Jobless Recoveries: Exploring Technology’s Role

Lambert here: Muffled policy prescription at the end…

By Georg Graetz, Assistant Professor in the Department of Economics, Uppsala University, and Guy Michaels, Associate Professor in the Department of Economics, LSE; CEPR Research Affiliate. Originally published at VoxEU.

Recoveries from recessions in the US used to involve rapid job generation. During the 1970s and 1980s, the first two years of recoveries saw an average increase in employment of over 5%. But since the 1990s, the job recovery engine has slowed down, and the first two years of recoveries have generated, on average, less than a 1% increase in employment (Gali et al. 2012). This recent joblessness of recoveries exceeds what we would expect based only on the recovery of GDP, and has caused concern among policymakers. In our latest research, we investigate whether the jobless recovery is a wider problem that plagues developed countries outside the US, and whether modern technologies may be an underlying cause (Graetz and Michaels 2017).

The possibility that technology may be causing jobless recoveries in the US has been proposed in a widely cited study (Jaimovich and Siu 2012). The authors argue that middle-skilled jobs – often involving routine tasks that are particularly susceptible to replacement by new technologies – might be permanently destroyed during recessions. The displaced workers are then forced into time-consuming transitions to different occupations and sectors, resulting in slow job growth during the recovery. Other explanations have been proposed that emphasise not the role of technology, but that of extended unemployment benefits or the decline of unions’ ability to influence restructuring during recessions. But the possibility that technology may be responsible for jobless recoveries is perhaps of more concern, since it is not dependent on specific institutions or policy choices, and could therefore be affecting other developed economies.

To appreciate concerns about the possible effect of technology on jobs, consider its long-run effects on employment. Following the seminal work of Autor et al. (2003), recent research (Goos et al. 2014, Michaels et al. 2014) demonstrates that across the developed world, new computer-based technologies are replacing routine-based tasks, including routine white collar work. So, if the technology-based mechanism that Jaimovich and Siu propose is responsible for jobless recoveries, we might expect its effects to be evident throughout the developed world.

To investigate this possibility, we put together data on recession dates, employment, and value-added for 28 industries in 17 countries between the years 1970 and 2011. This period spans 71 recoveries, giving us ample opportunities to test whether recent instances differed from earlier ones, and whether technology is bringing about any changes. We first examine whether recoveries that took place after 1985 differed from earlier ones – and if so, how. Across the 17 countries, we find that recent recoveries involved a slower growth of GDP, but not a significantly slower recovery of employment. In this respect, the jobless US recoveries seem to be the exception.

Second, we examine recoveries in industries that use routine tasks more intensively, including parts of the financial intermediation, retail, and manufacturing sectors. These industries were more prone to technological change, including automation. Across the developed economies that we study, routine-intensive industries experienced sharper recessions and slower recoveries (compared with the periods of expansion) even before 1985, but they were not worse affected in their employment growth in more recent recoveries.

But in the US, where recent employment recoveries have been slower, the routine-intensive industries stand out, having faced slower employment recoveries of late. We further show that our findings are not specific to routine-intensive industries but to all those that are exposed to technological change.

To do that, we focus on another indicator of new technology adoption, the use of industrial robots. Building on our previous work (Graetz and Michaels 2015), we examine the tasks that robots are nowadays capable of performing, match these tasks to occupations, and then measure the share of each industry’s employment that was made up by replaceable occupations in 1980, before industrial robots became important. This gives us an indicator of industries’ differential exposure to robots.

Although industries with high shares of jobs that are replaceable by robots (especially car manufacturers and the chemical and electronics industries) differ from routine-intensive industries, the patterns we find over time are quite similar in the two cases. Industries in which employment is prone to replacement by robots did not experience more jobless recoveries in recent years across the developed countries that we study.

Third, we examine whether workers from different skill groups are differentially affected by joblessness in recent recoveries. We focus mainly on middle-skilled workers – typically those with high school degrees or some post-high school education but less than a full college degree. Middle-skilled workers’ jobs often involve more routine tasks, which are more prone to replacement by computer-based technologies.

We find that across the developed countries, middle-skilled workers have not suffered more employment losses in recent recoveries. In other words, there is no evidence that recoveries across the developed world are hurting middle-skilled workers who are particularly vulnerable to technological change.

