Perhaps comedian Steven Wright said it best:

“I lost my job the other day. Well, I didn’t really lose it. I know where it’s at, it’s just when I go there someone else is doing it.”

They say that the truest comedy is the funniest, and there is nothing truer than the statement above. Steven’s old job didn’t go anywhere… his employer just found someone more qualified, more efficient, or less costly to do it. In today’s economy where layoffs and a bleak job market are the norm, the joke has lost a great deal of it’s humor. But a good look at the data proves Steven’s point — all those jobs are still there, it’s just that employers are finding more qualified, more efficient, and more cost-effective help.

And now for the kicker… For an increasing number of job categories, that help no longer needs to be of the human variety.

The mainstream media description of “jobless recovery” is only a half-truth — employers are “hiring” like mad. The dirty secret is that the work is of two flavors — either tasks that humans never did, or tasks that automation can now do better, faster, and cheaper. These “jobs” are going to technology.

“businesses’ spending on employees has grown 2 percent as equipment and software spending has swelled 26 percent”

A recent New York times article points this out with cold, hard data. Here is a choice quote:
“Two years into the recovery, hiring is still painfully slow. The economy is producing as much as it was before the downturn, but with seven million fewer jobs. Since the recovery began, businesses’ spending on employees has grown 2 percent as equipment and software spending has swelled 26 percent, according to the Commerce Department.”

Confronted with this data, even the President of the United States admits to the automation trend.

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In this downturn, the President declares “there are some structural issues with our economy, where a lot of businesses have learned to become a lot more efficient with a lot fewer workers”.

Bingo.

Obama was largely ridiculed for this statement — his detractor’s main argument being that automation has been with us for a long time, and ATMs or airport check-in kiosks (poor examples, indeed) are hardly a new development. The following graph (compiled from BLS data) would arguably help prove the detractor’s point that automation is “nothing new”.

Photo credit: Current Moment

Doug Henwood’s “productivity wedge” — the growing gap between productivity and compensation.

In the late 60s, the industrialized world launched into the era of computer-assisted automation. As companies like IBM began introducing technologies like the mainframe computer into businesses, productivity (defined as the output per human worker) became decoupled from wages. The lines of wages and productivity have diverged ever since, with wages on a flat line for the last 35 years as productivity continues on its upward climb.

“humans simply cannot compete for even advanced job categories that used to require years of training”

Now any student of history will be quick to point out that we’ve all been through at least 2 cycles of “disruptive automation” before — the first being the move from an agrarian society to an industrial one; the second being from an industrial one to an office one — each of these involved machines taking over a large number of tasks. There were disruptions and panic at each transition, but each time, humans climbed up the value chain, finding more interesting work to do. Each time, society dealt with it and moved onward and upward.

This round of automation, however, is profoundly different in that humans simply cannot compete for even advanced job categories that used to require years of training. The computers are growing smarter and faster, but like the wages in the graph above, we humans remain relatively unchanged. President Obama got the trend right, even if his examples were off.

It’s for this reason that I believe history will not remember today as a transient “jobless recovery”. Instead, I believe my kids are going to look back and remember this as the beginning of the “Post-Employment Era”* — when technology began taking over for human labor en masse.

Photo credit: Valeo Financial

Long-term unemployment in uncharted waters. Source: BLS Data

A good look around shows that it’s already happening. The job train is clearly off the tracks — businesses flush with cash are not hiring; banks are not lending; young adults entering the job market after years of training find no job waiting for them; experienced workers who’ve lost their jobs have simply given up trying to find another. Economists are all scratching their collective heads wondering why our economy is not behaving as it did in times past. But as the NYT points out, the economy is great and business is booming — provided you’re an IT professional or a company selling software or automation technologies.

“business is booming — provided you’re an IT professional or a company selling software or automation technologies”

As someone who is the former and owner of a company which does the latter, I know this first hand. I’ve calculated that the technology I’ve delivered over the last 20 years has displaced at least 2-300 jobs — probably par for the course for any IT professional that’s been around for a length of time. But I, myself am now starting to understand what it means to be “displaced”, as the two IT skills I’ve developed depth in — Web Development and System Administration — are starting to go automated, themselves. The code is quite literally starting to write the code.

For those individuals willing and able to climb up the value chain and leverage these automation technologies, there is tremendous opportunity. But I see automation making even the IT value chain shorter by the day.

