Sunday, April 6, 2014

Unemployemt: What causes it.


Although the labor market report on Friday showed modest job growth, employment opportunities remain stubbornly low in the United States, giving new prominence to the old notion that automation throws people out of work.

Back in the 19th century, steam power and machinery took away many traditional jobs, though they also created new ones. This time around, computers, smart software and robots are seen as the culprits. They seem to be replacing many of the remaining manufacturing jobs and encroaching on service-sector jobs, too.

Driverless vehicles and drone aircraft are no longer science fiction, and over time, they may eliminate millions of transportation jobs. Many other examples of automatable jobs are discussed in “The Second Machine Age,” a book by Erik Brynjolfsson and Andrew McAfee, and in my own book, “Average Is Over.” The upshot is that machines are often filling in for our smarts, not just for our brawn — and this trend is likely to grow.
How afraid should workers be of these new technologies? There is reason to be skeptical of the assumption that machines will leave humanity without jobs. After all, history has seen many waves of innovation and automation, and yet as recently as 2000, the rate of unemployment was a mere 4 percent. There are unlimited human wants, so there is always more work to be done. The economic theory of comparative advantage suggests that even unskilled workers can gain from selling their services, thereby liberating the more skilled workers for more productive tasks.

Nonetheless, technologically related unemployment — or, even worse, the phenomenon of people falling out of the labor force altogether because of technology — may prove a tougher problem this time around.

Labor markets just aren’t as flexible these days for workers, especially for men at the bottom end of the skills distribution. Through much of the 20th century, workers moved out of agriculture and into manufacturing jobs. A high school diploma and a basic willingness to work were often enough, at least for white men, because the technologies of those times often relied on accompanying manual labor.

Many of the new jobs today are in health care and education, where specialized training and study are required. Across the economy, a college degree is often demanded where a high school degree used to suffice. It’s now common for a fire chief to be expected to have a master’s degree, and to perform a broader variety of business-related tasks that were virtually unheard-of in earlier generations. All of these developments mean a disadvantage for people who don’t like formal education, even if they are otherwise very talented. It’s no surprise that current unemployment has been concentrated among those with lower education levels.

There is also a special problem for some young men, namely those with especially restless temperaments. They aren’t always well-suited to the new class of service jobs, like greeting customers or taking care of the aged, which require much discipline or sometimes even a subordination of will. The law is yet another source of labor market inflexibility: The number of jobs covered by occupational licensing continues to rise and is almost one-third of the work force. We don’t need such laws for, say, barbers or interior designers, although they are commonly on the books.

A new paper by Alan B. Krueger, Judd Cramer and David Cho of Princeton has documented that the nation now appears to have a permanent class of long-term unemployed, who probably can’t be helped much by monetary and fiscal policy. It’s not right to describe these people as “thrown out of work by machines,” because the causes involve complex interactions of technology, education and market demand. Still, many people are finding this new world of work harder to navigate.

Sometimes, the problem in labor markets takes the form of underemployment rather than outright joblessness. Many people, especially the young, end up with part-time and temporary service jobs — or perhaps a combination of them. A part-time retail worker, for example, might also write for a friend’s website and walk dogs for wealthier neighbors. These workers often aren’t climbing career ladders that build a brighter or more secure future.

Many of these labor market problems were brought on by the financial crisis and the collapse of market demand. But it would be a mistake to place all the blame on the business cycle. Before the crisis, for example, business executives and owners didn’t always know who their worst workers were, or didn’t want to engage in the disruptive act of rooting out and firing them. So long as sales were brisk, it was easier to let matters lie. But when money ran out, many businesses had to make the tough decisions — and the axes fell. The financial crisis thus accelerated what would have been a much slower process.
Subsequently, some would-be employers seem to have discriminated against workers who were laid off in the crash. These judgments weren’t always fair, but that stigma isn’t easily overcome, because a lot of employers in fact had reason to identify and fire their less productive workers.

In a nutshell, what we’re facing isn’t your grandfather’s unemployment problem. It does have something to do with modern technology, and it will be with us for some time.

