Many people these days are concerned about our “jobless recovery” from the Great Recession of 2007-10. Others are concerned because they see manufacturing jobs being sent overseas—usually to China and India, where people will do manual labor and rule-driven, narrowly focused work like writing computer code for a fraction of the prevailing wage in the United States. If only we could recover our economic momentum, they think, and take back those jobs now done overseas, prosperity will return.
It’s not going to happen. We at the turn of the 21st century are in the middle of an economic sea change in manufacturing as momentous as the one in progress at the turn of the 20th century in farming. In 1860, at the start of the Civil War, farmers accounted for 58% of the labor force: more than half the jobs in this country were on the land. By 1900 that had dropped to 38%—still over a third of the jobs. By 1930, farm jobs were 21% of labor opportunities. By 1960, only 8.3% of Americans worked on the farm, less than a tenth of the work force. And today, it’s less than 3%.
If you were laid off on a farm in 1911, what do you think your prospects of finding another job in agriculture would be? What would your children’s prospects be? Needless to say, during this dwindling of farm jobs, actual farm output did not decline but instead grew dramatically. Mechanized farming, pesticides, new technologies in food storage and processing—they all created more food than we could eat while employing fewer people. At the same time that farm jobs were disappearing, the number of factory jobs was rising, and they absorbed the laid-off workers. So, for the last century at least, the problem of employment was solved.
It’s common to say that U.S. manufacturing is in a slump these days, as more and more goods appear to be made in China and India. Don’t believe it. Chinese industrial output hasn’t even caught up to the U.S. We still make about 40 percent more goods than the Chinese. They only recently surpassed the Japanese economy—which has been stagnating for two decades—to become the world’s second largest.
So it’s not that the United States doesn’t make things. We make lots of things—often larger and more complicated things than the Chinese. Sure, most of the hand tools like hammers, consumer goods like pots and pans, toasters and toys, and personal electronics like iPhones and iPads are stamped “made in China.” But in the high-stakes, high-profit-margin, cutting-edge industries like jet airliners, earthmoving machines, and scientific equipment the U.S. still dominates.
The difference today is that automation is turning most of this manufacturing over to machines—usually machines designed and made in this country.1
It’s a truism to say that we live in the “information age.” Most of the new jobs are in a field that’s collectively called “symbol manipulation.” You analyze the information needs in one industry or another and design the software that will find, develop, and display it.2 You interpret computer simulations and design the cuts that machines will make to create the prototypes of faucet handles or jet engine vanes or fuel pump housings. You read marketing trends gathered from computer surveys and put together a marketing plan. You monitor the displays on automated machines and call out the fixit teams when they break. You interface between the computer screens showing procurement or inventory or logistics status and the people who want to sell you products, make your products, or buy them. You write songs or video games or books or screenplays for people who hunger for entertainment.
The actual work of cutting metal, molding and casting, and moving product will be done by machines, assisted by an ever dwindling number of human hands. The power of the machine amplifies human power many fold. The backhoe replaced the ten humans who once wielded picks and shovels to dig a ditch with one person who drives the backhoe and then a tenth of a person more who maintains it (while simultaneously tending nine other machines). Similarly, one driver of an eighteen-wheel semi hauls about 22 tons of merchandize, or twenty times the load of a wagon driver. One faucet designer using a computer-assisted design and manufacturing (CAD/CAM) program can replace ten human craftsmen shaping and fitting brass parts to make faucets by hand.3
Jobs lost to automation and mechanization are simply not coming back. You would not want to pay the price of a lawn mower assembled in America by the hands of a factory worker making a living American wage. You wouldn’t even want to pay for a handcrafted lawn mower made in China by someone making Chinese wages.
The good news is that greater productivity, making more goods available more cheaply, creates greater wealth. The economy is like an ecology: the more economic activity there is, the more economic opportunity there will be.4 Greater wealth and leisure mean more money and time for people to consume songs, video games, books, and movies—not to mention those handcrafted coffee mugs and clothes and furniture that artisans want to make and sell.
