What If Middle-Class Jobs Disappear?
11th November 2011
There are two challenges. One is the sheer speed of adjustment. In a hyper-Schumpeterian economy, the main work consists of destroying someone else’s job. Garett Jones has pointed out that the typical worker today does not produce widgets but instead builds organizational capital. The problem is that building organizational capital in one company serves to depreciate the organizational capital somewhere else. Blockbuster video adversely affected the capital of movie theaters, Netflix adversely affected the capital of Blockbuster, and the combination of faster Internet speeds and tablet devices may depreciate the organizational capital of Netflix.
The second challenge is the nature of the emerging skills mismatch. People who are self-directed and cognitively capable can keep adding to their advantages. People who lack those traits cannot simply be exhorted into obtaining them. The new jobs that emerge may not produce a middle class. Instead, if the trend documented by Autor for the period 1999-2007 were to continue, most of the new jobs would be low-end service jobs, for which competition will tend to keep wages low.
The recent trend in job polarization raises the possibility that gains in well-being that come from productivity improvements will accrue to an economic elite. Perhaps the middle-class affluence that emerged during the latter part of the industrial age is not going to be a feature of the information age. Instead, we could be headed into an era of highly unequal economic classes. People at the bottom will have access to food, healthcare, and electronic entertainment, but the rich will live in an exclusive world of exotic homes and extravagant personal services. The most popular bands in the world will play house concerts for the rich, while everyone else can afford music downloads but no live music.
And there stands the plot of about half a dozen science fiction dystopias I could mention, starting with the books of Mack Reynolds.
The chief problem would appear to be for the people on the left side of the bell curve. Such people traditionally get jobs where physical strength but not much brain is required. What do they do when all such jobs are performed by machines? The best they can hope for is temporary employment during the time it takes to design and build the machine that will ultimately replace them.
And even ‘smart’ people will have to run as fast as they can just to stay in place. As a lazy smart person, I don’t much like that idea, and I’m tremendously glad that I’m not in my twenties these days.
On the other hand, this may just represent the speed at which evolution works in a technologically sophisticated world. We’ve almost completely eliminated the frictional barriers to the flow of information; perhaps we’ve effectively done the same with whatever frictional barriers there are to the activity of evolution.