TYLER COWEN is professor of economics at George Mason University.

20 comments:

Unknown said...

It is interesting to wonder about how technology affects our lives in so many good ways, but as this post resembles, it can affect our lives in some really bad ways and we are not even possible to see. Since the 19th century many traditional manual jobs have been replaced to machinery and the facilities of technology. But what we see these days is that not only is technology a problem but education too. People without knowledge and skills because of the lack of education are being thrown out by many others more capable workers and by machines as well, and technology is making this process faster. And this process is being related to major effect on underemployment rates instead of subordination of will, because many people dislike the fact that they have to subordinate themselves to be in a job and rather even be unemployed.

Ashleen Ulysse said...

Technology in modern society has improved the standard of living tremendously. We, especially Americans have advanced greatly when it comes to technology. However, these advancement are taking away potential job for people that are willing to enter the work force. This is a growing epidemic because this has been an issue as early as the 19th century. It is not enough to blame all unemployment on technology, as opposed to earlier in history where less education(high school diploma) was needed to get jobs and now a higher education(masters degree) is a requirement. Technology should be used for jobs that we as humans cant fulfill and jobs that are unsafe and less pleasant so we leave the jobs that we can do to help decrease the increasing problem we are facing with unemployment.

Camille Dottore said...

Technology is truly changing our society for the better and for the worse. Today many people aren't getting employed due to the fact that certain machines can do the job for them. Nowadays technology such as computers and machines are taking over jobs that usually humans used to perform. In the 1900's certain machinery was introduced which cut some jobs, but those machines also needed manual labor by humans. Today these machines that are being introduced don't need humans at all to work. They solely function on there own, which is sometimes a scary thought. Also lower level jobs such as fire men or barbers or police men are now required a masters degree or some sort of college education. The society is forcing people who don't want to go to college in order to get a job and support themselves, now attend some sort of schooling to be allowed to get these certain jobs. As time goes by, the fewer jobs there will be for society, and the more lower level jobs will be harder and harder to attain. Unemployment is a problem that looks like is facing troubles from technology as well as educational requirements.

Unknown said...

Technology has a huge impact on our generation. It changed a lot of ways companies run their business. Large corporations are mostly turning to technological machinery to do most of their jobs instead of hiring a few people to it manually. When you look at the big picture you can see that is is effecting our employment rates tremendously. The power of social media itself as a form of free advertising is only one of the many examples of how technology is taking over a lot of average jobs.

Unknown said...

Technology has a huge impact on our generation. It changed a lot of ways companies run their business. Large corporations are mostly turning to technological machinery to do most of their jobs instead of hiring a few people to it manually. When you look at the big picture you can see that is is effecting our employment rates tremendously. The power of social media itself as a form of free advertising is only one of the many examples of how technology is taking over a lot of average jobs.

Marc Pasquale said...

It is quite obvious that jobs are now decreasing. Whether this has to do with just technology, I am not sure. Of course, growing technology plays a major part as new technological advancements are threatening the work of humans, yet that is not the only thing to blame. The economy is incredibly bad right now, and I do not think there is room for people to get jobs because they cannot get paid. It is also true that back in younger generations, it was way easier to get a job. This also plays a major part today because not everyone can afford to go to college, which means they cannot get a job because the standards or so high right now... like needing a degree for certain jobs that usually would not require one. To this extent, I think it is unfair. Not all jobs need a college degree, and it is possible to get a job with only a high school diploma, but it is incredible hard and unlikely. So, yes, I think technology is definitely increasing, and it is ironic because everyone seems to think this is such a good thing, meanwhile they are not looking deep enough into the future. Like it states, it is ruining a lot o peoples jobs, and like it says workers should be skeptical just in case the technology becomes available and people start getting fired. I also, however, believe that technology will never get so advanced that we will lose an incredible amount of jobs because there are some thing machines cannot possibly do, therefore we will always need human labor. I think it is a tough decision for anyone to be in, but coming from my generation I am not too concerned about getting a job after college, and I do not think we need to worry about that right now, but it is a thought to consider when the future continues.

