Productivity and Unemployment

Ryan Avent has a post and  nice graph at the Economist‘s Free Exchange blog about rising labor productivity  over the past 25 years or so:

The red line is the annual change in output per hour, and the black line is the ten-year moving average. There’s a story here relating to technology. And one of the interesting subplots to that story is how the revolution in computing and communications technology is impacting different occupations differently. Some are more or less unaffected (typically non-routine manual tasks, like janitorial work). Some have become far more remunerative as a result (typically non-routine abstract tasks, like development of products that can be sold globally). And some have been destroyed by the shift. Routine professions in manufacturing and business have been laid to waste by improvements in computational power, and the resulting effect on automation and offshoring.

As I’ve pointed out here many times, there is no reason to expect that this trend won’t continue–and there are probably good reasons to anticipate that it will actually accelerate as technology continues to advance.  I think it’s very likely that within the next decade (or perhaps two at the outside), full automation technology will begin to encroach on the work capability of most average workers—including those with significant training and education.

The Economist also has an article on “The Polarization of the American Workforce,” which takes the conventional view that automation and offshoring are destroying low and middle skill jobs while creating plenty of new jobs for the highly educated and skilled. That may have been the case so far—but I don’t believe it will continue to be true indefinitely. Automation technology (as well as offshore workers equipped with increasingly sophisticated information technology tools) is going to increasingly move up the food chain and and go after those high paying skilled jobs.  As the years and decades pass, the number of people in protected occupations is going to continue to shrink.