Pethokoukis, Economics, U.S. Economy

Technological unemployment and the loss of 2 million clerical jobs since 2007

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Government shouldn’t try to stop machines, whether robots or algorithms, from replacing workers. That doesn’t mean policymakers, however, don’t have a role to play. The Financial Times reports the US has lost almost 2 million clerical jobs since 2007 “as new technologies replace office workers and plunge the American middle class deeper into crisis.” Those jobs — including bookkeepers, bank tellers, file clerks, cashiers — still make up 16% of the US workforce, commanding an average annual salary of $34,000.

That sector is headed where manufacturing already is. Output up, employees down. There are two million fewer factory workers today than in 2007 despite output fast approaching its old high. The story of PPG Industries, as related by The New York Times, tells the tale:

The production lines run 24 hours a day, seven days a week at PPG’s plants, including one in Carlisle, Pa., that makes flat glass. It’s among the plants benefiting from a rebound in housing. “Because it is automated, we won’t have to add a lot of employees with the upturn in the construction industry,” Mr. Beuke said. “You don’t touch a piece of glass in our factories.” At PPG, production is up 10 percent since the recession — but employment remains flat.

It’s not all bad news. Cheaper energy will help manufacturing employment a bit. IHS Global Insight, according to the NYT, estimates the shale gas industry could eventually create 1.6 million jobs in the coming decades. Also, demand for managers, described by the FT as “people who figure out how to replace clerical workers – such as operations managers, management analysts and logisticians” is up, adding 387,000 jobs since 2007. In other words, non-routine jobs replacing routine jobs.

Maybe not fast enough. As Andrew McAfee concedes, “previous waves of automation have not, in the long run, led to mass unemployment.” But there is also no guarantee that creative destruction and labor markets will adjust as smoothly as we would like. And we could be entering as period where the fast pace of technological change overwhelms, at least for a while, our ability to educate workers and create new businesses and business models. McAfee:

Since the end of the 2001 recession real GDP has increased by just about 20%. The number of hours worked, however, has increased by only 2.8% over that same time, and the total number of jobs by 1.9%. Those latter two numbers are pretty close to zero. Is it so hard to believe that a realistic future combination of fast automation and relatively slow GDP growth could cause them to turn negative?

I don’t find that scenario implausible at all. Technological employment has not happened economy-wide yet, but as the facts change — as technology’s role in the economy shifts — shouldn’t we change our opinions about what constitutes a myth?

4 thoughts on “Technological unemployment and the loss of 2 million clerical jobs since 2007

  1. As only the Economist can, a cover in Jan posed the Thinker as a stinker and asked what’s been invented lately that’s had the impact of the flushing commodes the statue graced? (Or more specifically products with an instant mass market.) Not much was the answer, and therein lies the real problem with technology. The Internet is less important for what it does than what it allows us to do without. Tax preparers for example. Or DMV clerks. Or the Post Office. College classrooms. printing presses. This is no myth.

  2. The Financial Times reports the US has lost almost 2 million clerical jobs since 2007 “as new technologies replace office workers and plunge the American middle class deeper into crisis.”“….

    Is the Financial Times also carrying on about buggy whip makers, blacksmiths, and drovers?

  3. Memo to Jim P.: What you call “technological unemployment” is actually an increase in value. If a company can produce more with less, that means the company has greater worth than it did before. That frees up capital for more productive uses. Conservatives should be happy whenever technology allows us to do things more efficiently. Ultimately, it would be great if no one had to work — ever. This is very basic free-market stuff.

  4. From TechnologicalUtopia.com with permission:

    We all want to cheer every time a robot puts someone out of work. Work should be optional given the productivity gains we are seeing and the cost of living. Our governments should be spending more of our tax-dollars on something many seem to want. I’m for robotics that are owned by all of the citizens of a country. Fully automated robotics factories, with self replicating robotic arms. Highly automated renewable energy, windmills or underwater water mills. Highly automated steel production. Highly automated chip manufacturing, and Linux. I’ve seen some automated building manufacturing companies starting up as well. Other prerequisite products can eventually be manufactured as well. All source code and blueprints have to be fully owned with rights to an infinite amount of use. All owned by the citizens of the country concerned. Small factories at first, with all of the bugs worked out, so that it largely builds itself in the end. It should be affordable, I’m an economic conservative. Eventually the complex can produce consumer goods besides steel, energy, chips, buildings, and robotics. Charities and the open source community can help as well. I support liberal licensing agreements of source code and blueprints, to allow royalty free replication. Surpluses could be sold to pay for additional engineering by those ambitious. Revenues would be paid to those citizens who have invested. Continued exponential self-replication would eventually lead to true post-scarcity, for every citizen of a country.

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