Tiffany Pabon said...

Technology has altered our society for the better. The society is worried that automation could leave many unemployed and without a chance to successfully climb the ladder in their current jobs and become something more of themselves. Technology has led us to change which is something society fears. In the past the introductions of railroad and machines took over many jobs in the transportation and factory sectors that were no longer necessary. Although there were new jobs created like a conductor or a mechanic to fix machine, meaning that we needed the unemployed to learn these new jobs. Today many jobs revolve around healthcare and education. These are fields of work that mostly require college degrees, so people no longer can get by with a high school education and experience as easily as they did in the past. Some people in society see automation as most people view the steam engines and factory machines in the past. They are frightened that it will eradicate their jobs because they will no longer be needed. I am personally not opposed to automation but I am opposed to the threat it poses to our American jobs. If there was a way to have automation and have it create enough new jobs in the nation then I would one hundred percent on board with it being implemented.

Unknown said...

Technology has impacted our society both negatively and positively. Technology has made production faster, but it has also taken away jobs from workers because machines are now used to make most products. This development of technology is hurting our unemployment rate because the computer thinks and does everything in this century. Businesses would rather a computer or machine do the work because they do not have to pay it wages. Which is leading to more factories or businesses to choose the machines over people.

Will Harrington said...

It seems as though the more technologically advanced we become as a society, the more scarce jobs become. Back when technology was limited and computers weren't even invented, jobs were much more plentiful. Many unskilled workers could work in factories and make it by in life. Nowadays, it seems as though machines have taken over these types of jobs. More high-skilled jobs are becoming more common placing a high importance on a college degree rather than just a high school diploma. Unfortunately, this is a major issue for those with less skill and education.

Anthony Zullo said...

In every positive thing in life does come a negative in some way. No matter how you may look at things there are two sides to everything, good and bad. Technology is one of these very positive things in our world that also have a negative perspective that are overlooked. In the United States the biggest problem for Americans is the unemployment rate. Technology adds to this rate because machines have taken over factories and jobs people once have had. Technology is quicker, better and cheaper to business' that make products or need things done that can be done by technology. This develops the question to who gets jobs than. The best answer is the most qualified and intelligent because they can get the job done the best. This means many people need to stay in school to get good jobs and many people do not want to go through all that.

Maria Bueti said...

I found it interesting to think that technology has really impacted the employment in the United States. At first I thought that it would make sense that technology would take away some jobs. But they have also made some jobs like software designers. They have also made other jobs more efficient. An example would be like how accountants now use excel spreadsheets to do their work were as before they had to do everything manually. Sure over all technology has taken away a lot of manual labor therefore many people have to almost compete with machines to keep a job. I think that even though technology has added some great improvements to society but it had also had some disadvantages.

Nasha Bell said...

Technology has changed our world today drastically. In todays world technology has made many people lose jobs because they are more efficient. With this being the trend now that the newer technology taking jobs that makes peoples search for a job very hard. This trend did not start happening recently because as technology got better over the years somebody somewhere had to suffer. Most corporations are making the new technology the base of their companies so they don't have to hire any people. This trend has sped up drastically over the years and because of this the unemployment rate is very higher than it needs to be.

Miranda Carlone said...

Technology has had and will continue to have a tremendous impact on jobs and unemployment in the United States. As technology increases it will start to take over more and more jobs that would otherwise be available for people to work. This can be both good and bad because while it is creating more inavative and efficient ways to complete the jobs, it is also taking away jobs for many Americans. Humans are now being replaced by machines. This also has a big impact on who is getting hired. Now more than ever, more skills and a higher education is needed to do jobs that previously only required a high school diploma. This is putting more competition into the marketplace by forcing people to go to college and earn higher degrees to be able to become employed. Companies are reluctant to hire those with less education especially since technology could one day replace the lower level jobs. Overall, I think that this new trend in technology will be very beneficial to the standard of living in our society, however it will drastically change and increase the unemployment rate.

Marina Milos said...

