Why Might Jobs Not Come Back This Time?

Jeff Jarvis says the jobs that technology has eliminated are not coming back, and Paul Graham rightfully asks, "Why not this time?" Historically, technology eliminates jobs but also creates new ones. Eliezer Yudkowsky, in the Hacker News thread, posits five possible reasons why "this time it's different" (i.e., this time the jobs won't come back):

1) The amount of regulation and regulatory burden has increased sufficiently between then and now, that new business relationships have a much harder time replacing old destroyed business relationships. I.e., it's now more expensive to hire a new employee.

2) It's a novel change in the financial side of the economy. Like, capital-holders now try to make killings by investing in the right HFT funds instead of trying to go out and invest in new businesses. Implausible? Maybe, but finance has changed a lot recently, so the difference, if there is one, might be there.

3) The amount of re-education required to get a new job has increased enough to be a killer barrier to re-employment, whether because of employers having imposed an arbitrary demand for bachelors' degrees or because the jobs are actually more complex.

4) Ricardo's Law does allow individual regions to lose as a result of tech improvements, because if someone else beats your comparative advantage, people will want to trade with them instead of you. There's nothing ahistorical about the Rust Belt having a persistent recession within the US. This is now happening to the whole US; people no longer want to trade with us, but China is growing plenty.

5) The Thiel hypothesis: Recent technological developments are intrinsically more boring than past technological developments; people are trying to build web apps that will sell to Google for $10 million instead of trying to invent the next "microchip" or "electricity". It's not that the 21st century poses a novel obstacle to forming new business relationships to replace old ones; rather, 21st-century technologies that obsolete jobs are missing a wow factor or wealth-generating factor that previously increased demand or increased total wealth at the same time as obsoleting jobs.

Here's a useful Paul Krugman post about how technology "hollows out" the middle of job market — low-skill (janitors) and high-skill (chemists) people are okay but middle-skill workers suffer. He notes the hollowing out is now creeping into higher and higher skilled professions.

Here's a Boston Globe piece on how manufacturing in America is alive and well — we make way, way more "stuff" than China — it's just that there are fewer manufacturing jobs because of huge productivity gains.

Here's Nick Schulz and Arnold Kling on creating jobs in the New Commanding Heights of the American economy: healthcare and education. They happen to be the two most regulated and government controlled sectors. "To revitalize these sectors and revive the American job market," Nick and Arnold say, "we must open up these industries to competition and entrepreneurial reform."

8 Responses to Why Might Jobs Not Come Back This Time?

  1. Rolf Wasén says:

    The JOB PROBLEM is of course not a simple one.

    Once this has been acknowledged improvements of the situation may be achieved.

    Albert Einstein and other writers has recognized the problem a long time ago as has the Finnish philosopher Georg Henrik von Wright.

    Einstein advocated 6 hour working day and von Wright made similar unpopular comments.

    The problem is probably more an existential than technocratic one and difficult to believe that technocratic measures will work. Nor will economic “liberalism”.

  2. Andrew Meyer says:

    There are many reasons for the current situation, one other one is globalization and how it’s educational and pay mismatches to job requirements. Previously, accountants, business people and other white collar workers only competed against OECD people. In Western Europe, North America and Japan, there were maybe 700M people to divide the work between. When the wall fell in ’89 and China and India continued their march towards economic equality, another 3 B employee competitors came onto the stage.

    It wasn’t so much that they took jobs away from the US, as it was that they made the unnaturally high salaries of white collar workers obvious.

    Whether it’s through corporate structures, efficiency created by systems or outsourcing, middle class/white collar jobs are being redefined. All the “trained monkey” jobs.

    One of the things people don’t talk about with technology, is it’s ability to enable lower skilled people to do sophisticated work. Why do you need to pay an accountant $60-100k when you can pay a junior clerk $35k to do the same work?

    There has long been an understanding that people are over educated for the jobs they do. Those jobs are now being given to people with appropriate education and training to do them.

    There are many things effecting the current economic and job situation, but this is one of them.

  3. Ted S says:

    (reposting my comment from hn)

    > Why not this time?