Finally, we examine whether middle-skilled workers are worse affected in recoveries in routine-intensive industries, where technological replacement might be particularly pronounced. Once again, we find that across our 17 developed economies, middle-skilled employment in routine-intensive industries has not performed particularly badly in more recent recoveries.

Taken together, our results suggest that in developed countries outside the US, modern technologies are unlikely to be causing jobless recoveries. Our results do, however, pose a puzzle as to the nature of recent jobless US recoveries.

It is possible that US technology adoption is somehow different to that in other developed countries and that this is contributing to jobless recoveries. For example, Bloom et al. (2012) show that US multinationals achieved more productivity gains from using information technology than their European counterparts, so it is possible that job creation patterns in the US also differed.

At the same time, the extension of US unemployment benefits in recent years may have played a role in explaining slow employment recoveries. Meanwhile, European labour markets have become more flexible, which may have contributed to their robust employment growth during recent recoveries. Exploring these possibilities is an important task for future research.

References may be found in the original post.

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About Lambert Strether

Readers, I have had a correspondent characterize my views as realistic cynical. Let me briefly explain them. I believe in universal programs that provide concrete material benefits, especially to the working class. Medicare for All is the prime example, but tuition-free college and a Post Office Bank also fall under this heading. So do a Jobs Guarantee and a Debt Jubilee. Clearly, neither liberal Democrats nor conservative Republicans can deliver on such programs, because the two are different flavors of neoliberalism (“Because markets”). I don’t much care about the “ism” that delivers the benefits, although whichever one does have to put common humanity first, as opposed to markets. Could be a second FDR saving capitalism, democratic socialism leashing and collaring it, or communism razing it. I don’t much care, as long as the benefits are delivered. To me, the key issue — and this is why Medicare for All is always first with me — is the tens of thousands of excess “deaths from despair,” as described by the Case-Deaton study, and other recent studies. That enormous body count makes Medicare for All, at the very least, a moral and strategic imperative. And that level of suffering and organic damage makes the concerns of identity politics — even the worthy fight to help the refugees Bush, Obama, and Clinton’s wars created — bright shiny objects by comparison. Hence my frustration with the news flow — currently in my view the swirling intersection of two, separate Shock Doctrine campaigns, one by the Administration, and the other by out-of-power liberals and their allies in the State and in the press — a news flow that constantly forces me to focus on matters that I regard as of secondary importance to the excess deaths. What kind of political economy is it that halts or even reverses the increases in life expectancy that civilized societies have achieved? I am also very hopeful that the continuing destruction of both party establishments will open the space for voices supporting programs similar to those I have listed; let’s call such voices “the left.” Volatility creates opportunity, especially if the Democrat establishment, which puts markets first and opposes all such programs, isn’t allowed to get back into the saddle. Eyes on the prize! I love the tactical level, and secretly love even the horse race, since I’ve been blogging about it daily for fourteen years, but everything I write has this perspective at the back of it.


  1. watermelonpunch

    Unemployment benefits in Germany are WAY WAY more generous than even the most extended Unemployment back in 2010 or so in the U.S. I know this. And I believe it’s the same in a lot of other developed countries comparatively. So I’m not buying the unemployment thing.

    I was never buying the technology thing. Only because I’ve noticed that way way more than say even 10 years ago, but especially since 20 years ago, workers in particular jobs have been expected more & more to do their own clerical work. So I don’t buy that the robots replaced the secretaries. Those jobs changed, but the work didn’t go away. It’s just that other people have had to put in more time or sacrifice quality work to do it themselves.

    What I do know is that a lot of the rank & file IT jobs, clerical, customer service, and even accounts jobs, that used to be out there are no longer out there, because now they’ve been outsourced to h1-b outsourcing companies and other countries.
    I know people who work at companies in my area where that’s happened, where there used to be more people in more jobs locally.
    The scariest part about that is for the future. Who will move up? Eventually all the jobs at all levels will be completely outsourced because there won’t be anyone to move up into any higher positions either once those people retire, because there won’t be anyone from the ranks to promote into them… except somewhere else.
    And then who will have jobs to buy anything or afford any services locally, to support other jobs in the community?

    India is where I hear the most. There are just tons and tons of jobs people know were sent to India, or Indian outsourcing companies, in this area. Then people wonder why people in my area (in Pennsylvania) have been so hostile toward NAFTA, foreign trade agreements, and immigration? It’s no mystery. All our best middle class jobs really were taken away and given to foreigners, while we as customers, are expected to, or have no choice but to, continue favouring these companies with our custom.

