cited above:
"The jobs that are going away aren't coming back," says Andrew McAfee, principal research scientist at the Center for Digital Business at the Massachusetts Institute of Technology and co-author of "Race Against the Machine." ''I have never seen a period where computers demonstrated as many skills and abilities as they have over the past seven years."But perhaps you're an optimist and thinking, "Well, there's always that job flipping burgers at McDonald's or Burger King that I can fall back on."
The global economy is being reshaped by machines that generate and analyze vast amounts of data; by devices such as smartphones and tablet computers that let people work just about anywhere, even when they're on the move; by smarter, nimbler robots; and by services that let businesses rent computing power when they need it, instead of installing expensive equipment and hiring IT staffs to run it. Whole employment categories, from secretaries to travel agents, are starting to disappear.
"There's no sector of the economy that's going to get a pass," says Martin Ford, who runs a software company and wrote "The Lights in the Tunnel," a book predicting widespread job losses. "It's everywhere."
ROBOT SERVES UP 360 HAMBURGERS PER HOUR
No longer will they say, “He’s going to end up flipping burgers.” Because now, robots are taking even these ignobly esteemed jobs. Alpha machine from Momentum Machines cooks up a tasty burger with all the fixins. And it does it with such quality and efficiency it’ll produce “gourmet quality burgers at fast food prices.”