Just as recently as 5 years ago, construction of a Website was a highly complicated task that required significant training and a team of at least 2-3 specialists with college degrees. Now, pretty much anyone who can click a mouse can build nearly the same thing in a week using Drupal or WordPress — saving themselves at least $5-7,000. New automation technologies like Opscode Chef are making even the building and maintenance of your entire IT infrastructure a one-time event. For most businesses, keeping your servers running and secure used to require a team of at least two to three people making six figures each. Businesses who deploy Chef can now cut back to a single person, and save themselves $100-200K. Per year. Forever.

“those dollars I used to pay people are no longer going back into the economy”

Contrary to what your System Administrator would like you to believe, building and maintaining an IT infrastructure isn’t rocket science. Like most jobs, it follows a fairly well defined algorithm — configure server X like so, configure it to talk to server Y like so, if deviations occur; resolve. Plug that algorithm into Chef and it will literally “write the code” for you — building out one million servers as happily as it can build out one. It works 24×7, never calls in sick, and (almost) never has a “bad day” where it takes all of our servers down.

When I build infrastructure or a Website these days, I no longer pick up the phone and call people. I log into a server and fire off code. My business can scale like mad, but those dollars I used to pay people are no longer going back into the economy. For my business, the contract of our capitalist society — that “employers hire workers; workers collect pay; workers spend” — is broken, and that breach of contract seems to be expanding in scope and depth.

“robots are assuming more and more of our work, both the intelligent and dumb flavors”

Everywhere I look, I see advanced, high-paying jobs going the direction of automation. For starters:

• The Navy is looking to bring on a fully-automated bomber, the X-47B, which can carry out it’s whole mission — including landing on an aircraft carrier (long regarded one of the most difficult tasks of any pilot) — completely autonomously.
• Google is in the midst of late-stage testing of their “driverless cars” in Nevada — consumer models are as close as 1-2 years away.
• Foxconn (China’s biggest employer, and the largest electronics maker in the world) recently announced they plan to automate 1 million jobs within two years.
• Wired Magazine recently reported that “One in 50 troops in Afghanistan is already a Robot“.
• Because of their ability to act in nanoseconds, roughly one third of all stock trades in both the US and the UK are now performed by “algorithmic trading” — stock-trading supercomputers.

Photo credit: http://www.intell.rtaf.mi.th/intellFilesUpload/intellnews/52434-01.jpg

The plane that could render Navy flight school (and human pilots) obsolete

Granted, Foxconn’s “robotics” will be largely of the “dumb” variety… still China — where labor is arguably cheaper than anywhere else on the planet — will have 1 million fewer jobs in a couple years. Sure, the Navy’s end game for the X-47B still involves having a human as the squad leader, with oversight of 10-15 drones. That said, there will 10-15x fewer openings at flight school. Sure, most of the ground robots in Afghanistan are “still pretty stupid”, but DARPA is making them smarter every year. No matter how you dice it, robots are assuming more and more of our work, both the intelligent and dumb flavors.

According to Futurist Tom Frey, Perhaps the biggest impact to the job market will be felt by Google’s Driverless Cars which, just a few months ago, received approval to autonomously drive in Nevada. Unlike their human counterparts, these cars, once deployed commercially, should be crashing a whole lot less — something I’m sure we’re all for. However, Tom is quick to point out that, in addition to the obvious impact this technology would have on Taxicab drivers, fewer crashes means fewer auto-body repair specialists, fewer mechanics, fewer police, fewer insurance agents, fewer hospital staff, fewer lawyers, fewer… should I stop here or keep going? I wouldn’t even own or maintain a car, myself, if I knew that a driverless taxi would always be on time.

Don’t get me wrong — I’m all for fewer lawyers — but following this train of thought leads us to two sad truths and one giant opportunity.

The sad truths:

• A large part of our economy is built on the inefficiency and limitation of humans
• Even today, most of what we humans do is not so “intelligent” or “special” that machines cannot do it better, faster, cheaper

The giant opportunity:

• Human kind is on the cusp of perhaps it’s greatest achievement — transfer of nearly all conceivable labor to machines

Photo credit: http://images.smh.com.au/2010/10/11/1980144/driverless_car1-420×0.jpg

Robotic Drivers: Car crashes down = Economic crashes up?

For an example of these truths, look no further Watson, the IBM computer which destroyed its human competition in Jeopardy just a few months back. Not content with mere humiliation of the human species, Watson has just landed it’s first job — “helping medical professionals diagnose and sort out treatment options for health issues”. And Watson is just the start…

Photo credit: http://hothardware.com/newsimages/Item16264/Watson_Jeopardy.jpg

IBM’s Watson: Smarter than Deep Blue. More employable than You.