    People aren’t stupid. They know who they’re training to replace themselves. They know it’s not robots. We don’t need any study to explain this. We know what’s happened.

    1. Marco

      “…workers in particular jobs have been expected more & more to do their own clerical work”

      This is especially true in software development where in the recent past firms had dedicated “business analysts / QA” (usually lower-paid making $35-50k) who worked with non-technical stakeholders / clients to draw up a requirements document. Now for many small to medium-sized software projects it is expected that mid-senior software engineers ALSO assume role of business analyst.

      1. watermelonpunch

        Yes, so maybe a robot (some type of automation) took 5-20% of a job over a period of years. But the other 80-90% was just shoved into the workload of someone else… probably about 5% of the job was simply lost and isn’t being done anymore or not done well, or with less quality, because that person whose workload it was shoved into simply doesn’t have the time or resources to do it efficiently and well.

        It seems as the years go by, I know more and more people who’ve described bizarre counter-productive illogical work organization or inexplicable inefficiency issues in their jobs, across a wide range of industries, from doctors to IT, from government to manufacturing. And it’s mostly in the realm of lower level administration & admin support work… the jobs supposedly taken by robots.

        In many cases, it seems like throwing away a dollar to save a penny.

        Even if you factor in employee healthcare benefits, the math doesn’t add up.
        (Yes, I’ve done the math at times, to try and make sense of some of these situations!)

        Some people I know believe it’s purely punitive on the part of TPTB. But though it feels that way, that doesn’t make much sense, unless you believe the people making the decisions have zero incentive to care about efficiency.

        1. Disturbed Voter

          Distorted finance creates distortion across all business segments. A non-managed business cycle would have been sharper down and sharper back up … but then the status quo investors would have lost their shirts.

          1. watermelonpunch

            I’ve suspected that, but don’t have the expertise to really fully understand the chain of events. In some cases I can see how it could happen, but generally that cause doesn’t seem to apply to other situations… yet the same thing happens.

    2. MoiAussie

      Robots are not the issue. It is the internet itself that makes most of the outsourcing and offshoring possible. I bet Vint Cerf and Tim Berners-Lee never dreamed that their wonderful creations could have such destructive social consequences.

      1. Mark P.

        ‘It is the internet itself that makes most of the outsourcing and offshoring possible.’

        Yes, for a dozen years I’ve been telling people this. It is technology that’s enabled American companies to terminate large numbers of American jobs but the technology in question was and is instantaneous global networks.

        1. watermelonpunch

          Yeah but Germany has access to the internet, and they’re not offshoring their best jobs, right?

          1. Mark P.

            They’re sending many of them to Eastern Europe. It’s offshoring in the context of the Eurozone.

    3. Ed

      “The scariest part about that is for the future. Who will move up? Eventually all the jobs at all levels will be completely outsourced because there won’t be anyone to move up into any higher positions either once those people retire, because there won’t be anyone from the ranks to promote into them”

      Why is this a problem? Why would Chines and Indian companies want to promote non-Chinese and non-Indians into the higher positions?

      1. The Heretic

        It is a problem from the viewpoint of American and Canadian professionals and workers. We are being de-skilled via the lack of opportunity to gain experience and expertise, when jobs and projects are outsourced to other countries. Our country loses, the people lose, even as some shareholders and executives profit.

      2. watermelonpunch

        I should’ve put this in context. I know of American workers in these kinds of supervisory positions overseeing a bunch of outsourced people in India, for example. Of course they’ve still got their jobs. But for how long, and who will then replace those people in those even better jobs… the even better jobs will have to be outsourced too.

        Seems to me that this will play out to be a very few people with good jobs, and nobody else who can afford their services… I don’t think this is going to work.

  2. Anonymous

    I have an Indian friend, now an American citizen, who made the following observation about H-1(b) programs:

    He says that recruiters would far rather hire an H1-(b) worker than an American citizen, even if they pay them more. This is because they can have complete control over them. They can’t take another job, without a lot of bureaucratic hassle, but if they lose the job they’ve got, they get sent home. It’s a power trip.

    My friend’s sister-in-law, also Indian, graduated with a bachelor’s degree in computer science from an American school. Recruiters were very interested in her until they found out she was a green card holder (she’s now a citizen) and then they dropped her like a hot potato.

    My friend–who originally came to the US illegally, or rather his father did–not only voted for Trump, he sent him money.

