Recession, technology kill middle-class jobs
NEW YORK — Five years after the start of the Great Recession, the toll is terrifyingly clear: Millions of middle-class jobs have been lost in developed countries the world over.
And the situation is even worse than it appears.
Most of the jobs will never return, and millions more are likely to vanish as well, said 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.
They’re being obliterated by technology.
Year after year, the software that runs computers and an array of other machines and devices becomes more sophisticated and powerful and capable of doing more efficiently tasks that humans have always done. For decades, science fiction warned of a future when we would be architects of our own obsolescence, replaced by our machines; an Associated Press analysis finds that the future has arrived.
Jobs are not coming back
“The jobs that are going awayaren’t coming back,” said Andrew McAfee, principal research scientist at the Center for Digital Business at the MassachusettsInstitute 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.”
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,” said Martin Ford, who runs a software company and wrote “The Lights in the Tunnel,” a book predicting widespread job losses. “It’s everywhere.”
The numbers startle even labor economists. In the United States, half of the 7.5 million jobs lost during the Great Recession paid middle-class wages, ranging from $38,000 to $68,000. But only 2 percent of the 3.5 million jobs gained since the recession ended in June 2009 are midpay. Nearly 70 percent are low-paying jobs; 29 percent pay well.
Far from over
Experts warn that this “hollowing out” of the middle-class workforce is far from over.
They predict the loss of millions more jobs as technology becomes even more sophisticated and reaches deeper into our lives.
Maarten Goos, an economist at the University of Leuven in Belgium, said Europe could double its middle-class job losses.
Some occupations are beneficiaries of the march of technology, such as software engineers and app designers for smartphones and tablet computers. Overall, though, technology is eliminating far more jobs than it is creating.
To understand the impact technology is having on middle-class jobs in developed countries, the AP analyzed employment data from 20 countries; tracked changes in hiring by industry, pay and task; compared job losses and gains during recessions and expansions over the past four decades; and interviewed economists, technology experts, robot manufacturers, software developers, entrepreneurs and people in the labor force who ranged from CEOs to the unemployed.
The AP’s key findings:
• For more than three decades, technology has drastically reduced the number of jobs in manufacturing. Robots and other machines controlled by computer programs work faster and make fewer mistakes than humans. Now, that same efficiency is being unleashed in the service economy, which employs more than two-thirds of the workforce in developed countries. Technology is eliminating jobs in office buildings, retail establishments and other businesses consumers deal with every day.
• Technology is being adopted by every kind of organization that employs people. It’s replacing workers in large corporations and small businesses, established companies and start-ups.
• The most vulnerable workers are doing repetitive tasks that programmers can write software for – an accountant checking a list of numbers, an office manager filing forms, a paralegal reviewing documents for key words to help in a case.
• Thanks to technology, companies in the Standard & Poor’s 500 stock index reported one-third more profit the past year than they earned the year before the Great Recession. They’ve also expanded their businesses, but total employment, at 21.1 million, has declined by a half-million.
• Start-ups account for much of the job growth in developed economies, but software is allowing entrepreneurs to launch businesses with a third fewer employees than in the 1990s. There is less need for administrative support and back-office jobs that handle accounting, payroll and benefits.
• It’s becoming a self-serve world. Instead of relying on someone else in the workplace or our personal lives, we use technology to do tasks ourselves. Some find this frustrating; others like the feeling of control.
• Technology is replacing workers in developed countries regardless of their politics, policies and laws. Union rules and labor laws may slow the dismissal of employees, but no country is attempting to prohibit organizations from using technology that allows them to operate more efficiently – and with fewer employees.
A common refrain
Some economists say millions of middle-class workers must be retrained to do other jobs if they hope to get work again.
Others are more hopeful. They note that technological change over the centuries eventually has created more jobs than it destroyed, though the wait can be long and painful.
A common refrain: The developed world may face years of high middle-class unemployment, social discord, divisive politics, falling living standards and dashed hopes.
In the U.S., the economic recovery that started in June 2009 has been called the third straight “jobless recovery.”
But that’s a misnomer. The jobs came back after the first two.
Most recessions since World War II were followed by a surge in new jobs as consumers started spending again and companies hired to meet the new demand. In the months after recessions ended in 1991 and 2001, there was no familiar snap-back, but all the jobs had returned in less than three years.
But 42 months after the Great Recession ended, the U.S. has gained only 3.5 million, or 47 percent, of the 7.5 million jobs that were lost.
This has truly been a jobless recovery, and the lack of midpay jobs is almost entirely to blame.
Hope for future?
What hope is there for the future?
Historically, new companies and new industries have been the incubator of new jobs. Start-up companies no more than five years old are big sources of new jobs in developed economies.
But even these companies are hiring fewer people.
Gains outweigh losses?
Many economists are encouraged by history and think the gains eventually will outweigh the losses. But even they have doubts.
“What’s different this time is that digital technologies show up in every corner of the economy,” said McAfee, a self-described “digital optimist.” “Your tablet (computer) is just two or three years ago, and it’s already taken over our lives.”
Peter Lindert, an economist at the University of California, Davis, said the computer is more destructive than innovations in the Industrial Revolution because the pace at which it is upending industries makes it hard for people to adapt.
Occupations that provided middle-class lifestyles for generations can disappear in a few years. Utility meter readers are just one example. As power companies began installing so-called smart readers outside homes, the number of meter readers in the U.S. plunged from 56,000 in 2001 to 36,000 in 2010, according to the Labor Department.
In 10 years? That number is expected to be zero.