Those in the know — people like Ray Kurzweil and Nick Bostrom tell us that Moore’s Law (which basically states that computing power doubles every 18 months) ensures us we will be seeing computers with “The same capacity as the human brain” within the next 20-30 years. At most. The two major hurdles for AI — vision and language — are undergoing incredible breakthroughs and should be reaching maturity around the same time. I’m fully expecting to meet C-3PO’s cousin in my lifetime.

“If basic needs were provided by a machine workforce, how many more of us would make real and meaningful contributions to society?”

More exciting than even that, I can envision a day where robotic help would keep the world running while humankind is freed up to pursue lives of meaning and/or leisure. I believe my daughter’s generation will be one in which every individual can develop their innate talents — to realize their true calling in life. If we all worked for love rather than money, what vocations would we enter? If basic food, clothing, and shelter were rights given to all rather than a privilege granted only in exchange for labor, how many more of us would make real and meaningful contributions to society? How much more would all of us benefit? J.K. Rowling, whose Harry Potter novels have sold over 44 million copies, is a perfect example of what can happen when we provide an environment for people to pursue their dreams. She is famously known for having written much of the novel while on government assistance. I wonder how many J.K. Rowlings are slaving away in a 9-5 because society’s current structure prevents them from sharing their true talents with the world? How many Motzarts are locked away in an accounting job right now?

This all sounds great… until we snap back to 2011 and remember that all of those mind-numbing, unfulfilling jobs provide the bulk of our economy today — people pay for food, clothing and shelter with money from their labors. By removing the prospect of employment, automation threatens to push a large part of society into poverty, while making a small part of it extremely rich — a trend that’s been happening in the US for just as long as we’ve been replacing people with machines. Perhaps it’s time to create a governmental “transition team”, charged with figuring out the end game for automation, and helping those who are displaced to find a role in the Post-Employment Era. Unfortunately, most of the world seems blissfully unaware of the reality of automation… our politicians and journalists are either unable or unwilling to connect the dots.

“automation threatens to push a large part of society into poverty, while making a small part of it extremely rich”

But there are a handful of people who are discussing and even planning for the Post-Employment Era. Among them, Marshall Brain has some of the most intriguing ideas about how to best transition us to “create a society that takes advantage of the leisure that robots can provide”. I look to groups like the retired community, who, freed from the need to work in order to survive, still make meaningful contributions to society. I ponder if we really need to spend $.30 of every dollar on defense, and how much a fraction of that wealth could be used by a “transition team” to help us plan for the future and cope with the present. I wonder if even the rich and powerful would not benefit if America moved to a more European model of social welfare, where the resources and productivity of a nation are more equally shared among all of it’s citizens.

I’m cautiously optimistic of where automation is taking us, but I’m healthfully fearful as well. I’m fearful that we won’t get to the source of our “unemployment problem” until we’ve hit 15 or 20% unemployment, our economy is decimated, and our politicans have done more harm than good. I’m fearful of the backlash against automation, and society labeling it as a curse, instead of a blessing. Most of all, I’m fearful that the wealthy and powerful in my country would gladly pass on utopia for more wealth and power… poverty, imprisonment, war, are but a few of the ways that an “unemployment problem” could be dealt with.

Photo credit: Chillout Point

One possible future, Robots as friends

The important thing we must realize is that automation represents a tremendous burden and/or opportunity for all. If you’re lucky enough to be temporarily insulated from today’s “economic downturn”, know two things:

1. At it’s current pace, automation nearly ensures 20, 30, 50 or even 90% unemployment. Maybe as soon as 10 years, almost certainly within 30-50 years.
2. A world in which we don’t plan for that is going to be very ugly. For everyone. Including you.

Automation will become either society’s best friend or worst enemy. It could either mark the dawn of explosive human creativity, or it could result in the enslavement and oppression of all but the most powerful. I am convinced that the world of tomorrow is going to tilt very hard to either utopian or dystopian… there will be no in-betweens.

“we are in dire need of new economic and social contracts”

The data shows us that we are in dire need of new economic and social contracts. Contracts that are honest, open-minded, and ethical; contracts that ensure we understand, respect, and appreciate each human life for the miracle that it is. Vain as they might try, even our politicians and economists admit that the old strategies are not working. We need new rules and strategies to deal with a brand new game. As Tom Frey likes to say “it’s hard to drive a car when you’re looking in the rear view mirror”. The Post-Employment Era is upon us. It’s our responsibility — as a group — to recognize, embrace, and plan for it.

The DaVinci institute will be diving deeper into these issues in future posts, but we’d love to hear your ideas and inputs. Please feel free to comment below.
* Post-Employment Era is a term coined by Futurist Thomas Frey

By Rich Morrow of quicloud