One of the most appealing beliefs about technology–that it will always create more jobs than it destroys–is no longer true. It was true in the first and second industrial revolutions, for one simple reason: the new industrial revolution created vast numbers of low-skill jobs that offered displaced workers abundant opportunities for work that did not require more than entry-level skills.
It only took a few minutes to learn one’s job on an assembly line in the first industrial revolution, and many workers recoiled from the sheer boredom and physical repetitiveness of this work. This is one reason why Henry Ford famously raised his workers’ wages to the then-princely sum of $5/day: the high turnover of people quitting was killing him.
I covered this in The Alienation of Work (April 15, 2014):
After the success of the moving assembly line, Henry Ford had another transformative idea: in January 1914, he startled the world by announcing that Ford Motor Company would pay $5 a day to its workers. The pay increase would also be accompanied by a shorter workday (from nine to eight hours). While this rate didn’t automatically apply to every worker, it more than doubled the average autoworker’s wage.
While Henry’s primary objective was to reduce worker attrition–labor turnover from monotonous assembly line work was high–newspapers from all over the world reported the story as an extraordinary gesture of goodwill.
In other words, labor had scarcity value. This is no longer true, as we shall see.
The second industrial revolution (telephony, radio, consumer marketing) required more training, but there were tens of millions of relatively well-paying entry-level sales and paperwork positions created for people who were automated out of factories. For example, my father made enough selling appliances at Sears in the 1950s to buy a house, support a wife and four kids and pay for luxuries such as modest family camping vacations.
This is simply not true in the third industrial/Digital Revolution: the jobs being created are not entry level or low-skill, except for informal menial jobs like running into Target to do some shopping for a highly-paid person who will pick up their items from you on the curb.
These menial service jobs are often awarded to the lowest bidder, while the enterprise that operates the auction skims a significant chunk of the revenues.
Believers in “technology always creates more jobs than it destroys” also overlook the work of Immanuel Wallerstein (and others) who identified the job-killing trend that cannot be reversed: the cost of labor is rising for systemic reasons that supercede supply and demand of labor.
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