The Jobs Crisis: Bigger Than You Think

Walter Russell Mead:

Of the Big Five questions facing America today, the most pressing and urgent is the question of jobs. This is more than the problem of recovering from the last economic slump; it is more than the impact of globalization and automation on manufacturing jobs. The American economy is shedding jobs, especially long-term, well-paying jobs with good benefits, and the jobs that replace them are often less secure and less well paid. The relentless transformation of the American labor market is changing the nature of American life, calling into question some of the basic assumptions and building blocks of the last fifty years, and generating a complex mix of political and social pressures that will shake the country to its foundations.

Essentially, the problem is this: automation and IT are moving routine processing, whether what’s being processed is information or matter, out of the realm of human work and into the realm of machines. Factory floors are increasingly automated places where fewer and fewer human beings are needed to transform raw materials into finished products; clerical work and many forms of mass employment in business, government and management are also increasingly performed more economically by computers than by trained human beings.

The transformation is only beginning to kick in. Self driving cars and trucks may reduce the need for human beings in the transportation and freight industries.  Information processing is beginning to change the nature of the legal profession and even as law school applications fall by almost 50 percent there is much more change to come. Computer assisted diagnosis is making itself felt in health care. MOOCs are likely to change the way much of higher ed works.

It is impossible to say now how far and how fast this process will move, but more and more Americans are experiencing the kind of upheaval that blue collar workers in manufacturing began to experience in the last generation and white collar workers and journalists have felt more recently. We are seeing the greatest wave of economic transition since the mechanization of agriculture reduced the percentage of the labor force engaged in farming from more than half the American labor force in 1890 to less than two percent today.

The old engines of job growth, especially in manufacturing, aren’t working, and the competition for good jobs keeps getting tighter. With the entry of billions of Asians and others beyond the old industrial economies of North America, Europe and Japan into the modern economy, the competition is global. And if low wage workers can’t do the job cheaper than you, computers and, increasingly, robots mean that you can still lose your job.

Under the circumstances it is not surprising that many American families and workers see bleak prospects before them.  Even workers who are doing relatively well have to work hard to keep their skills sharp and live with anxiety about the future.

At the same time, some industries and some individuals are doing very well. Modern California is something of an image of the post-Fordist world: in Silicon Valley and in Hollywood, there are pockets of vast wealth creation. Across the state health care does very well, supporting large incomes for highly skilled workers and managers. These oases of wealth support professionals and service providers around them: from accountants and plastic surgeons to pool boys and gardeners.

But the state as a whole is not in good shape; even the presence of world beating, high value added industries in Hollywood and Silicon Valley, two of the world’s most concentrated centers of innovation, is not enough to create broad and stable prosperity across the Golden State.

This is an economy that produces inequality very different from what most citizens of the old industrial economies are used to, and the social and political consequences of rising inequality play a growing role in many countries who once prided themselves on their success in building a vast and stable middle class.

Much of the inequality is generational. For many young people, the road to a middle class job is harder than ever before: more years of school, more years of debt, more internships, more years of scrabbling after graduation until that first real, career building job comes through.

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