Wednesday, January 23, 2013

The more things change

One morning, long before the recession hit, I was following a garbage truck down the street, watching as a large mechanical arm reached out and picked up trash cans, lifted them above the truck and dumped the contents inside.

As I watched, I remembered not long ago when two men would run the routes, one riding on the back of the truck while the other drove the vehicle.  The guy on the back was in charge of 'collection', not a clean job but probably good pay and an on-the-job fitness program.  He was also the socialite, waving to neighbors and exchanging pleasantries.

We used to leave Christmas goodies on top of our can on the last pickup day before the holiday.  Generally it was a big tin of cookies, enough for two.  But I digress.

As I watched the newer truck with its single driver, I wondered what became of the guy on the back.  Obviously his job was cut, a consequence of the confluence of technology and budgetary realities.  One could argue that the development of the mechanical 'garbage arm' permanently eliminated half of the collection jobs.  Fifty percent, gone forever.

I'm no Luddite, I embrace technology and love how it has made my life easier.  The dream of the human race has long been to develop robots to do the dirty work.  The Jetsons had Rosie the Housekeeper.  The Robinsons had 'Robot', whose verbal alerts of impending doom ("Warning, alien approaching!") saved the lives of the family more than once.  He was also a vicious chess player.

Be careful what you wish for.

When the housing market collapsed and the world slumped into the Great Recession, CEOs of companies with large work forces began licking their chops.  Though regrettable, this recession is just what they needed: an excuse to lay off huge swaths of workers.  Millions lost their jobs and found themselves, many for the first time, in the unemployment line.  Their replacements?  Algorithms, robots, and when a live person is needed, temp workers who receive no benefits beyond an hourly wage.  A CEO's wet dream.  Wall Street's Perfect Storm.

And the Middle Class's death knell.

Courtesy of the Associated Press:

"The jobs that are going away aren't coming back," says Andrew McAfee, principal research scientist at the Center for Digital Business at the Massachusetts Institute of Technology and co-author of "Race Against the Machine." ''I have never seen a period where computers demonstrated as many skills and abilities as they have over the past seven years."
The global economy is being reshaped by machines that generate and analyze vast amounts of data; by devices such as smartphones and tablet computers that let people work just about anywhere, even when they're on the move; by smarter, nimbler robots; and by services that let businesses rent computing power when they need it, instead of installing expensive equipment and hiring IT staffs to run it. Whole employment categories, from secretaries to travel agents, are starting to disappear.
"There's no sector of the economy that's going to get a pass," says Martin Ford, who runs a software company and wrote "The Lights in the Tunnel," a book predicting widespread job losses. "It's everywhere."
The numbers startle even labor economists. In the United States, half the 7.5 million jobs lost during the Great Recession were in industries that pay middle-class wages, ranging from $38,000 to $68,000. But only 2 percent of the 3.5 million jobs gained since the recession ended in June 2009 are in midpay industries. Nearly 70 percent are in low-pay industries, 29 percent in industries that pay well.
The implications are startling.  The unemployment numbers remain in the 7's because it's the new reality.  There will be no big recovery this time.  A recovery requires new jobs.  Those jobs are now permanently gone.

We're not alone.  Technology has enabled US corporations to eliminate jobs in other countries as well.  Places like China, Taiwan, India and other developing countries are feeling the same pinch.  It's mind blowing.  For the first time in our history, we're facing the reality of the leaps in technology that have quietly, slowly allowed us to replace ourselves.

The Pollyanna in me says, great - we're free to spend more time with family, enjoy the little things, smell the roses.  Good, right?  The problem is, our society is built upon working, collecting a check, and re-spending that income in our economy.  If we can't do that, major changes will need to take place.

Watch this:

So now, we're faced with the challenge of our time.  How do we rise to meet it?  How must the world change if we're to continue our way of life?  What will the new paradigm look like?  Will we revert to farming our own food?  We won't be able to afford food from a grocery store.  Educating our own children?  The tax base will drop precipitously, making our current education system untenable.

It's difficult to imagine all of the implications, but it's clear we're whistling past the graveyard now, finger pointing as to why the unemployment numbers are still high.  Folks, the numbers aren't coming back.
You’ve been replaced. Technology, outsourcing, a growing temp staffing industry, productivity efficiencies, have all replaced the middle class. The working class. Most jobs that existed 20 years ago aren’t needed now. Maybe they never were needed. The entire first decade of this century was spent with CEOs in their Park Avenue clubs crying through their cigars, “how are we going to fire all this dead weight?” 2008 finally gave them the chance. “It was the economy!” they said. The country has been out of a recession since 2009. Four years now. But the jobs have not come back. I asked many of these CEOs: did you just use that as an excuse to fire people, and they would wink and say, “let’s just leave it at that.”
I’m on the board of directors of a temp staffing company with $600 million in revenues. I can see it happening across every sector of the economy. Everyone is getting fired. Everyone is toilet paper now.

The good news is, you won't need to bake as many cookies for the trash guys.  Post your thoughts in the comments section.


Anonymous said...

Sadly Dave, you're right on the money. I feel for the kids just out of college who can't find jobs but have these enormous loans to pay off.

Paul said...

That's some mighty great and thoughtful writing there, Dave. Guess we just have to keep on truckin' and trustin' and doin our best one day at a time.

Violet said...

i'm good with growing my own food and homeschooling the kids. ;)

Dave Morris said...

Mary, I agree - we are reaching a breaking point with the cost of education outpacing inflation by extreme multiples, and school loans going into default. Responsibility for school loan payments cannot be exonerated via bankruptcy, you're pretty much stuck with them. It's a very unnerving time for those wading into the workforce or making decisions for their future.

Paul, thanks for stopping by.

Kenny Chaffin said...

Yes, well said Dave. Corporations will do whatever they can to cut expenses. We need to cut corporations, that would be a good start I think.