But greater productivity also turns the economic equation on its head. Consider that for a hundred thousand years of hunter-gatherer culture, good times were defined by having more food on hand than you wanted to eat—feast at the table. Bulging granaries are a good thing. That turned over sometime around the 1900s, when a bumper crop meant an oversupply of grain (or corn, or pigs, or cattle) and falling prices for those still in the farming business. In our economy, not having enough production of cars or television sets or cell phones or new housing starts is not the problem. It’s when demand falls and inventories start backing up, driving prices down and leading to the layoff of those workers and productive assets who remain in manufacturing (and in marketing, logistics, finance, and human resources) that the trouble starts.
We’ve solved the production part pretty handily. It’s the rest of the equation that is going out of whack.
The economic question of the 21st century—the only economic question of the 21st century—is what do the rest of the people do? Blog and write their memoirs? Make handcrafts that collectors can buy? Write marketing brochures for artisan shops? Get advanced degrees in folk dancing? Play golf? Smoke dope? We are coming upon a time when everyone's basic physical needs will be taken care of by machines with the active, employed participation of perhaps ten or twenty percent of the population. So what do the rest of us do? This is not just about making money so people can buy this stuff—supplying buying power is the easy part—but how do we make their lives meaningful?
For most people, the meaning in their lives comes from work and family. You are what you do. You are who you love. We’ve pretty well exploded the family component through our culture’s narcissistic focus on personal happiness, with a corresponding rise in divorce rates and out-of-wedlock children. We’re now losing the work component through rising automation. This also suggests why young people are rioting in Tunisia, Egypt, Libya, and Britain: they don’t see a lot of personal future in the way things are going.
The human race has faced this problem before. When hunter-gatherers sat down in river valleys to grow grains and tend livestock instead of walking over the landscape picking up what food was available, the sudden productivity of the peasant classes meant that large numbers of people in urban concentrations were suddenly without useful employment. They were fed, but they weren’t busy. The response of the growing managerial and priestly classes was civic works: pyramids in Egypt, Nazca stone-paintings in Peru, cathedral and castle building in Europe. Another response was weapons training and war all over.
Once again we have large numbers of people who will have enough to eat but not enough to do. For those not content to write poetry and smoke dope, what is an acceptable purpose for a human life? Answer this question robustly—without any genie-in-the-bottle solutions like “smash all the machines”—and you can be the next great Nobel laureate in economics.
1. See “Gutenberg and Automation” from February 20, 2011 in My Blog History.
2. Note that you will, in most cases, only design the software, which is the creative work. The code itself will be assembled by an automated program or written letter-by-letter at the hands of Indians or Russians who closely follow the grammatical rules of the programming language to implement your design: you plan, they type.
3. Here’s another example of how technology is amplifying the input of human labor and so eliminating jobs. While working at Pacific Gas & Electric Company in the 1980s, I learned that the basic work unit for tending the electric distribution system is the “line truck,” the crew that drives out to a downed power line and fixes it. Long before I got there, in the 1930s, the truck crew was five people who climbed ladders to make repairs, up and down until the job was done. By the 1950s and through the 1980s, the crew had been reduced to two “linemen.” They climbed the wooden utility poles with belts and leg spikes, like lumberjacks, to make repairs. They were supported by a third person, the “groundman,” who passed tools up to them with a pulley system (so they didn’t have to climb up and down repeatedly) and who could assist if one lineman belted to the pole had an accident (in which case his partner, similarly belted and spiked to the pole, would have trouble helping him down). By the end of the 1980s, the basic line crew was reduced to two people operating out of a bucket truck, which hoisted them to the top of the pole on the arm of a cherrypicker. The groundman had disappeared from the equation. The line crew went from five people to two through successive waves of technology adoption.
4. See “It Isn’t a Pie” from October 3, 2010 in Politics and Economics.