    Maybe now, unlike ever before, computers and robots can do most of the tasks that (relatively) unskilled humans are capable of, for less than minimum wage.

  4. This web 2.0 hoakum from Jeff Jarvis is really not so different, in modus operandi, from Glenn Beck’s goldbug scam:

    “Holding out blind hope for the magical appearance of new jobs and the reappearance of growth in the economy is a fool’s faith.”

    Paul Krugman is correct that in the long term, only increasing total factor productivity can lead to sustained economic growth.

    If TFP can be taken as a measure of an economy’s long-term technological change or technological dynamism, it would seem that Jarvis’s formula descibes sustainable economic growth:

    “Technology and related trends, including globalization, lead to efficiency in companies and sectors. Transparent markets lead to lower prices. Digital abundance leads to both.”

    So why the pessimism?

    I like what Paul Krugman says:

    “This kind of fatalism corrodes whatever will we might have to actually deal with our problems.”

    Jarvis continues:

    “Our new economy is shrinking because technology leads to efficiency over growth. That is the notion I want to explore now.”

    When in the last two centuries did new technology lead to net shrinking macroeconomies?

    Let Krugman do the simpleton’s work:

    “There’s no hint in these data that we’ve entered new territory in which decent growth fails to create jobs; the problem is that we haven’t had decent growth.”

    Regarding Eliezer’s point no. 3, “The amount of re-education required to get a new job has increased enough to be a killer barrier to re-employment”, Brad DeLong has a nice answer:

    “The idea is that because of structural shifts in the economy we have workers who had the skills for declining industries but do not have the skills for the currently-expanding industries, and that it will take a long time for them to acquire the skills that they need to fit the labor requirements of the new economy.

    “Although these extra 12 million surplus workers are unemployed now, they were employed back in 2007. Are we supposed to believe that changes in technology have proceeded so rapidly that the marginal economic product of all these 12 million workers crashed in two short years?”

    And the coup de grace from Krugman (again):

    “It really makes you despair: we’ve been over and over the evidence, and there’s not a hint in the data that a mismatch between occupations and jobs can explain any important fraction of the jobless rate.”

    By now, it should be clear we can expect the same old same old from Jeff Jarvis– stinkbombs and faux goat sacrifices at the altar of capitalism.

    As for Eliezer, hey, he’s young.;-)

  5. Marty Nemko says:

    Perhaps more potent than the reasons cited in your post, the Obama Administration’s ever more massive mandates are making it cost-ineffective to hire: link to martynemko.blogspot.com

  6. Leave it to Marty Nemko to cite propaganda shop and employment service for intern hacks, the Heritage Foundation.

    I admit I am entertained by the hilarious spectacle of Nemko helpfully providing links to job outsourcing websites in an article that purports to explain why any economic recovery will be jobless, at least for citizens of the US.

    I’m touched that he is so distraught “…that President Obama and the Democrats are truly trying to help employees but the inadvertent effect of their initiatives will ironically be to eliminate jobs, not create them.”

    Yes, he’s so disturbed by this worrisome possibility that he wants to help it along by providing even more links to work-outsourcing sites from ethically challenged life-hacking maven Tim Ferriss.

    Perhaps Marty’s plan is to create more jobs here by accelerating the coming of the day when more Indian companies are outsourcing work to US call centers than vice versa.

  7. Kimi Slezak says:

    I had no idea that the US manufacturers more than China. I bet if you asked the average man on the street, 99% would say China beats us hands down. I would have, too. I think the whole idea of what a job is needs to be redefined. I come from a long line of self-employed people and frankly never had, nor wanted a job. We need to teach Entrepreneur 101 in high school and have college degrees in it offered. That is what will save our economy and ourselves, not more boring jobs provided by large corporations.

  8. tamy zhou says:

    I strongly agree with Kimi Slezak,the education system should be re-worked so that it produces more entrepreneurs than employees.The employee syndrome is affecting almost each and every country.Most people after finishing school will have to go and look for a job.Few will ever think of starting a small business.One major cause of this being the education system.That could explain why most people with college degrees work for people who have no degree at all.With a good education what most of us think is finding a good job that comes with a corner office,yet someone who in some cases did not even finish high school will think self-employment

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