I guess technology is one of those bitter sweet deals. We live in a society that has endless wants and needs. Businesses need to satisfy these wants by creating these goods and services using quicker, cheaper and more efficient methods. Technology is programed to produce results faster than a human being. For example, accountants definitely use their math skills to produce all those income statements and balance sheets. However, to produce all these reports they use Excel to create the spreadsheets. Excel makes sure their numbers match up and that they are not making any mistakes. Years ago, when an accountant had to report all those numbers, it was done manually. Times have changed and technology has replaced humans in many ways. We cannot blame technology for the unemployment rate; however, it is correct to state that technology has had quite an effect on the employment. Instead of speaking negatively about technology, we should embrace how such an innovation can bring better results than a human being.

Unknown said...

Theological advances permit society to produce more output from the current mix of resources. These advances may take the form of less costly methods of producing existing output or may result in the production of new products (such as DVD players, HDTV, anti-lock braking systems, car production, etc.). Society clearly gains from the production of either more output or more highly valued output. This technological innovation also resulted in an increase in the demand for unskilled workers and a decrease in the demand for skilled craftsmen. Technology is Increasing the unemployment throughout the years as we become more technological advance. Over all this intertwines with issue of less education and skill.

Nicole Smith said...

I think technology today has helped to destroy the U.S employment rate. For example look at the grocery stores we all go to. Check out is an automated process. First self-checkout lanes were installed, and now there is the checkout scanner you can take with you while you shop and scan your items as you go and pay at the register. This has allowed stores to cut back on their salaries expense, however; it has also decreased the amount of jobs available. A lot of receptionist jobs have been replaced with automation as well. A lot of jobs that many people without a college background would take are slowly fading. As the article also states the pressure of having a college degree is making it harder for many to find jobs. Those without a college education have a harder time finding jobs. Degrees that were once trade degrees are now starting to require more college based classes. I have a paralegal degree which was once a two year trade degree, and is slowly becoming more and more of a four year degree. This puts those who cannot afford the college education at a lesser of an advantage when it comes to finding a job.

Maltha Romano Jimenez said...

Technology will always effect the jobs available because they are a cheaper and faster way of getting things mass produced or done cheaply. Business owners and consumers are constantly looking for the easiest and fastest way to get items they want or a service they would find faster. Unfortunately, with this speed and cheap way of labor, lack of quality comes along with it. Obviously hiring someone who would be skilled in the job is a great option, it would always cost the business owner more money producing what they would consider a lost and disappointing customers because they aren't quicker than most of todays machines. The computer business because of this, if you cannot do what the computer is designated to do, at least you can learn to program it to do so. This is still a form of employment that would involved education but its a small price to pay for a skill that will be extremely for your personal survival. Therefore, there are ways to go around the fact of more jobs being taken over by machines, you just need to adjust your mindset to it.

Bakhoya Mangoli said...

Some would say that the new age thats coming is lead by technology, with hearing that you would think that its something positive because we usually tend to look at technology as something that helps improves our lives, also makes everything easier. But through reading this article we get to see the negative effects of technology that can bring to employment. The fact that it brings easier ways it takes aways jobs that could be put out. The question is brought up why hired humans when there are machines that can do it twice as fast without any complications. This has been a growing problem since the 19th century.

Rachel Andal said...

From the inventions of the steam engine to the electric motor, technology has not stopped changing and improving every day aspects of our lives. Technology has both positive and negative effects towards human beings. From helping make jobs go by faster and more efficient to completely replacing the need of a human worker. Technology is one of the major causes of unemployment from the beginning of the 19th century to present, with factories and companies relying on faster, reliable, and efficient machines to replace those of human hands. Though some of these machines due need to be looked over and watched carefully for malfunctions, there goes the need for human workers still to help maintain the functions and durability of the machines that had replaced them. While technology may have caused some unemployment, technology also gives the need to employ skilled workers to handle them. Unemployment i believe has one major cause which is out sourcing in my opinion.

Unknown said...

I would say that human workers getting replaced by machines play a huge part in unemployment. Machines work twice as fast as human workers, they require no rest, and they do not require a paycheck so it makes sense why people fear losing their job to a machine.