Since the Great Recession ended in late 2009 the jobs recovery has been rather sluggish. However, corporate profits, purchasing of equipment, and software has returned close to normal. The slow movement of the jobs recovery has caused some economists and technologists to place the blame on machines. Most believe the nature of work has changed and companies are adding automation rather than new employees.
I’m not as convinced and I’m not alone in this thinking. Some analysts believe that technology-led productivity improvements don’t affect all classes of workers the same, that high-skilled (data scientists) and low-skilled (janitors) workers aren’t as much affected as the semi-skilled, middle-income wage earners.
Bottom line it appears there are several culprits behind the slow return of jobs and these would be the formation of new businesses, the availability of credit, and that companies must invest more in information technology rather than physical capital.
What can we do to spur jobs growth?
- Policymakers should encourage and support entrepreneurship among younger adults and remove the regulatory inhibitors to make capital readily available.
- To increase credit, the Fed should encourage banks to lend more of its deposits to productive businesses rather than the fact that banks deposit money with the Fed.
- To accelerate productivity growth from IT-led investment, companies should encourage the use of standards and best practices that reduce complexity. Incremental investments rather than just ‘big bang’ projects would deliver more consistent gains.
As the job recovery continues, the alleged evidence of technological unemployment among middle-income earners is disappearing and therefore automation is not the main reason after all.
Quote for the Day: “Make no little plans; they have no magic to stir men’s blood and probably themselves will not be realized. Make big plans; aim high in hope and work, remembering that a noble, logical diagram once recorded will not die.” — Daniel Burnham, Chicago architect
2nd Quote for the Day: “Be yourself; everyone else is already taken.” ― Oscar Wilde