Invisible Crisis, Cruel Reality– Displacement of Low-to-Middle Skilled Workers by Automation: Are You Dispensable?

Nearly one-half (47%) of all work will be automated by year 2034. Then question is: Which half? It’s an invisible force that goes by many names, e.g.; automation, artificial intelligence, technology, innovation, robots… Whatever name you prefer, it’s killing traditional jobs… Innovation has always resulted in job losses, but usually economies have eventually been able to develop new roles for workers to compensate… But the velocity of change this time around appears to be unprecedented, and the result is a huge amount of uncertainty about where next generation is going to find work…

According to David Autor; it’s a force that is ‘hollowing out’ the low-to-middle skilled workforce… And this is just tip of iceberg. According to Sebastian Thrun; recent developments in– artificial intelligence, machine learning… puts a large share of employment across wide range of occupations at risk… According to Jerry Kaplan; automation is ‘blind to color of your collar’, i.e., blue-collar, white-collar, no collar… According to Martin Ford; most jobs can be broken down into a series of routine tasks, and more of these tasks can be done by machines…

In the article Where Have All the Good Paying Jobs Gone? by Michael Collins writes: We finally have recovered most of the jobs that were lost in the Great Recession. Politicians and public-policy makers are celebrating the fact that unemployment is under 5%… However, the Great Recession primarily wiped out mid-wage jobs, and the strongest growth during the recovery has been in low-wage jobs… 

According to The National Employment Law Project; in 2012, 58% of the recovered jobs were in low-wage occupations, with median hourly wages from $7.69 to $13.83 an hour. Mid-wage occupations, with median hourly wages from to $13.84 an hour to $21.13 per hour, were the big losers– 60% of all jobs lost in the recession. The higher wage jobs from $21.14 to $54.55 per hour, lost 19% in recession but 20% have recovered and are doing well…

But in essence this economy has replaced good jobs with bad ones. According to Bureau of Labor Statistics data shows; there are 7.9 million people still unemployed. And another 2.1 million are long-term unemployed (those jobless for 27 weeks or more), while 1.7 million people are considered marginally attached to labor force, and 6.1 million people are involuntary part–time workers. So is the economy really recovering?

Five percent unemployment sounds great but when you add it up, 17.8 million people need a job or want a better job… This trend of low-wage jobs growing faster than mid-wage jobs is not just bad for middle-class workers, it’s bad for the economy… The big lesson here is that there are no simple answers to complex economic problems. The simple idea that low-interest rates would lead to economic growth was a simple answer that was accepted by many pundits for years, but apparently they were wrong…

The psychologist Paul Ginnetty calls this type of reasoning; ‘the potent narcotic of reassuring simplicity’… Politicians will always take advantage of people’s addiction to simplistic answers for their own benefit by simply telling people what they want to hear. Remember, it’s not only the quantity of jobs needed but also the quality, those that pay  decent wages…

In the article  Is Your Work ‘Routine’? If So, It’s Probably Disappearing by Josh Zumbrun writes: The labor markets and middle-class was built on– ‘routine’ workers who showed-up at factories and offices, took their places on assembly line, or paper-pushing chain, and did the same task over and over and then went home… Research by Henry Siu and Nir Jaimovich show; the world of ‘routine’ work has collapsed: Over the course of the last two recessions and recoveries, a period beginning in 2001, the economy’s job growth has come entirely from ‘non-routine’ work…

Most research classifies work by whether the task is ‘routine or non-routine’, and whether the work is ‘cognitive or manual’, e.g.; the ‘routine manual’ work includes rules-based and physical tasks, such as; factory workers who operate welding, or metal-press machines, or forklifts, or home appliance repairers… Whereas, ‘routine cognitive’ work includes tasks done by clerical secretaries, bookkeepers, filing clerks, bank tellers… 

According to Bureau of Labor Statistics; U-1 (Unemployment-1) is the narrowest definition of unemployment and U-6 is the broadest measure of unemployment. U-6 includes all classes of unemployed even those who are considered marginally attached and/or part-time for varies economic reasons. In other words, those who would like a full-time job but can only find part-time work. Or perhaps those who were working a full-time job and employer cut their hours rather than actually laying-off employees…

Economists consider U-6 the ‘real’ unemployment rate, although U-3 is generally accepted and commonly quoted Unemployment Rate... According to Randall W. Forsyth; if you are not in the labor market, i.e.; looking for work… then you are not officially unemployed… Current U-6  Unemployment Rate for December 2016 is: 9.1% (up from 9.0% in November)… The Gallup equivalent to U-6 (or ‘Under-employment Rate’) is: 13.7% up from 12.7% in October and 13.0% in November…

In the article How Technology Is Destroying Jobs by David Rotman writes: Advances in technology– from improved industrial robotics to automated translation services… are largely behind the sluggish employment growth of the last 10 to 15 years. According to Erik Brynjolfsson; new technologies are increasingly adopted not only in manufacturing, clerical, retail work… but also in professions such as; law, financial services, education, medicine… The fact that robots, automation, technology… can replace people is increasing a reality in the workplace…

But more troubling is that the velocity of change by technology is destroying traditional jobs faster than creating replacements, which is contributing to the stagnation of median income and the growth of inequality. According to  ­Brynjolfsson, McAfee; rapid acceleration of technology, innovation has greatly widened gap between economic winners, losers and income inequalities…

Technologies tend to favor ‘superstars’, e.g.; someone who creates a software to automate tax preparation and then they might earn millions or billions of dollars while eliminating need for thousands of accountants… New technologies are encroaching into human skills in a way that is completely unprecedented, and many middle-class workers are right in the bull’s-eye; and even relatively high-skill workers, e.g.; education, law, medicine… are affected…

Hence, the middle-class is becoming dispensable, and the top and bottom class are clearly getting farther apart… Many economists believed that by improving productivity, the economy will do just fine… Yes, productivity was the single most important economic statistic. But that’s no longer true…

One dirty little secret of economics is that– technology does grow the economy and it does create more wealth… but there is no economic law that says everyone will benefit: In other words, in the race against the machine, technology, automation, robot… some workers will win, while many others will lose…