The fastest way to create new jobs: Part 2

(Editor’s note: This is the second of two parts. Read Part 1.)

Older Americans are continuing to work, primarily because they can’t afford to retire. The recession has impacted their household budgets, and particularly the value of their investments and retirement funds.

According to new U.S. Census Bureau data, 12.5 percent of the population is over 65 and that number will grow to 20 percent by 2040, possibly more if the birthrate continues to decline.

People age 65-69 who are still working grew from 22 percent in 1990 to 31 percent in 2010. For men working between age 70-74, the numbers grew from 16.6 percent in 1990 to 20.9 percent in 2010. For 70-74 year old women it was a similar pattern, increasing from 8.4 percent to 13.5 percent. 

Blaming Robots

Even before the real age of robots has begun, they are being blamed for stealing people’s jobs.

That’s the view of economists Henry Siu (University of British Columbia) and Nir Jaimovich (Duke University), who point out in a recent article, the reason for this structural change in labor markets is the rise of automation: 

“Automation and the adoption of computing technology is leading to the decline of middle-wage jobs of many stripes, both blue-collar jobs in production and maintenance occupations and white-collar jobs in office and administrative support. It is affecting both male and female dominated professions and it is happening broadly across industries – manufacturing, wholesale and retail trade, financial services, and even public administration.”

While that may be true for what’s happening to existing traditional jobs, they fail to account for the wide range of entrepreneurial and new work opportunities that the same technology is creating.

Job losses are easy to count. Startup businesses, however, are far more difficult to monitor because most tend to fly under the radar until they enter a serious growth phase. 

Finding the Seeds of Creation in Automation 

According to a May 2011 study by the McKinsey Global Institute titled “Internet matters: The Net’s sweeping impact on growth, jobs, and prosperity,” the Internet has accounted for 21 percent of GDP growth over the last five years.

They also concluded the Internet is a key catalyst for job creation. Among 4,800 small and medium-size enterprises surveyed, the Internet created 2.6 jobs for each one lost to technology-related efficiencies.

We are now transitioning from room-size automation, which only large companies could afford, to desktop automation that allows small and even one-person businesses to be part of.

In much the same way that the 1985 Apple LaserWriter gave birth to desktop publishing, the 2010 MakerBot’s Thing-O-Matic 3D printer gave birth to desktop manufacturing.

Automation is no longer to domain of the elite few, and the quicker we can make the transition to all industries, the quicker everyone can participate.

The Economics of Automation

Our economy is based on people. Humans are the buying entities, the connectors, the decision-makers and the trade partners that make our economy work.

Without humans, there can be no economy. So when it comes to automation, consider this:

  • A person with a toolbox is more valuable than a person without one.
  • A person with a computer is more valuable than a person without one.
  • A person with a robot is more valuable than a person without one.

Automation does not happen simply for the sake of automation. It’s intended to benefit people.

If we only look at what automation will eliminate, we’ll be viewing the world through a glass-half-empty lens.

Final Thoughts 

In Feb 2012, I made the prediction that over 2 billion jobs would disappear by 2030. We seem to be on track for that to happen.

Driverless cars will eliminate millions of driving positions. 3D printers will eliminate millions of manufacturing jobs. If we continue down the list, teacherless schools will eliminate teachers, pilotless planes will eliminate pilots, checker-less retail will eliminate checkout clerks, and so on.

Whenever jobs go away, politicians tend to have a kneejerk reaction trying to implement legislation that enables us to hang on to the past for a while longer.

But job losses will happen regardless of whatever overt attempts are made to stop the hands of time.

Contrary to popular opinion, automation creates jobs. As the McKinsey study has shown, we get a 2.6 to 1 benefit from jobs lost through digital automation on the Internet. Since the physical world is five times the size of the online world, we may create even more jobs with physical automation.

Categories: Economy/Politics