Friday, February 3, 2017

Jobs: I believe we've passed a tipping point

I've been warning for years that many jobs are going to be replaced by automated solutions, and that most of the jobs currently available are candidates for automation.  I know many of my readers have said that they're 'insulated' from that by requirements for technical knowledge, or specialization, or other factors;  but things have now moved so far, so fast, that I believe we're 'over the edge'.  I now expect the number of jobs - and the number of people employed - to diminish on a regular basis as a percentage or proportion of our population.  The situation is going to be worse for those countries still heavily oriented towards manufacturing, such as China.  They're likely to lose jobs even faster.

I'm preparing a long article (which may become a series of articles) about what this implies for us as a nation and as a society.  It has potentially very serious consequences across a great many areas, from politics, to immigration, to social services, to the structure - even the type - of our communities.  Today, I'd like to give you some food for thought from two sources.

First, here's a 2014 video titled 'Humans Need Not Apply'.

Sobering, isn't it?  Bear in mind that it's more than two years old - and in the intervening period, every single thing it forecasts has become even more true.  For example, just yesterday I linked to IBM's Chef Watson artificial intelligence application, taking input about the ingredient(s) you have on hand and listing recipes or meals you might prepare with them.  That whole process is automated.  There are no human hands or brains involved.

The second source to spur your thinking is an article in the Wall Street Journal titled 'The End Of Employees'.  Here's an excerpt.

Never before have American companies tried so hard to employ so few people. The outsourcing wave that moved apparel-making jobs to China and call-center operations to India is now just as likely to happen inside companies across the U.S. and in almost every industry.

. . .

The shift is radically altering what it means to be a company and a worker. More flexibility for companies to shrink the size of their employee base, pay and benefits means less job security for workers. Rising from the mailroom to a corner office is harder now that outsourced jobs are no longer part of the workforce from which star performers are promoted.

For companies, the biggest allure of replacing employees with contract workers is more control over costs. Contractors help businesses keep their full-time, in-house staffing lean and flexible enough to adapt to new ideas or changes in demand.

For workers, the changes often lead to lower pay and make it surprisingly hard to answer the simple question “Where do you work?” Some economists say the parallel workforce created by the rise of contracting is helping to fuel income inequality between people who do the same jobs.

No one knows how many Americans work as contractors, because they don’t fit neatly into the job categories tracked by government agencies. Rough estimates by economists range from 3% to 14% of the nation’s workforce, or as many as 20 million people.

. . .

Eventually, some large companies could be pruned of all but the most essential employees. Consulting firm Accenture PLC predicted last year that one of the 2,000 largest companies in the world will have “no full-time employees outside of the C-suite” within 10 years.

. . .

Steven Berkenfeld, an investment banker who has spent his career evaluating corporate strategies, says companies of all shapes and sizes are increasingly thinking like this: “Can I automate it? If not, can I outsource it? If not, can I give it to an independent contractor or freelancer?”

Hiring an employee is a last resort, Mr. Berkenfeld adds, and “very few jobs make it through that obstacle course.”

There's more at the link.  I urge you to click over there and read the article in full.  It provides many examples across the spectrum of corporate activity, showing how 'normal' jobs have been outsourced, replaced, or done away with entirely.

As I said earlier, I'm working on an in-depth look at this problem, and what it's likely to mean for many of us.  The two sources above provide foundation material that's very important.  It's worth your while to go through them in full, and think about their implications for yourself.



Ron said...

Have companies asked themselves how people will be able to buy their crap if so few have jobs?

0007 said...

One has to wonder just who these/those companies figure will be buying their products when nobody has a job except for the beans counters and the CEOs

Akatsukami said...

Note that this describes how companies are doing without employees, not without workers.

Ron said...

Will workers have the same disposable income as former employees to purchase goods and services? I am not well schooled in economics, but it seems that this business strategy will result in less demand for consumer oriented businesses, less B to B businesses, less schools of higher education, less tax revenues, etc.

Pootie Tang said...