    1. watermelonpunch

      I know plenty of people who think it’s punitive control freak power trips too.
      But it has to involve a $ payoff somewhere.
      Probably in HR and Labor Law regulation compliance savings, because people over a barrel won’t complain about all sorts of things that employers might do to save money at the expense, or even danger or hardship, of employees.

      I was listening to a podcast of On Point Radio, and they were talking about the dairy farmers and their use of undocumented immigrants to do the work another couldn’t find Americans to work who were willing to work who are willing to work seven hour shifts without breaks, six days a week, 24 hours a day, no vacations, take no sick time. And they were using this as an argument for more immigration or against stopping immigration, or against deportation of undocumented immigrants.

      A BIG reason that a lot of people local to me are angry about immigrants, random people I’ve heard complain about this over the years (people I’ve talked to in a variety of settings), is that there are ordinary citizens going to jobs expecting their rights under labor laws and safety laws, and they aren’t hired for the jobs or they’re fired from the jobs because there are other people who are too scared to stand up for those rights. Immigrants who are too scared to complain about grossly and needlessly dangerous working conditions, or willing to settle for just harsh working conditions and very low pay and a lack of other compensations like healthcare benefits or sick time.

      So I’m not sure that makes sense to argue for immigration on the basis of having a workforce that will put up with horrible treatment and lack of protections, and pushing Americans out of the job because they aren’t willing to risk their lives for lower pay and worse conditions than a job like one at a fast food restaurant.

      This certainly isn’t going to win over supposedly racist or anti-immigrant citizens, in fact it’s not going to win over any workers who actually want fair wages and reasonable humane working conditions, and logically, it SHOULD NOT WIN OVER ANYONE WHO CARES ABOUT THE WELLBEING OF IMMIGRANT PEOPLE because the argument here is advocating for the continued ability of employers to severely MISTREAT SUCH IMMIGRANTS.

      Who’s the racist here? The person who wants to have employers answering to safety concerns for ALL workers? Or the person who wants non-white foreign people trapped in bad working conditions?

      I’m not saying racism doesn’t come into it a lot. But it doesn’t happen in a vacuum, and I don’t think the covert insidious systemic type is any more moral than the overt reactionary kind, in fact possibly the opposite.

      Furthermore, this argument’s logic would suggest that the employers of such immigrants do best (and most profitable) under immigration laws that are strict and severe in the written law, but quite lax in the actual enforcement. In other words, lax enforcement that allows people to continue to work as undocumented, but restrictive so that they can never assert any real rights that citizens and legal residents are supposed to enjoy.

      1. watermelonpunch

        I guess the robots topic really sets me off.
        Generally because every time I come across a robots taking the jobs story, when you pull back the curtain, they’re never robots, they’re humans who are treated like robots (inanimate objects).

      2. LT

        Look how fast Black people were seen less and less on domestic jobs scene after the previous civil rights movement.

      3. Gee

        Im not sure race has to have anything to do with it. If somehow the country next to us were poor white people sneaking over the border illegally to make better wages, they would still be seen as the people that can be exploited. It’s almost irrelevant that they are of a different race. What matters is that they cannot exercise the rights that a US citizen would have, and rich business owners who have no scruples and no moral compass will happily exploit them to the fullest extent possible. I suspect that if they could enslave them, they would do so.

        1. Mark P.

          If somehow the country next to us were poor white people sneaking over the border

          See forex the British reaction to the influx of cheap Polish labor.

        2. watermelonpunch

          Yes, that’s my point Gee. Thank you.

          Without any checks, yes, they would enslave or do whatever. Only checks and regulations and laws and enforcement and fair rules can stop corporations and moguls and the like from doing this. They’ll take advantage of the low hanging fruit, and as they do that, the pull down the branches so that everyone is brought down.

          Prejudice is not the root of the issue, and as a talking point it’s a red herring. It’s about othering and blaming the wrong cause of the problem.
          Robots, immigrants, “others”, whatever.

          My paternal grandfather was a white immigrant from Poland. He first worked in the steel mills and had most of his body burned in a (probably avoidable) fire at the mill. He then went into the anthracite coal mines near Scranton. The conditions were inhumane. My other grandfather was the son of immigrants and started working in the coal mines at age 12.
          His wife, my grandmother, her father was an immigrant coal miner and lived in the coal mine owned village and shopped at the coal mine owned store.

