NEW YORK – Five years after the start of the Great Recession, the toll is terrifyingly clear: Millions of middle-class jobs have been lost in developed countries the world over.
And the situation is even worse than it appears.
Most of the jobs will never return, and millions more are likely to vanish as well, say experts who study the labor market. What’s more, these jobs aren’t just being lost to China and other developing countries, and they aren’t just factory work. Increasingly, jobs are disappearing in the service sector, home to two-thirds of all workers.
They’re being obliterated by technology.
Year after year, the software that runs computers and an array of other machines and devices becomes more sophisticated and powerful and capable of more efficiently performing tasks that humans have always done. For decades, science fiction warned of a future when we would be architects of our own obsolescence, replaced by our machines; an Associated Press analysis finds that the future has arrived.
“The jobs that are going away aren’t coming back,” says Andrew McAfee, principal research scientist at the Center for Digital Business at the Massachusetts Institute of Technology and co-author of “Race Against the Machine.” “I have never seen a period where computers demonstrated as many skills and abilities as they have over the past seven years.”
The global economy is being reshaped by machines that generate and analyze vast amounts of data; by devices such as smartphones and tablet computers that let people work just about anywhere, even when they’re on the move; by smarter, nimbler robots; and by services that let businesses rent computing power when they need it, instead of installing expensive equipment and hiring IT staffs to run it. Whole employment categories, from secretaries to travel agents, are disappearing.
“There’s no sector of the economy that’s going to get a pass,” says Martin Ford, who runs a software company and wrote “The Lights in the Tunnel,” a book predicting widespread job losses.
The numbers startle even labor economists. In the United States, half of the 7.5 million jobs lost during the Great Recession paid middle-class wages, ranging from $38,000 to $68,000. But only 2 percent of the 3.5 million jobs gained since the recession ended in June 2009 are midpay. Nearly 70 percent are low-paying jobs.
In the 17 European countries that use the euro as their currency, the numbers are even worse. Almost 4.3 million low-pay jobs have been gained since mid-2009, but the loss of midpay jobs has never stopped. A total of 7.6 million disappeared from January 2008 through last June.
Some occupations are beneficiaries of technology, such as software engineers and app designers for smartphones and tablet computers. But, overall, technology is eliminating far more jobs than it is creating.
To better understand the impact of technology on jobs, The Associated Press analyzed employment data from 20 countries; and interviewed economists, technology experts, robot manufacturers, software developers, CEOs and workers who are competing with smarter machines.
The AP’s key findings:
• Over the past 50 years, technology has drastically reduced the number of jobs in manufacturing. Robots and other machines controlled by computer programs work faster and make fewer mistakes than humans. Now, that same efficiency is being unleashed in the service economy.
• Technology is being adopted by every kind of organization that employs people. It’s replacing workers in large corporations and small businesses, established companies and startups, schools, hospitals, nonprofits and the military.
• The most vulnerable workers are doing repetitive tasks that programmers can write software for — an accountant checking a list of numbers or a paralegal reviewing documents for key words to help in a case.
• Startups account for most of the job growth in developed economies. Thanks to software, entrepreneurs are launching businesses with a third fewer employees than in the 1990s.
• It’s becoming a self-serve world. Instead of relying on someone else in the workplace or our personal lives, we use technology to do tasks ourselves. This trend will grow.
The lingering pain of the Great Recession is not entirely a result of technology’s advances. Other factors are keeping companies from hiring — partisan gridlock in the U.S., for instance, and the debt crisis in Europe, which has led to deep government spending cuts.
But to the extent technology has played a role, it raises the specter of high unemployment even after economic growth accelerates.
THE JOBS OF NO RETURN
After the recessions that ended in 1991 and 2001, jobs lost were slow to return, but they all returned within three years.
But 42 months after the Great Recession ended, the U.S. has gained only 3.5 million, or 47 percent, of the 7.5 million jobs that were lost. The 17 countries that use the euro had 3.5 million fewer jobs last June than in December 2007.
The lack of midpay jobs is almost entirely to blame.
Fifty percent of the U.S. jobs lost were in midpay industries, but Moody’s Analytics, a research firm, says just 2 percent of the 3.5 million jobs gained are in that category. After the four previous recessions, at least 30 percent of jobs created — and as many as 46 percent — were in midpay industries.
Some of the most startling studies have focused on midskill, midpay jobs that require tasks that follow well-defined procedures and are repeated throughout the day. Think travel agents, salespeople in stores, office assistants and back-office workers like benefits managers and payroll clerks, as well as machine operators and other factory jobs. An August 2012 paper by economists Henry Siu of the University of British Columbia and Nir Jaimovich of Duke University found these kinds of jobs comprise fewer than half of all jobs, yet accounted for nine of 10 of all losses in the Great Recession. And they have kept disappearing in the economic recovery.
TECHNOLOGY UP TO TASK
The uncomfortable truth is technology is killing jobs with the help of ordinary consumers by enabling them to quickly do tasks that workers used to do full time, for salaries.
Check out your groceries or drugstore purchases using a kiosk? A worker behind a cash register used to do that. Buy clothes online? You’ve taken work from a salesman.
Software is picking out worrisome blots in medical scans, running trains without conductors, driving cars without drivers, spotting profits in stock trades in milliseconds, analyzing Twitter traffic to tell where to sell certain snacks, sifting through documents for evidence in court cases, recording power usage beamed from digital utility meters at millions of homes, and sorting returned library books.
The Hackett Group, a consultant on back-office jobs, estimates 2 million of them in finance, human resources, information technology and procurement have disappeared in the U.S. and Europe since the Great Recession.
IF ONLY HISTORY REPEATS
What hope is there for the future?
Historically, new companies and new industries have been the incubator of new jobs. But even these companies are hiring fewer people. The average new business employed 4.7 workers when it opened 2011, down from 7.6 in the 1990s, according to a Labor Department study released last March.
Technology is probably to blame, wrote the report’s authors, Eleanor Choi and James Spletzer. Entrepreneurs no longer need people to do clerical and administrative tasks.
Technological innovations have been throwing people out of jobs for centuries. But they eventually create more work, and greater wealth, than they destroy. Many economists are encouraged by history and think the gains eventually will outweigh the losses. But even they have doubts.
“What’s different this time is that digital technologies show up in every corner of the economy,” says MIT’s McAfee, a self-described “digital optimist.” “Your tablet (computer) is just two or three years ago, and it’s already taken over our lives.”