Jobs Are Going, Going, Gone… to Robots

I've written a few times on this topic. The cold reality is that today's technology economy is different when compared to the Industrial Revolution. Unlike the Industrial Revolution, which eventually created new jobs, products, and wealth, I'm concerned that the tech revolution is going to result in fewer jobs. Oh, it will still create new products and wealth… but not nearly enough jobs to offset what will be lost.

You might wonder if I'm being alarmist. But, the new jobs of the Industrial Revolution did not require specialized knowledge or abilities. You only needed a body that worked to take a factory job. A high school diploma was sufficient, and even that wasn't always essential. Today, the new jobs require skills only a few people have or can obtain.

As the following article demonstrates, we simply do not need as many people in this economy. In science fiction and utopian literature, the machines would free us to sit around and be creative. But, such creativity also requires special skills and knowledge. To be blunt again, few people are motivated intrinsically enough to pursue high-level pursuits of the mind.

Here is the problem:

The Robot Reality: Service Jobs Are Next to Go
http://m.cnbc.com/us_news/100592545
Fiscal Times for CNBC.com | March 26, 2013 | 12:39 PM EDT

If you meet Baxter, the latest humanoid robot from Rethink Robotics – you should get comfortable with him, because you'll likely be seeing more of him soon.

Rethink Robotics released Baxter last fall and received an overwhelming response from the manufacturing industry, selling out of their production capacity through April. He's cheap to buy ($22,000), easy to train, and can safely work side-by-side with humans. He's just what factories need to make their assembly lines more efficient – and yes, to replace costly human workers.

But manufacturing is only the beginning.

"Could [Baxter] be a barista?" asks [Scott Eckert, CEO of Rethink Robotics]. "It's not a target market, but it's something that's pretty repeatable. Put a cup in, push a button, espresso comes out, etc. There are simple repeatable service tasks that Baxter could do over time."

"When machines and robots start taking over service sector jobs, that's when we'll really start to notice," says Martin Ford, robotics expert and author of The Lights In the Tunnel: Automation, Accelerating Technology and the Economy of the Future. "If you're making hamburgers or Starbucks drinks, that's really just high manufacturing."

What's worrisome to Ford is that these jobs have been offering a huge safety net to the middle class. They're jobs he calls "the jobs of last resort." When someone can't find a salaried job, they look for lower-paying service jobs to get by – and because the jobs typically have a high turnover rate, they're more likely to be available. Think of all the college graduates who take jobs as cashiers or baristas before they find salaried work. If those jobs were to vanish, those workers would be forced to file for unemployment instead."

Yes, robots can now do the simple service jobs. You can buy an iPad from a vending machine in some airports. We've long had (acceptable) coffee and cocoa from machines. The local convenience store has an automatic milkshake machine that I consider really tasty. Other than people making the machines and repairing them, what's left for lower-skilled humans?

Some of my colleagues will answer, "Education is key!" Okay, education to do what? Some STEM fields are actually facing a glut of graduates, though tech companies remain eager to off-shore work or to import cheaper talent. The brutal reality is that the total number of tech employees is minuscule. In 1978, one GM plant employed 77,000 workers. Today, Apple, with the largest market capitalization, employs 47,000 in the United States — half of those in retail.

One programmer can launch a million dollar application. The technology revolution simply cannot be compared to the Industrial Revolution, because of this one-to-thousands comparison.

The U.S. restaurant industry employs 9.5 million people, and nearly 50 percent of all adults have worked in the restaurant industry at some point in their life, according to a 2012 report from the Workforce Strategies Initiative at the Aspen Institute. Compare these numbers to the tech job "boom" at companies like Facebook, Apple, Amazon and Google – and you get a mere 190,000 people.

Technology generates amazing wealth, concentrated among those with the skills to create products that are often nothing but intangible ideas. Computer code requires only a laptop, not a huge factory.

The PC, however, also created a decade of economic wealth – but the wealth has largely stayed at the top. Facebook, Apple, Amazon and Google don't employ many people, relatively speaking, but they have about 6.25 percent of the market cap of all U.S. companies. Yes, PCs have created IT jobs and software developers, but the tech industry is small compared to retail and restaurant industries. Computer and mathematical jobs make up about 3 percent of the labor force, according to the BLS, and require advanced degrees and years of training.

I'm not alone in my pessimism; some well regarded technologists agree.

Will service employees have the time and resources to learn new skills? Will enough high-skill jobs be available for them? No one is quite sure where they'll go when robots like Baxter push them out.

Erik Brynjolfsson, director of the MIT Center for Digital Business and co-author of Rise Against the Machine, has been warning economists about the coming job disruption for years. "Technology doesn't automatically lift the fortunes of all people," Brynjolfsson said recently to a crowd at Wharton University in San Francisco. "Profits [in the U.S.] have never been higher, innovation is roaring along, GDP is high, but job creation is lagging terribly, and the share of profits going to labor is at a 60-year low. This is one of the most important issues facing our society."

Do we have a solution? I doubt it. For now, those of us with specialized skills are going to subsidize the social safety net because we must. At some point, the tensions between the producers with special skills and the under/unemployed will cause dramatic social upheaval.

The Jetsons was a fantasy. The reality is going to be messy.