          They’ve done it before, they do it now, they’ll do it again.

          I’ve heard stories about how the eligible voter coal miners basically had to vote for whoever the mine managers told them to. The coal mine owners had people at the polls to make sure the coal miners voted ‘correctly’…
          Now they just buy politicians so there are no choices available to vote ‘incorrectly’.

    2. ChrisPacific

      He is 100% right and it’s why the focus on relative pay rates is a smoke screen. The difference in control is real and can be quantified in dollar terms.

  3. P Whittaker

    once upon a time companies had staff at the head office to answer questions or trouble shoot problems with their products or service. now we have call centers in India where “your call is important to us” is finally answered in an accent you may now be able to decipher. As an ex pat limey I know about not always being understood, they have my sympathy. I have a not yet activated credit card sitting due to the automaton refusing to accept my date of birth, and until I get to speak with a live person, it and the company can go to hell.

    1. watermelonpunch

      It took me 3 months and about 20 support tickets to transfer my domain recently. I’m unsure what the problem was. It could’ve been a communication/language barrier. It could’ve been that the tech support wasn’t up to par (they seemed to be completely unaware of ICANN particulars, and unwilling to listen to my explanation), or it could’ve been a scam… they were attempting to get me to do something that would’ve extended the time I would have to wait to transfer, maybe to try to get me to renew with them before transferring? Honestly, I don’t know for sure which was going on. But I was with this company for 18 years, and over that time almost everything eventually was outsourced to India, and with it, the service and tech support went down the tubes, and I became more & more convinced this company was about scamming.

      In my area some years ago Sallie Mae outsourced to India. It started around 2000.
      At first they laid people off and they quit in anticipation of the outsourcing. Then they realized they still had work, so they hired temps to do it (for less pay) in the interim over a period of a year or so. They had Indians come to learn the jobs from the people working there… most who were laid off too eventually.
      Then, within a couple of years, the news started coming out about how people with student loans were experiencing problems getting customer service. By 2008 I think a quarter of the company was sent to India (and some other places).
      Then by 2009 the news was filled with angry complaints of students having trouble getting customer service after having their identities stolen and things like that. And they were up for a contract renewal I think. There may have been (rightly) some requirement for background checks of people working on the student loans. So finally Sallie Mae decided to reshore jobs.
      Obviously this involves taxpayer money, and jobs in an area that was hard hit in 2009. So there was a lot of animosity, and it was covered a lot in the local news at that time.
      In the end, I’m not sure how many jobs were brought back to Pennsylvania or specifically northeastern PA location. I know that there are far less people employed by Sallie Mae here than there were back in the 1990s, when it was a big employer in northeastern PA.

      And I do know this issue played prominently in the election between Lou Barletta (the anti-immigrant former republican mayor of Hazleton and big Trump supporter), and Kanjorski (the democrat who was pro-Iraq-war and notorious for bringing low quality jobs to the area by companies who’d later skip town without paying their tax bills).

  4. Jef

    Its no puzzle…there is no recovery. “Jobless recovery” is the most ugly oxymoron I can think of right now.

    The patient is completely cancer free…unfortunately they are also dead.

    Banking/finance shenanigans and bubbles induced increase in GDP does not a recovery make.

    1. Skip Intro

      Indeed, ‘Recovery’ is a propaganda term used to describe the goosing of stock/asset prices and the rise of an overly financialized GDP. A jobless recovery is not a recovery, the technology taking jobs is financial innovation which creates phantom recoveries from QE and helps an increasing portion of the of the economy get skimmed off by the rentier class. If FIRE revenue was subtracted from GDP rather than added, we wouldn’t be asking about recoveries at all.

      1. andyb

        There hasn’t been a recovery nor will there be until the great reset (coming soon). 3 of the key factors of economic growth; GDP, employment, and inflation have been massaged and manipulated to a fare-thee-well. Factoring in true inflation over the last 10 years (somewhere between 7-10% per annum–and that’s compounded) indicates that we have had negative GDP for the entire period. And we all know that the unemployment rate is a cruel joke; thanks Obamacare. But the real villain is the criminal FED (ZIRP and QE) and the complicit bought and paid for Congressional critters.

    2. SomeCallMeTim

      How about measuring recovery by median wage levels? The broader discussion might’ve been different over the last few decades using this yardstick.