This is a similar situation with the company where I work. About 40% of the staff are contractors, from the janitorial staff to the skilled technicians and tradesmen. I'm one of those technicians. It sucks. You're discriminated against when it comes to parking privileges (about the only thing you can legally do these days). But from out customer's perspective it makes sense. When it comes time to cut the budget, they just adjust the funding level with the contracting company. Let them deal with the personnel issues.

Cedar Sanderson said...

Not sure chef Watson is a good example just yet. it was interesting to plug options in, but without a human testing the results, you're going to wind up with... well, it might be food, but it won't be good food. For an example, it gave me an option that called for 5 cups of Japanese eggplant. I don't have that in my fridge, so I changed it to carrots, and then the recipe called for 1 carrot, sliced. I suspect that 5 cups of cubed artichoke is not even remotely equivalent to a single carrot.

if the workforce and job place changing? Absolutely. But I think for a long time yet, the robots will need human minders, to keep them from putting a single carrot in the casserole when you need more like ten carrots. Or something.

Bob said...

This revolution is coming at a stunningly fast pace and the elites pushing it do have a solution to the disastrous rise in unemployable humans... eliminate them. The mindset that exists at Planned Parenthood is just the tip of the iceberg. From eliminating unwanted babies to eliminating unwanted humans is a small step indeed for them and already in the plans, an unfortunate but necessary solution. And they do not care.

So there's your real nightmare: Not one of being unemployed and/or unemployable, but one of being eliminated... for the good of the whole, of which six and a half billion humans are not a part of.

Keep in mind these elites that are bringing us what they think will be a shining future fully believe that the maximum number of humans on this planet should be no more than 500 million, and they are planning on "disposing" almost seven billion of us excess meatbags one way or another, the easy way or the hard way, makes no difference to them.

Are you - or ANY of your offspring - going to be one of the "Chosen" survivors in this world of tomorrow? Don't bet on it.

Even if you survive the coming pandemics, you will not survive the resulting famine.
And if by some miracle you do, you will still be an outsider, completely unable to blend in.

Have a nice day.... while you still can. The clock is ticking. It really is.

Peter B said...

"Living wage" strikes again: Robot baristas

lpdbw said...

Regarding "employees" vs. "workers", i.e. contractors, this has been highly influenced by labor law and stupid regulations like minimum wage and Obamacare. Laws requiring you to provide benefits and wages above what value the worker actually provides, and then making it hard to fire them forces you to outsource your production to contractors.

This may be somewhat reversed under the Trump administration. How much, and whether it lasts, and how well that retards the process Peter is describing is an open question. We may see a few years of improved employment, and as the jobs taper down, have a smoother ride because of it.

Or not.

Bill Quick and others have talked about this, and one solution (I'm not yet convinced) is the "Universal Basic Income".

Ron said...

@Bob - That's a nightmare scenario I have been thinking about for some time. With the increases in technology, the ability of the common man to revolt against the elites will eventually come to an end.

kurt9 said...

The "End of Employees" article is about outsourcing, not automation.

I actually work in automation. I can tell you that automating many jobs, particularly in manufacturing, is going to be a long time in coming. I am not concerned about this trend at all.

Peter said...

I design manufacturing test systems for home automation products. It isn't a glamorous job, but I get a front row seat to cutting edge technology in both the consumer and industrial markets. And I get to take them apart and play with them ;)

The automation of jobs is a thing, but it isn't something that happens suddenly all at once. Instead it happens in bits and drabs as some solution to a specific workplace problem is found via a machine and opens up employee's time for other work. Someone who is paying attention and actively trying to keep their skills from becoming obsolete isn't in any danger.

kurt9 said...

Peter, precisely. Automation is an incremental process, one that started 150 years ago, that will continue as an incremental one.

Anonymous said...

I used to design and build business automation systems (I'm now retired), and one I built for a client enabled a task performed by 14 8-hour employees to be done by two employees, each devoting 30 minutes to the task. When the shock wore off, the usual panic about "what to do with the employees" set in, enhanced by the rest of the proposal that would do the same thing for that outfit's other 7 departments. