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Your Job In 2020

Mon, Apr 19 01:31 PM

Your Job In 2020

Martin Ford, Forbes.com

The greatest economic challenge the United States faces in the coming decade will bereversing its dismal unemployment situation. The past decade has been an unmitigateddisaster for job creation.

To keep pace with population growth and prevent the unemployment rate from rising, theeconomy needs to consistently create between 1 million and 2 million new jobs per year.Yet private-sector employment has actually fallen over the last 10 years; the U.S. nowemploys at least a million fewer people than it did in 1999.

What are the prospects for turning things around by 2020? Some analysts are sanguine. Arecent report sponsored by the MetLife Foundation predicts that due to a gradually agingworkforce, the U.S. may in fact actually face an overall worker shortage as early as 2018.

What this type of demographic analysis misses is the extraordinary acceleration we are

likely to see in information technology. Already job automation technology has had adramatic impact on employment over the past decade. In the manufacturing sectorfactories that continue to operate in the U.S. are able to survive only by automating theproduction process as much as possible.

In the service sector automation often comes in the guise of self-service: ATMs,automated checkout isles and online banking are just a few areas in which technologyallows customers to do the jobs that once required workers. Meanwhile, advances ininformation and communications technology have accelerated the globalization ofcorporate workforces--in particular the trend toward offshore outsourcing, or"offshoring," where jobs are transferred to low-wage countries.

While the technological progress over the past decade has been dramatic, it's nothingcompared to what we can expect in the next 10 years. Historically, advances incomputing power have followed Moore's Law, which stipulates that computing capabilityroughly doubles every two years. There will always be the natural inclination to assumewe will witness the same degree of progress in the next 10 years that we saw in the last10--but that view is deceivingly simple. It fails to account for the exponential nature oftechnological advances.

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If Moore's Law holds throughout the next decade, we can expect that the power ofcomputing will increase by a factor of approximately 32. That's 32 times the technicalcapability we have now--and there is every reason to expect that dramatic increase incomputing power will be leveraged to drive down costs by automating jobs.

Automation technology will continue to hit hardest in the areas where we have come toexpect it: the manufacturing sector and low-wage, unskilled jobs of all types. Yet thereality is that by 2020 we will also see increasing penetration of automation intooccupations that require significant training and college degrees. The six-figureknowledge workers who now inhabit oceans of corporate cubicles will be heavilythreatened by software automation and specialized artificial intelligence applications thatcan perform many of the routine tasks and analyses that occupy their days.

Where technology is not yet sufficient for full automation, businesses are likely to turn tooffshoring as an interim solution. Advancing software tools--in some cases enhanced bytechnologies such as machine learning--will continually upgrade the capabilities of low-

wage offshore workers. As both job automation and offshoring become cheaper and moreaccessible, both practices are likely to be employed increasingly by the small businessesthat have historically been responsible for the bulk of U.S. job creation.

Many dismiss this rather pessimistic view by pointing to the fact that, while technologyeliminates jobs, it also creates new industries and employment sectors. This argumentglosses over the fact that new technology-based industries tend to be capital intensive:they do not employ large numbers of people. Compare McDonalds with Google: In 2008McDonalds employed 400,000 people with revenue of $59,000 per worker. Google hadjust 20,000 employees--each of which brought in, on average, over a million dollars inrevenue. The question we have to ask is: What happens when McDonald's begins to look

more like Google?

Advancing technology may indeed create more Googles, but the same progress is almostcertain to eventually have a highly disruptive impact on employment in the moretraditional, labor-intensive industries that employ the bulk of the workforce--potentiallyeliminating entire job categories by 2020.

The economy of 2020 may well be characterized by substantial, broad-based and everincreasing structural unemployment, as well as by stagnant or plunging consumerspending and confidence. Mainstream economists, content to rely on quantitative modelsbuilt in the last century, are largely oblivious to and ill-equipped for the reality of the nextdecade.

If 2020 finds us on the brink of an age in which our workers are becoming increasinglysuperfluous, any solutions to the problem will likely be radical and, by 2010 standards,politically unthinkable. By 2020 solutions will have to be found. Ultimately the viabilityof capitalism and of our democratic institutions will demand it.

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Martin Ford is the author of The Lights in the Tunnel: Automation, AcceleratingTechnology and the Economy of the Future and blogs regularly ateconfuture.wordpress.com.