  5. John

    I agree. This “technology taking our jobs” trope is overplayed. Employment is very low in the developed countries, and I think it’s mostly a result of globalization and the abundant labor market. Of course a big part of it is that the real economy hasn’t been functioning well for decades. Since the 1970’s, there has been a crisis of overproduction/under-utilization of capacity in manufacturing, causing profit rates to steadily fall. Since this is the lifeblood of a modern economy, the developed nations experienced stagnation until they blew massive asset bubbles (Japanese real estate in the 80’s, the American stock market in the 90’s, American real estate in the 00’s, Euro bubbles in the 00’s), which was enabled by the system of floating exchange rates and the wave of privatization and deregulation. The huge expansion of private debt helped mask these problems, but the financial crisis exposed them until the subsequent bailouts/money-printing rounds kept the party going.

    This is what neither the Keynesians nor the neoclassicals understand. The root causes behind our economic malaise are structural, and they’ll rear their ugly head again at some point (requiring another bailout). Not even fiscal stimulus can solve this problem, because while it can boost demand in the short term, it won’t change these structural issues plaguing the real economy (namely, falling profit rates in manufacturing) that impede us from getting “normal” 2-3% GDP growth.

    But of course it was bound to happen eventually. We have a finite amount of space and resources on this planet, but capitalism needs infinite growth. At normal growth rates, the global economy would double by 2060 and double again by the end of the century. Not even with a huge African boom are we going to achieve that. If it’s not capitalism that gives us that 2-3% growth rate, but rather industrialization and urbanization (let’s not forget that the global economy grew at a snail’s pace in the 16th, 17th, and early 18th centuries), we may be stuck with secular stagnation for the foreseeable future. At least until a world war blows everything to pieces and we get to build again.

    1. MoiAussie

      The most important intellectual challenge ahead is how to shrink and then stabilize the world’s economy at a sustainable level, while enabling people to live healthy, meaningful and satisfying lives. I suspect the solution involves reeducation camps for the rich and state confiscation of of their wealth – the ultimate libertarian nightmare. Libertarians can move to Mars if they don’t like it.

        1. Bill Smith

          One child per couple has been a disaster for those countries that tried it. Or at least those countries that tried it think so. China, for example. Been walking that back in the last few years. Vietnam too.

          1. Tim

            1 child is a little extreme. 2 children is closer to the required replacement rate, and would have far less unintended consequences.

          2. hunkerdown

            Only scams and fertility cults need a continuing fresh supply of marks. Nature doesn’t need replacement levels of reproduction. Also, Nature bats last.

            In a different milieu, not least culturally (in many Asian cultures, the status of young women in the family is low, however equal or not their status may be in public and in the markets), the results of population decline might not be nearly so disastrous.

      1. John Wright

        We will be closer to this day when the developed nations’ GDPs start taking negative adjustments to their stated GDPs for the harm done to the common environment because we are not at a sustainable level..

        This could be referred to as “Sustainable GDP”

        This would be similar to a corporation restating earnings due to an item not properly accounted for.

        Even climate change induced activity (flood prevention) adds to GDP, when it should subtract from it as it is a charge attributable to prior WW GDP creation.

        I heard one speaker hazard that the sustainable population of the USA is about 100 million.

        That is a number that should cause TPTB to question a lot of their economic assumptions.

        The sustainable GDP of the USA could be quite small.

      2. John

        Yes. The whole system is predicated upon huge amounts of consumption ad infinitum. As I mentioned above, at 2-3% GDP growth the global economy would be growing at a breakneck pace. Eventually though Keynesianism fails, because you run out of worthwhile infrastructure to build and yet you still need to boost demand somehow to get that magical 2-3% growth rate. People have to understand that we’re in for ‘secular stagnation’ indefinitely. The problem is that they’re addicted to the 2-3% growth rates and if they don’t get it, they get disillusioned with the system and elect dangerous politicians who promise to restore the country to how it was in the good ol’ days. If we want to keep capitalism, it’s going to be in a Japanese style, low-growth economy, and it’s up to us to make sure that people live healthy, meaningful, and comfortable lives–all while trying to preserve the planet. This last bit is the hardest part, because if we want to keep the earth inhabitable, we need to drastically reduce consumption, and that will crush our economies.

        All things have to come to an end, and eventually, the people will have to seize the means of production and create a new economic system if humanity is to thrive on this planet.

    2. Ed

      Agree with all of this.

