Chronic Unemployment
Posted: January 10th, 2012 | Author: Michael Moore-Jones | Filed under: Business, Education, Finance/Economics, Thinking Out Loud, Web/Tech | Tags: government, jobs, Martin Ford, policies, society, technology, The Lights in the Tunnel, unemployment | 9 Comments »Structural unemployment is a form of unemployment that occurs because worker’s skills are outdated, or not desired by employers. Technological unemployment is in some ways a type of structural unemployment caused specifically by advances in technology – as technology automates jobs, workers become unemployed with no skills to gain other employment.
Both of these types of unemployment are traditionally fixed through supply-side policies such as training and educating workers so that they have skills desired by employers. This fix is costly to taxpayers as it is not cheap to provide education. However, in most cases, it is a fix – workers will be able to find employment after being trained and educated. Structural and technological unemployment are in most cases temporary because of the government’s supply-side efforts.
But what if technology advances so much that employers simply don’t need as many workers, no matter what their skills?
I’m not just talking about manual labour here. Obviously manual jobs are being replaced by robots and others forms of technology. But again, these people can be up-skilled and subsequently find re-employment. I’m talking about when technology becomes so advanced that people cannot up-skill to a point above the capacity of the technology so as to become desirable to an employer.
Technology is starting to cause people with university degrees to become unemployed. Law firms don’t need as many lawyers because much of the research can be done in one-hundredth the time it previously took. R&D departments need less engineers and managers because the processes have been automated. Teachers are becoming irrelevant as we learn online. I’m talking to friends of mine who have masters degrees and cannot find a job. It’s a global problem that most people are blaming on the economic downturn. I don’t fully believe that. It may be a part of it, yes – but I believe the main cause of this unemployment is simply advances in technology.
It’s only going to get worse because technology will never stop advancing. We’re going to see technology continue to progress at faster rates every single year than it ever has previously. And the technology is going to become (already is becoming) so advanced that it will render people with masters degrees “unskilled”. No company will hire an individual whose skills can be done by a form of technology at a tenth of the cost. Technology also doesn’t require healthcare and stock options.
Where is this going to lead? If people simply are not needed and therefore cannot gain a form of income, what happens? How do they live?
In the short-term, governments won’t realize that the problem is advances in technology. They’ll keep paying benefits to more and more people, while funding supply-side efforts to train workers. They will subsidize university. They’ll focus on education to begin with. They also might try demand-side policies – by increasing government spending, they can fund more jobs. So we’ll see governments employing more people. But none of these solutions are long-term. They’ll simply lead to a waste of resources in every country.
And when governments do realize that the problem is advances in technology? Well, stopping advances in technology to save jobs is ludicrous. I hope that no government ever considers that.
I think this is a massive problem that will start to show just how serious it is in a couple of decades. This will be one of the major problems facing economies (excluding, ironically, developing economies) in this century. And I don’t have an answer to the problem.
Personally, I want to be at the forefront of developing these technologies. I guess it’s a kind of “If you can’t beat ‘em, join ‘em” mentality. I also think that entrepreneurship is going to explode in societies as a result of this problem. People who can’t find jobs will simply create one for themselves. In this sense, this may be a blessing to modern societies.
After I began thinking about this issue, I tried to find more writing on the topic. I couldn’t find much, other than a book by one Martin Ford, called The Lights in the Tunnel. I’m reading it now, and will likely write another post once I’ve finished it. If you know of any other writing done on this topic, please share it with me – I want to find out as much as I can.
