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Sunday, February 16, 2014

Technology, The Job Killer

I am a bit uneasy writing this piece. For the several years, I have seen this issue building up steam but few people want to speak about it. Quite simply, it is that while technology has enriched all of our lives tremendously over the last decade, it is killing millions of jobs, particularly low paying service jobs.

Technology makes our lives easier. Remember waiting in line to cash your check on payday? Remember bank tellers? Remember getting signals crossed when trying to meet up with people? It never happens now with smart phones. How about online banking or buying stocks online for $8 instead of paying a brokerage house $250? And, most of all, men of a certain age do not have to ask for directions as Google maps or a GPS in the vehicle can save their marriages.

All of these advances make our lives more productive, efficient and sometimes fun. Yet, slowly, a price is being paid.  I have always been a champion of economic progress. When one door closed on me it seemed that five others opened and they were better than the first. Many people today do not seem to be in the same situation.

Simply put, technology seems to be killing more jobs than it creates. Clearly, it is creating some great high paying jobs in Silicon Valley and a few select other areas but not so everywhere else.

Here are a few statistics that I believe make my point better than a long rant. At its zenith, a decade or so ago, Blockbuster had 60,000 employees virtually all of whom were in the service arena. Today, Netflix, which hopped aboard the moving digital train to dethrone Blockbuster, has but 2,000 employees.

How about General Electric, the last original member of the Dow Jones Industrial Average and one of the few remaining poster boys for American industry? It has about 305,000 employees. Google, the surrogate for tech and the knowledge economy has 46,421 employees.

So, as the economy has shifted, many jobs of all kinds are gone forever. The debate that is going on now about minimum wage often centers around the need for caution. Iif we move from the current federal $7.25 to the president’s recommended $10.10, many say that a great many jobs will be lost. Even Bill Gates, on MSNBC recently, weighed in saying that companies will move toward some form of robotics when faced with such a large expense hitting at once. Someone whom I respect tremendously dismissed it as nonsense. Her opinion was that when a company can eliminate a job via technology, they will do it regardless of the minimum wage (Actually, a gradual rise in minimum wage has proven to have minimal effect on unemployment. A nearly three dollar immediate rise would likely hurt many small businesses significantly and shutter a few).

Did you know that the big box retailers are experimenting with RFID technology? It stands for Radio Frequency Identification. I know of two tests going on now; there may be many more. The first has you sign up for an account. As you leave a store with a basket full of goods, your assigned credit card is immediately charged. If you try to leave without an account, security is there to stop you and prosecute. The second approach is a smart phone application that you use as you pick up each item in the store. You do not go to a regular checkout line but a special one where you are given a receipt for your purchases. The retailer also will have a detailed tab on your purchases which will help with couponing and other promotional features. You will have little or no time to checkout. Sounds great but it saves the retailers a bundle as they can lay off thousands of checkout people.

Mining firms around the world are experimenting with using robots for dangerous jobs. If there is a cave in, no one dies. And, as one person wrote to me, robots don’t have sick days, join unions, or ask for raises. Assembly lines are using more robots in western countries.

Eric Schmidt of Google in a recent CNBC interview at Davos reminded us that what we call robots may not be a funny looking science fiction clone but rather a computer program. Netflix’s amazing movie preference feature is a logarithm. Or, how about Google’s algorithm for search? They are in a sense robots replacing thousands and thousands of people.

A restauranteur mentioned to me that he hopes to test putting a small device on each table with his menu on a screen. You can make selections and add comments for special needs and the order goes straight to the kitchen. If it works, he plans to lay off most of his wait staff. An astute friend asked if he the fellow had thought about how he would not have any customers if all businesses took the same approach to squeeze out costs.

Do not get me wrong. Technology is an integral part of my life--I love it. Yet, as jobs continue to disappear forever, what is going to pick up the slack? Some say tech itself will be the silver bullet but I would posit that technological advances will only cover a small fraction of the lost jobs. We are seeing a nice pickup in energy and energy service jobs in Texas, Oklahoma, North Dakota, Ohio and Pennsylvania. They are good paying jobs and often blue collar. Can America rebuild its industrial base? It will be hard but that seems to me to be the only way out of this growing problem.

George Orwell once wrote, “To see what is in front of one’s nose needs a constant struggle.”

If you would like to contact Don Cole directly, you may reach him at doncolemedia@gmail.com

1 comment:

  1. Spot on observation. Facebook just bought WhatsApp for billions...? WhatsApp was reported to have 50 employees.