      To be less snarky than my earlier comment, you simply don’t have automation and other labor saving devices in the middle of a labor glut.

      Its certainly possible to automate and/ or rationalize most jobs, but I have a strong suspicion of examples of this actually happening in the present are mostly investment scams.

  6. Jesper

    How long would it have taken the authors to produce that report using the IT of 30 years ago?
    The statistical software is a LOT more user friendly and the hardware the software is running on is a lot more powerful. Comparing the hours worked now and 30 years ago for producing that report should give som indication of how many jobs are disappearing due to well executed and well implemented IT.

    1. Yves Smith

      I beg to differ. The existence of spreadsheets allows people to waste a lot more time dorking with models and doing unnecessary runs when they’d have to be much more thoughtful and think through how they’d do their data collection and analysis. I started out on Wall Street doing financial analysis by pulling data out of annual reports, putting it into green ledger paper, computing results with a calculator, and preparing summaries that secretaries typed up on typewriters. We still got pitch books done using prices at closing that would be Fedexed, faxed, or carried to the client for presentation the next day.

      The ease of doing more had led to a lot doing more. Not much of that “more” is necessary of value added. IMHO word processing was a bigger productivity improver. Compuserve databased greatly degraded the quality of info and staff competence. People now run zillions of scenarios because they can, but the data overload doesn’t improve decisions all that much.

      In other words, yes there clearly has been productivity improvement, but not as much as you imply.

      1. cnchal

        Perhaps economists can be enticed into determining if the number of bullshit jawbs increase with the square of processor speed increase? We might be getting close to a limit.

  7. Jay Sullivan

    There really is no ‘puzzle’ to it. We are not in a recovery. If there are no jobs there has been no recovery. Banks, insurance companies, stock brokers and real estate speculators have gotten back on their feet thanks to tons of help from the Federal Reserve, but the real people trying to do the work and trying to live in this country have not recovered, and we are hanging on by our fingernails.

    1. pete

      As someone who studied economics I think you give them far to much credit. They are monsters

  8. Douglas P Anthony

    In decades as an IT contractor into the Fortune 500, I gained these perspectives regarding those companies:
    1. IT budgets continued to grow as tech “discovery” of opportunities on large and small scales were a significant part of the budget – and most of the glamour as far as getting promoted;
    2. The companies “continuing seeking” creates companies with higher fixed costs for a range of production, but lowers, intentionally, variable costs (reduces tasks that can be automated);
    3. Significant balance sheet reductions (of liabilities of employee costs) were a stated goal of such companies (pleasing the Street and keeping share prices higher);
    4. Outside use of contractors/consultants would stabilize employee costs as the costs of outside labor was usually charged to projects that were capitalized – the end of any project would allow the dismissal of outside labor without affecting the permanent employee count . If these were (increasingly) contracted labor from overseas, variations in their labor could go entirely uncounted in the contraction or any subsequent expansion of their use.

    So, in the early days of a recovery, there would probably be some under-utilization of the permanent employee base and possibly a lower level on IT projects. Once confidence was gained that budgets could be expanded, the project funding/study/commissioning would take time to complete before the augmenting of the labor force would occur; as the permanent employees would be seen as more supervisory, these early stages would barely show up. So the IT expansion/contraction cycle, its delays and use of outside labor would affect national employment counts before full confidence was achieved.

    This is just to add a little detail to how IT employment cycles could obscure and delay re-employment after a pullback.

  9. Loblolly

    WeTechnology always makes more jobs and it usually frees up labor to do more sophisticated tasks.

    All the new jobs are being exported. This a trend that is consistent back to the first overseas call centers. The software industry has been outspoken about H1-B visas since the mid 2000’s.

    How about TISA? Trade in Services Agreement? Exists solely to roll back any and all worker protections and rights anywhere and everywhere. Because not treating humans as poorly as possible is anti-American and hurts America.

    The America that already does not care about the half or more of its citizens who do not benefit from unfettered capitalism.

    Just as a reminder of who the Democratic Party fights for I like to share this video of Barack Obama lobbying for the TPP, the other oligarch stroking anti-American trade bill.


      1. Minnie Mouse

        Speaking of foreign meddling with elections, the ISDS investor-state extortion shakedown regime buried inside TPP and NAFTA enables direct foreign meddling into the legislative process. Do not pass any law that may let consumers know where their food comes from, or your treasury may get ripped off for billions by a WTO kangaroo court.

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