A recession happens when you lose your job, a depression happens when I lose mine. So went my father’s logic and it can inform how we look at the upheaval in manufacturing and coal mining jobs playing out in the U.S. The issue has been automation or more specifically robots taking jobs with alarming regularity that humans once did.
A story in the March 28 New York Times by Claire Cain Miller offers sobering analysis from two economists, Daron Acemoglu of M.I.T. and Pascual Restrepo of Boston University whose joint paper, “Robots and Jobs: Evidence from US Labor Markets” published by the National Bureau of Economic Research said,
For every robot per thousand workers, up to six workers lost their jobs and wages fell by as much as three-fourths of a percent.
I regard the information as valid but believe it needs further analysis and not simply accepted at face value—at least not immediately. That automation claims jobs is indisputable and a part of how the U.S. model of capitalism is played out. Further, it’s not just blue-collar jobs that are in the lurch. In researching a talk for later this year, I spoke with a banking software company whose solution for loan origination takes the process from as long as seven weeks to less than ten minutes.
What’s that if not a robot? And what’s the effect if not to reduce the number of trained hands that need to touch a loan? But we don’t speak about a crisis in banking jobs. If you’ve been educated sufficiently to originate loans, your skill set is likely transferrable to another job somewhere in the financial services industry. That’s not as true in other jobs.
A generation ago if you were steeped in manufacturing you could go from factory to factory and find work whether you were making cheap jewelry or machine components. If you were a coal miner you could work in an iron or copper mine. That’s less true today because as jobs dry up in old-line industries there are fewer places to apply analogous skillsets; in part because they’re all automating.
According to the Times, the thinking had been that creative destruction, Joseph Schumpeter’s elegant term, created new jobs as old ones dried up and
Just as cranes replaced dockworkers but created related jobs for engineers and financiers, the theory goes, new technology has created new jobs for software developers and data analysts.
But notice what happens. The assumption is that a dockworker is not likely to become an engineer or a data analyst. The dockworker’s skillset is not that elastic and more to the point, it’s hard to imagine retraining for years while the bills pile up. So the idea of creating new jobs might be valid in the aggregate but for individuals the shift represents a crisis that defines the difference between a recession and a depression.
That’s just on the job front. Consider other market forces like demand. It might not be immediately apparent but energy provision has been under pressure to commoditize for a long time. It takes significantly less labor to take a BTU of energy from an oil well than from a coal mine and then turn it into electricity than it does with natural gas and even less labor when simply generating directly from solar panels and windmills. The economics of competing energy sources has made older forms of energy uncompetitive, hastening the advance of automation in mining as a way of prolonging the 'life' of this industry segment.
The economy creates winners and losers. When markets are new, jobs proliferate and a lucky few businesses grow to control their spaces. As markets age, they resemble a game of musical chairs and those who stay longest crash the hardest.
What's the answer? How can we reset expectations and provide for the future in a manner that stands a good chance of long haul success.
At the heart of this discussion is the reality that we need a better education system, one that provides skills capable of morphing to suit the changing workspace. Rather than encouraging the development of narrow skillsets that can (and ultimately will) be commoditized, we need to be laying the groundwork that encourages the development of a polymath mindset.
In a polymath world, the individual moves from skill to skill with sufficient ease that it is possible for them to hold and develop new careers as opportunities come and go. That's not something to which educators have paid much attention and raises numerous questions around the quality of developed skills, the skillset mix for individuals and the development of appropriate curricula.
An obvious example comes in the medical profession. Initial training always starts with the groundwork of 'general' practice but branches into a myriad of specialties with some adjacencies. Another example is in accounting where skills are developed in managing datasets which, in today's environment, are considered of higher order value than the 'generalist' training of managing debits and credits. Unfortunately, these examples are limited and we have to look further afield to provide opportunities that accommodate the majority of people in the workplace.
The talent pools I describe around the world, and emerging communities and crowds will make them rethink talent strategies. In turn that will have significant impact on what we traditionally considered a "job". That in turn will influence government policy in terms of investment, job prospects etc.
There is much more to this discussion than the teaser above but you get the point. So who will pick up the baton? State or business?