Thursday Mar 23

Everybody’s Business: Tech vs. Jobs

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Corporations such as Google and Facebook promote the idea that digital technology is enriching our lives. In some ways it has: it is easier than ever to keep in touch with far-flung friends and acquaintances, to purchase a vast array of products, to access an endless variety of music and video, and much more.

Yet one thing the tech industry has failed at miserably is giving people opportunities to make a decent living. An October front-page article in the Wall Street Journal presented the dismal facts: The tech industry has enriched its investors but does little for the U.S. workforce. In fact, the Journal pointed out, domestic employment in the computer and electronics hardware industry has fallen nearly 50 percent since the beginning of the century, while the much smaller software workforce has seen only modest increases.

More evidence can be found in a report on data centers published by my Good Jobs First colleague Kasia Tarczynska. It showed that these facilities, which make up what is known as the cloud, each create only a few dozen jobs. Yet state and local officials, desperate to show they are doing something to encourage employment growth, shower tech giants with subsidies that average nearly $2 million per job.

Most tech companies with stock market valuations in the billions have surprisingly small numbers of employees. In late 2016, Twitter had a market capitalization of more than $13 billion yet its head count was only about 3,400. Those tech companies such as Apple that sell tangible products make greater use of labor inputs, but they tend to outsource much of the work to low-wage, low-road suppliers in poor countries.

One tech company that has been hiring a lot (including in the United States) is Amazon, which has doubled its workforce to more than 200,000 over the past couple of years while creating the distribution network necessary for rapid delivery. There are two problems, however. The first is that most of these new positions are lousy warehouse jobs. Amazon has developed a reputation for brutal working conditions — and is aggressively fighting unionization. The second is that many of these jobs will not last for long. Amazon is investing heavily in automation, including the purchase of Kiva Systems, a firm specializing in warehouse robotics. And it continues to experiment with drones designed to replace UPS drivers.

Not only is the tech industry failing to create many jobs in its own operations, but it also is on the verge of destroying large numbers of positions in other sectors. A prime example is the rush toward self-driving vehicles. While there has been some (probably not enough) debate on safety, little has been said about the employment impacts. According to the Bureau of Labor Statistics, some 9.5 million people work in occupations relating to transportation and material moving. A substantial portion of these — especially truck, bus and taxi drivers — are threatened by the shift to autonomous vehicles.

After being decimated by offshoring, the U.S. manufacturing sector has been recovering, but as a consequence of digital technology and robotics today’s plants require far fewer warm bodies. This fact was usually unmentioned in the heated trade policy debate during the presidential campaign.

The trend can also be seen in the extractive industries. The supposed “war on coal” behind the Obama Administration’s environmental initiatives has had a much smaller impact on mine employment than the spread of highly mechanized strip mining in areas such as the Powder River Basin of Wyoming and Montana. Even construction, which is assumed to be highly labor intensive, tends to create fewer jobs these days thanks to new methods and technologies. This was part of the reason the Obama stimulus didn’t create more jobs, and it will also limit the employment impact of any Trump infrastructure plan.

Advances in artificial intelligence mean that automation-induced job loss will not be limited to blue-collar occupations. Even the professions are not immune. Some of the work done by lawyers, journalists, teachers and doctors is increasingly being turned over to computers.

The same is starting to happen in lower-level service jobs as supermarkets and big drug stores increasingly use self-service checkout counters and restaurants let customers place their orders on tablet computers.

The tension between technological progress and the needs of workers is, of course, an old story. Yet one lesson never seems to sink in: society needs to prepare for the upheaval and make sure that there is a just transition for the workers who are displaced.

Philip Mattera heads the Corporate Research Project in Washington, DC, and writes the blog Dirt Diggers Digest.

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