5×5: Employment in the Digital Revolution

by | Friday, November 8th, 2013

RE:INVENTION’s team reviews a recent news article or research study every Friday, then debates the topic at hand, sharing our individual insights. We call this Friday feature, 5×5.

UP THIS WEEK: EMPLOYMENT AND LABOR IN A DIGITAL ECONOMY

We all know the fable of John Henry from childhood. In short, the story goes that he challenged a steam engine to a competition while he was working on a railroad. He ended up beating the machine, but promptly dying upon his victory. However, that story was based in the late 1800s. Since then, people have been constantly innovating to the point at which machines are now more efficient than human labor in many industries. With the Digital Revolution rapidly gaining momentum, it’s important to ask exactly what progress we’re aiming towards. High unemployment rates are associated with plenty of societal issues, so when the point comes at which substituting technology for human labor is the cheapest method of work, what is in our best interest to do? This week’s 5×5 explores the implications of the Digital Revolution on employment rates and the roles of workers in the new economy.

This Week’s Reference Articles:

OpEd News, November 4th, 2013, “Is it Time to Rethink the Digital Revolution?” 
CBC News, November 4, 2013, “Are robotic smart machines behind the jobless recovery?

THIS WEEK’S QUESTION

With populations growing exponentially and the Digital Revolution allowing companies to substitute more machines for human labor, what will the repercussions be in terms of employment rates and the roles of workers in the new economy?

OUR TEAM’S RESPONSES

Kirsten Osolind (“Change Catalyst”)

Gartner’s report suggests that “by 2020, automated innovation and the labor reduction effect of digitization will cause social unrest”….that during the next decade we’ll see rapid mass adoption of new technologies – 3D printing, machine learning, voice recognition, and wearable devices.

I suspect the adoption curve will be somewhat slower, despite accelerating technological change. Generally speaking, the higher the level of complexity, the slower the rate of adoption.

Let’s not forget that 57% percent of the world’s population still lives under autocratic regime. Five billion people still have yet to join us online and will do so in the coming decades. Emerging markets present a wealth of opportunity for growth.

That said, we have indeed moved from a manual labor society to an information-driven society. Educated workers have an advantage as machines are increasingly taking the place of the unskilled. Many present day job titles and responsibilities will become obsolete. But new jobs will replace them. The concept of “work” and the skills required of workers will profoundly change.

Robots embedded in software will increasingly be used for routine, repetitive tasks and rules-driven processes.

But corporations will still need humans for vision, judgment, and creative problem-solving — to adapt to change, to create new value for the organization and its customers. Education, training, and talent will become increasingly paramount: people who are knowledgable, inventive, resourceful, and imaginative will have significant advantage.

As for social unrest, it’s already happening and it’s not being caused by “the labor reduction effect of digitization.” Rather, it’s in response to government-induced stagnation, wasteful government spending, lack of government transparency, bankers, financial markets, macroeconomic instability, and greed. In the U.S., inflation is decreasing the value of new wages while workers are being paid less.

This is not a problem with two or three dimensions – but seven or eight – maybe more. People with infinitely wiser minds than me have been unable to solve it. And I surely don’t think I can solve it in a blog post.

Joe Barrus (“The Technologist”)

The Human Race has been progressing since day one. This will not change. Humans are very adaptable and as such have adapted to change and major transformations in the past. If that wasn’t true, we wouldn’t be where we are today. The issue isn’t whether humans can adapt but rather can they adapt fast enough.

Technological change is accelerating; meaning that the rate of change is not linear but rather exponential.  This is often a difficult concept for modern business strategists to contemplate and is an underlying cause for many of the business failures we see today.   In the past, change could happen across generations with our children learning the new skills required for a new economy while the older generations could hold on to what they knew and still be productive.  The phase transition between transformations overlapped long enough to allow for an orderly transition.  These days, the transformation cycles are happening in shorter periods requiring individuals to make radical adaptations within their own lifetimes.  The impact on society can be drastic as individuals lose their jobs while trying to develop new skills to become productive again.

There really is not enough space here to write about how we will adapt.  I could write a whole dissertation on this as I’ve spent a lot of time contemplating how the rate of technological change will impact society.   So, in the interest of brevity, I’ll try to be concise.

In the short term, I think as we see machines taking over the execution of production that have traditionally been manned by humans, new jobs will open up in the management, operations and maintenance of these machines.  We had this same worry as computers began displacing workers in the workforce.  However, a whole new industry of highly skilled workers emerged to develop and maintain these computers.  Essentially the workforce simply shifted to focus on the new building blocks of a new economy exemplifying how the cycle of transformation works.  I think the same thing will happen.  We will see more jobs emerge managing and developing these new technologies as they replace workers executing the means of production.  However, the accelerating rate of change could leave some of us without for significant periods of time as this happens.  This is the real problem we need to address.

However, as an optimist, I’d like to think that the same advancements in technology will also enable faster learning cycles.  We have already seen this with ready access to information on the Internet.  As the current Information Age transitions to the Knowledge Age, we will see new tools emerge that will create knowledge as building blocks requiring assembly to create new value.  Humans will become part of a new form of assembly line using new tools that won’t necessarily require highly specialized learning and skills.  And for those jobs that do, tools will emerge that will allow development of those skills within shorter learning cycles.

