Productivity and Unemployment

James Anderson at Miyanville displays the same graph (from CalculatedRisk) I used in my last post on jobless recoveries getting longer and notes that advancing technology is underlying the trend. He gives the example of UPS which has recently announced the elimination of 1800 white collar jobs specifically due to improving automation technology:

Not to pick on a great company, but here’s a typical example. UPS (UPS) last month guided higher fourth-quarter earnings…, and also said that it planned to lay off 1,800 people in management and administrative positions in 2010. Here is the operative quote: “By leveraging technology and the management strengths of its people, UPS will reduce the number of Districts and Regions in its US small package operation.” That technology was not faster trucks, it was better computer systems.

Anderson goes on to wonder how long it will take the job market to recover and speculates 2016. But, as I’ve pointed out here previously, technology is not going to stop advancing and by 2016 there will be many more jobs subject to both automation and outsourcing than is the case today. Full employment is a moving target that is going to get harder and harder to hit.

8 thoughts on “Productivity and Unemployment

  1. Hi ,
    Great blog. you really point to something that can become a very serious problem.

    While i agree that some sort of income distribution would be part of the solution, it would be only a part.

    Some other parts i think that would be needed:
    1. Technologies and solutions that make decent living very very cheap.
    For this maybe some DARPA research program for very low cost living solutions would be beneficial. This at the same time could really help developing countries and open huge markets, which would be helpful for jobs.
    2. Ways to make the transition easier. France’s 35 hours work week , seems a reasonable good step. Also trying to structure regulated industries from low amounts of high cost labor to higher amounts of low cost labor. for example replacing doctors with nurses equipped with smart computer systems.
    3. Ways to counter the psycho-social damage of unemployment. Maybe some kind of volunteer opportunities for people who get unemployment benefits , to help their self-esteem , and build skills.
    BTW the Atlantic did a very frightening article on the damages of current high unemployment :

    I guess that this blog is a focal point for people interested in the automated society. I wish it would also become a community that discusses possible solutions.

    Thanks ,

  2. While I appreciate what’s been said, I think that your focus is narrow. How many jobs have been created by technology? How many people are now employed in the IT, Biotech, or Web-related industries? I would argue that technology has created at least as many jobs as it has eliminated.

    The future of employment is going to be the leveraging of knowledge and information, rather than the leveraging of pencils or muscles. Certainly technology has eliminated middle management and other jobs at companies like UPS; but growth in other sectors more than makes up for it.

  3. Technology driven unemployment is replacing jobs for the average & below worker at a rate that our economy can’t match. Technology driven companies are going abroad to “cherry pick” the best workers, while these American workers are not needed for these high skill jobs. If we don’t employ them in some deliberate, low tech (possibly government incentivised) program, they soon become part of the welfare & debt problem. Technology is rapidly excluding a ever increasing number of Americans from many aspects of life. We need to adapt our technology & jobs to the average & below citizen. We need more than the top 50% as consumers as well as contributors if our economy is to survive! Retraining won’t work unless we can add 10 to 15 points to thier IQ scores! Creating a country where only the brightest among us have a place at the table is not Democracy!

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