I've been wondering how many of these jobs are just gone for good due to higher efficiency and permanently increased productivity? We assume most of the unemployment & underemployment is caused directly by the recession but I'm not so sure about that. It seems possible to me we had sort of a jobs bubble where companies were overstaffing and the recession just exposed this. If you lay off 20% of your staff and magically the other 80% pickup the slack what incentive is there to re-expand by 20%?
My theory is modern technology and communications have just made certain positions inherently more productive. I can think of a time not that long ago where I may have lost an hour a day driving back to my office just to check my e-mail. Now I do that throughout the day on my SmartPhone while working on other projects. For a less skilled job I look at how grocery stores now scan products by UPC. There goes the job of the 19 year old tagging every can of corn with a little price tag sticker. When you run out of corn your computer inventory (tracked by UPC) knows about it. You spend 30 seconds re-ordering more through a computer instead of 15 unproductive minutes on the telephone waiting for the supplier to take your order. If these scenarios are being repeated in different ways all over the economy I think we need to consider that the rise in worker productivity is permanent and these jobs are gone for good.
He notes that there's been "[a] recovery in output, but not in employment. That means a smaller number of laborers are working, but we are producing as much as before. As a simple first cut, how should we measure the marginal product of those now laid-off workers? I would start with the number zero. "
Kling's pet theory is "recalculation," in that recessions are frequently the result of lots of people being employed doing the wrong thing (in this instance, building and selling houses), and it takes a while for those workers to be "reassigned" by the market to productive jobs. Money quote here:
" Let us talk about the marginal product of worker i in occupation j. In most cases, this is indeed zero. My marginal product would be zero in fishing, medicine, and many other fields. In a complex economy, if you were to randomly assign workers to jobs, ZMP would be the norm, not the exception. The more complex the economy, the more carefully workers must be assigned in order to avoid ZMP."
Their is always more work than that which can be accomplished. Unfortunately right now, we don't know what that work is and what its value will be. This makes it extremely risky for people to jump careers since they don't know where to go, and it makes it hard to invest capital/start a business because the future payments are unknown.
If the housing market was at the correct value - not insanely overpriced as it is now people could be employed building bigger/new houses. If certain resources are limited (high price) then investments can be made to harvest them more cheaply. It takes time for people to experiment and for knowledge/price information to make its way around the market. Unfortunately, we also have some government policies that are actively distorting market signals and also increasing uncertainty of the future.
So while jobs disappear for good, new ones will be created -- unfortunately it is not quick or painless. I believe Ned Ludd's town took ~50 years to achieve the same level of success after the introduction of the automatic loom.
B.S. there's lots of things that we as a country need to get done. From our crumbling infrastructure to global warming to preparing for the retirement boom we need to be investing massively, not scaling back. We have too few resources to get everything done that needs to get done, not too little. It is a failure of our markets and our government that so many resources sit idly by.
Actually, there are very few investments we can make which will prevent retirements from destroying/severely harming the US.
Social security is directly indexed to wages, and medical spending tends to be proportional to the higher wage brackets as well (most medical spending is labor costs).
Virtually any productive investments we make would increase wages, and social security/medicare costs will rise commensurately. The only thing we can do to prepare for the retirement boom is either cut benefits, or massively increase productivity with no commensurate increase in wages.
The economy is not a zero sum game. After all, the population of the United States was 92 million people in 1910, with vastly inferior technology and productivity. And yet, there are still jobs to go around, and things will improve.
I was just wondering how much something like this has affected the programming world. Business shrinks, loses some of its less productive programmers, and possibly gives their better ones more control, or hires more carefully and gets a better one. I think just about everyone here is aware of the massive productivity difference between a low-tier code-monkey and a guru - gurus are cheap for what they do, they're just hard to find.
That might happen at some places, but often the opposite happens: companies go into maintenance mode where they hire the cheapest possible "just keep the thing from falling over" programmers and sysadmins, and get rid of the expensive programmers, who are often seen as an "R&D" luxury that can be dumped in a recession.
I find it absolutely amazing this hasn't been talked about more. I have no idea what the majority of the population is going to do in the near-future. These jobs are not coming back. I posit that a large percentage of the currently unemployed will never be employed in their sector again. We will never reach pre-2007 employment levels because the majority of jobs weren't and aren't necessary.
In the short to medium term I don't think it is clear. To grow employment, the US needs to grow its manufacturing sector. Many people think that is impossible because of lower costs in China.
However, Chinese manufacturing costs are under increasing wages pressure (see http://www.chinadaily.com.cn/business/2010-07/19/content_101...). For some thing that isn't going to matter - the cost of labor is the main cost in manufacture, so China will be cheaper.
For some industries, though, there are significant capital costs up front. China doesn't necessarily have such a big advantage there, and it's the kind of thing that properly targeted government stimulus (direct or in the form of tax concessions etc) can make a big difference.
Unfortunately it seems that a large part of the political dialog in the US revolves around how bad any form of government intervention in the market is.
The US's competitors don't have that weakness, though.
I definitely agree that growing manufacturing is a short-to-medium term solution to unemployment.
However, I think it's only a partial-solution going forward in that a) employers won't need to (and therefore won't) employ as many workers per plant and b) the skill-sets required for those positions will be more demanding[1] than those in the past.
As for the long term, I think it's safe to say that robotics and automation will eventually remove entirely the need for human factory workers and (nearly) all manual labor. I'm intensely interested the type of society that this will give rise to and I don't know if it's possible (I suspect not) for this type of market to sustain our current population.
[1. I could probably find you an article saying this, but I heard this on PBS Newshour about a week ago.]
As for the long term, I think it's safe to say that robotics and automation will eventually remove entirely the need for human factory workers and (nearly) all manual labor.
Maybe. People are surprisingly cheap in some parts of the world, and robotics are pretty expensive. Even in the future, the raw materials in machinery won't magically get cheaper.
For some industries the upfront costs associated with automation won't be worth it for a long, long time.
Even in the future, the raw materials in machinery won't magically get cheaper.
True, and raw materials will probably get more expensive. Another thing to consider, however, is that newer industrial techniques might not even be employable without the use of machines. For instance, humans can't make processors regardless of how cheaply their willing to be payed.
For some industries the upfront costs associated with automation won't be worth it for a long, long time
Right. It's always going to be a cost benefit analysis and I think that's a fair assessment.
This is obviously a very, very small data point but just the other night on the PBS Newshour they had a piece about the 99-weekers (people who have been out of a job for 99+ weeks) and the central interviewee of the story was formerly in marketing.
Those who lost their jobs due to efficiency and technology improvements are going to become the target customers of many of those online schools in hopes to switch to a new sector. They will take on a large amount debt as a result and might never actually be able to find jobs -- but the colleges need now worry about that -- they'll get payed by the government...
My theory is modern technology and communications have just made certain positions inherently more productive. I can think of a time not that long ago where I may have lost an hour a day driving back to my office just to check my e-mail. Now I do that throughout the day on my SmartPhone while working on other projects. For a less skilled job I look at how grocery stores now scan products by UPC. There goes the job of the 19 year old tagging every can of corn with a little price tag sticker. When you run out of corn your computer inventory (tracked by UPC) knows about it. You spend 30 seconds re-ordering more through a computer instead of 15 unproductive minutes on the telephone waiting for the supplier to take your order. If these scenarios are being repeated in different ways all over the economy I think we need to consider that the rise in worker productivity is permanent and these jobs are gone for good.