Another factor to consider is that this same accelerating rate of change will also develop technologies that begin to solve large societal issues such as hunger, illness, shelter and our environment.  We already have examples of large 3D printers building houses at much lower costs.  As these technologies advance, we will start to see commoditization of resources, cheap distribution at scale and higher quality of life for all as might be described by the controversial concept of a resource based economy.

What happens when we reach this state of utopia?  We will still need those jobs to operate and manage the means of production and distribution of these resources and we will still need specialized skills and knowledge that can be bought, sold and bartered as services.  I will still pay someone to create music for me or to entertain me by playing a football game.  I still will need someone to clean my house or wash my car.  In other words, I think ultimately we will become a service based economy as we emerge out of the next few cycles of transformation.  What happens after that?  I’m not sure but humans and technology are likely to literally merge creating a whole new concept of humanity and society with its own new set of problems.

Dennis Jarvis (“The Marketeer”)

“I’ve got a feeling we’re not in Kansas anymore.”  Who can forget this memorable refrain by Dorothy to her dog, Toto, in The Wonderful Wizard of Oz?  This was my initial thought after reading Tom Mahon’s blog, “It’s Time to Re-Think the Digital Revolution,” and Don Pettis’ report, “Are Robotic Smart Machines Behind the Jobless Recovery?”

For me, the Digital Revolution, and with it the use of robotic technologies represents a healthy transition of our economy and culture, not so much unlike the Industrial Revolution in the late 18th and early 19th Centuries.  The Industrial Revolution brought a fundamental change in society.  With it came fear and anxiety, requiring the masses to re-think, re-calibrate, re-educate and re-train.  But, once the Revolution was underway, there was not going back and for the better.  And, what about Henry Ford, who in the early 20th Century gave us the mechanized assembly line, thereby affording the ability of most consumers to buy a car?  The work force had to change the very way it functioned each and every day.  Again, there was no going back and for the better.  I recall a personal experience with a medical device company.  One day I met with the head of R&D who had an artist’s rendition of the next generation of manufacturing technology hanging his wall.  Depicted were a machine, a dog and a man.  The job of the machine was to make the product; the man’s job was to feed the dog; the dog’s job was the keep the man’s hands off the machine.  A bit cynical, but the point was that the machine, controlled by digital technology, would be able to deliver superior and consistent quality, all to the benefit of the practitioner and patient.  It wasn’t about job elimination; it was about doing the job differently.  It did require different but trainable skills.

 

So, as I reflect on our current Digital Revolution, I am not deterred.  The tectonic change brought about by digital and robotic technologies will again force us to re-think, re-calibrate, re-educate and re-train.  I don’t believe the Digital Revolution has been a cause of our jobless recovery.  However, I do share some of Mahon’s concerns about possible side effects.  In particular, I look at the education of the current generation of students.  As documented by the Organization for Economic Cooperation and Development, the U.S. has assumed second tier status among the international community on math, reading, and science.  Could this be an artifact of this generation’s fascination with the Digital Revolution at the expense of these disciplines?  We have also seen recent evidence of schools cutting back on the humanities, physical education and even cursive writing.  Is this also resulting from the Digital Revolution?  I believe society’s ability to productively optimize digital technology will go hand-in-hand with our ability to embrace these cornerstones.

 

In the end, there is no going back, and I think it will be for the better, but with some navigational refinements.  After all, “we are not in Kansas anymore” and compass just won’t be enough to get us to where we need to go.

Jorge Barba (“The Culture Guy”)

In a society where we see automation being more pronounced, as strange as this sounds, empathy will become the killer app; even more. In all seriousness, when we talk about customer experience, we are talking about human contact. As a business, we’ve been trying to automate the processes that have to do with dealing with the customers as much as possible, but there is still a disconnect in how people want to interact with service providers, and vice versa.

From the customer’s perspective, we also want to be able to deal with companies as less as possible. This is the reason why I say that empathy will be even more important because the most forward thinking companies will want to exist in the life of their customer’s.

The point is that we are still ways off until we start seeing robots that replace humans in all of their capacity, but even when that happens people will still yearn for human contact.

Kane (“K-9 Intern”)

I’m not too worried. Pups like me have been around for centuries and I don’t see that changing any time soon. Maybe they’ll invent a computer that can play fetch all day, too!

THE FINAL WORD

The competition between man and machine has been around since the Industrial Revolution. Machinery has helped increase efficiency and transform economies into high-performance ones. The question of outsourcing labor to foreign countries, as well as that of substituting labor for machines that can do work more efficiently, have been hot-button issues for awhile and will continue to generate disagreement as it technology allows robots to take over more human functions. Nonetheless, as technology grows to complete more menial tasks, the problem-solving and innovative powers innate in the human mindset will continue to prevail into the foreseeable future. Though digitalization will certainly lead to unemployment in several sectors, a new digitalized economy will open up plenty of doors within existing sectors and even generate new industries.

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