This is the second in a series of ten posts on the threat to jobs and growth from technology and online distribution, and what we might do about it.
- The first part summarises the argument
- The second introduces the challenge.
- The third looks at the threat to jobs from automation.
- The fourth looks at the threat to jobs from online competition.
- The fifth looks at what economic problems this might cause.
- The sixth looks at the social and moral problems it might cause.
- The seventh looks at some of the arguments against a policy response: are we really sure this is a problem? Doesn’t technology always create as many jobs as it destroys? Surely there is nothing we can do?
- The eighth explains why more education and training isn’t the solution to technological un and underemployment.
- The ninth explains why more self-employment and entrepreneurship isn’t an adequate solution either.
- The tenth looks at other solutions, and proposes a new one.
Will there always be enough jobs or good jobs to keep the economy growing?
Even just five years ago the question would have sounded kind of crazy. Now, I’m not so sure. The more research I find, the more worried I am.
Consider this. In the last thirty years, the American middle class has collapsed. Middle jobs – jobs which rank in the middle of the spectrum in terms of pay, skills, security, and status – have been disappearing.
This graph (from Laura Gardiner and Adam Corlett’s invaluable presentation) tells the story for the UK.
The least skilled jobs are to the left and the most skilled jobs are to the right. The axis along the side shows the increase or decrease in employment share. And the red bars show the number of employees. The story is of a country adding many jobs needing high skills, but losing many jobs needing middling skills. There are fewer secretaries, electrical engineers, bookkeepers, and sheet metalworkers today than there were in the nineties, and fewer equivalent jobs to replace them.
But maybe the UK and the US are just outliers?
No. MIT economics professor David Autor – one of the leading thinkers in this area – has shown that the pattern is the same across 16 EU countries. The share of middle jobs has declined in every single one, in some countries by a lot. Here’s his chart (from this paper):
So what is happening?
One of the prime suspects is technology. While it tends to make the best paid jobs more productive, it also replaces a lot of the jobs in the middle.
Many are beginning to worry it could be much more destructive than that.
The Civil Service is already thinking about the possibility of permanently increased structural unemployment (page xix). The World Economic Forum estimates that across rich countries, two thirds of the jobs likely to go will be office and administrative jobs: exactly the kind of jobs Britain disproportionately does. And the Bank of England has looked into the threat to jobs from automation and concluded that a staggering 15 million jobs in Britain are at risk (p.13).
To put that into context, today there are only about 31 million people working in the UK.
There’s also evidence that job destruction tends to speed up with each business cycle: each recession destroys more routine jobs than the last.
When the Bank of England concludes that 15 million many jobs could be lost to automation, when a book warning about mass technological unemployment wins the Financial Times/McKinsey ‘Book of the Year’ award, and when sober centrist economists like former US Treasury Secretary Larry Summers propose radical solutions (of which more in post 10), something is stirring.
When my parents’ generation left school or university, there was a great mass of middle jobs waiting for them. If these predictions are right, they won’t be there for the next generation.
But this could be a problem for the whole economy.
After all, jobs are the main way that money flows from companies to the broad mass of people. Fewer or worse paid jobs means lower demand and growth.
The worst case scenarios here sound so unprecedented that it seems only sensible to think about what we might do about them before we’re sure they’re going to happen.
In this series of posts, I’m going to look at technological unemployment and underemployment – why it might happen, whether we can and should do anything about it, and I’ll suggest a solution.
I’ve come to the conclusion that in the worst case scenario, the only policy solutions which might make a serious difference would be well outside the boundaries of what is electorally acceptable in the UK today.
In the next part, I’ll look in more detail at why middle jobs are disappearing.