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The Future of Employment

Published 02/07/2018

There’s this weird thing that comes with covering technology.

As you are typing the words, you realize what you are writing will be 100% wrong or 100% obvious in a short time.

And yet, right now, we are advancing so quickly that I have no idea how things will ultimately end up.

Especially on the topic of employment.

Which, again, as this is being written is a hot button issue as we have an administration in the United States that is doing anything and everything to create jobs – and at the same time, limit cheap labor by restricting trade and immigration.

Don’t worry.

We’re not going to get political here as we don’t have a dog in the hunt on this topic.

Our focus is purely one from a technology standpoint.

Creating jobs is never a bad thing.

At the same time, from a technology standpoint, we have to wonder if these are permanent jobs or jobs we are temporarily resurrecting to give the economy a temporary boost.

In fact, by forcing US companies to “buy and hire American,” we might be hastening the extinction of these jobs.

The inevitability of this is clear.

US businesses, for the most part, are looking at short-term profitability.

They have three options when it comes to labor.

  1. Pay humans a salary to do it
  2. Import the products/material which was made with cheap labor oversees
  3. Invest in technology that will automate the labor

With option #3, companies eliminate a lot of costs in the form of salaries and or import costs, which you think would be appealing.

However, the initial outlay required to invest in that technology is cost prohibitive when compared to option #1 and/or #2.

Let’s use an easy example.

Orange, Inc makes computers, so they need computer chips.

They have three choices.

  1. Hire employees who can make the chips and pay them a salary, which costs nothing up front and $1,000 per year after that
  2. Buy the chips from oversees, which costs nothing up front and $900 per year
  3. Built technology that can make the chips with no human intervention, which costs $8,000 up front and $100 a year.

#1 and #2 are better options for about eight years, which is longer than the tenure of most managers, so option #1 and #2 are more attractive to them.

And of those two #2 is the slightly better option.

Now, let’s look at how a change in policy could affect that.

The administration implements a tariff on imported chips, which pushes the cost to $4,400 per year for option #2.

At the same time, we limit immigration (both legal and illegal) and the shortage of labor causes wages to increase (which can also happen from an increase in minimum wage).

Now option #1 would cost $4,000 per year.

It’s now a better option than #2, but the cost to automate has remained at $8,000 up front and $100 a year afterward.

Suddenly, #3 is the best option and the work you’ve done to protect / create jobs has brought about their ultimate demise.

Talk about your unintended consequences.

Now, you might be saying there’s a fourth option, and you’d be right.

In scenario #2, the companies that were exporting chips may decide to build plants here in the US thus circumventing the cost of the tariff.

That certainly is an option and it might create jobs, but it’s still subject to the same principle.

That company has two options to circumvent the tariff.

Build a US plant or lower their own manufacturing costs by replacing humans with machines.

The choice will be decided upon which is better from a cost perspective – the cost of building and staffing a new plant in the US. Or the cost of automating the workforce.

If it’s the latter, not only have you killed US jobs, you’ve taken jobs out of the global economy as well.

Here’s the ultimate point.

Innovation always wins eventually.

And if something is eventually going to happen, we need to plan like it is going to happen tomorrow.

Automation will happen, so we need to stop trying to fight it and start figuring out how to harness it.

Instead of looking at is as a job killer, let’s look it as an opportunity creator.

We don’t have all the answers right now, but if we start planning, we can come up with ways that allow humans to use the strengths they have over machines and software.

There are a lot of job functions that machines, right now, are just flat out better – exceedingly better – than humans.

And these job functions cross political lines and class lines.

Our example looked at manufacturing, which is an are where machines blow humans away.

Machines are just flat out better than humans in manufacturing.

Transportation is another area where machines excel beyond the capabilities of humans – even in the cases of disaster or emergency.

Machines can recognize patterns better than humans, meaning they make better diagnosticians.

  • Cooking
  • Serving
  • Movers/Warehouse workers
  • Retail Sales (think checkout clerks)
  • Nurses
  • Truck Drivers
  • Construction laborers
  • Financial Analysts
  • Legal Research
  • Agriculture
  • Software Development (we certainly aren’t immune)

The list goes on and on.

But to our earlier point, if you’re a cook, don’t freak out.

You’ll have more time to think of creative dishes and feed the ingredients into a machine who will cook it to perfection.

If you’re a financial analyst, you may not be picking stocks, but it will give you more time to get to know your clients so you can better understand their needs and put the right info into the machine.

Like the Internet and so many inventions before it, Artificial Intelligence, Machine Learning, Automation, whatever you want to call it is neither good or bad.

But it is inevitable, so let’s get ready for it.