“The Economist” on Innovation and Jobs
This week’s issue of The Economist has an article on innovation and job creation: “Still full of ideas, but not making jobs“.
Here’s a quote:
America’s ability to innovate and raise productivity remains reasonably healthy. The problem is that the benefits of that innovation and productivity have become so narrowly concentrated that workers’ median wages have stagnated.
The article seems to imply that this is a temporary problem, and that we just need the right kind of innovation — something that will “share the benefits of innovation more widely.”
The article also echos the conventional wisdom on the need for more education, saying: “Americans once led the world in educational attainment, but this is now barely rising while other countries have caught up (see article). ” Yet, the evidence on the ground shows that college graduates (even those with degrees in technical fields) are seeing increasing unemployment and underemployment, even as student debt levels soar.
The article completely ignores the issues I’ve been writing about here:
- Specialized software automation and artificial intelligence applications—and in particular machine learning technology—will increasingly threaten knowledge-based occupations. This may be especially true of entry-level positions typically taken by new college graduates.
- Robots are going to get better and cheaper, and ultimately they will invade a great many lower-wage occupations in the service sector. These low-wage jobs are responsible for the majority of new jobs now being created.
- The migration of all types of information and entertainment to digital format will continue. We have already seen substantial disruptions of business models in traditional labor-intensive industries as a result of this (print media, movie rentals, physical book stores, etc.). As information is increasingly hosted in the cloud and delivered electronically, there will be fewer jobs.
Is it likely that future innovation will create new industries that are labor-intensive enough to keep up with growth in the labor force (at least 1 million new workers per year in the US) and also absorb potentially millions of people displaced from more traditional industries? I doubt it. All the evidence suggests that the industries of the future will be technology-intensive with fewer opportunities for workers—especially those without elite, technical skills.
One of the few exceptions may be “green” jobs associated with installing solar panels, etc. However, these are largely temporary infrastructure jobs rather than permanent, sustainable positions, and the numbers seem unlikely to be sufficient to counteract the broader trend toward fewer jobs in other industries.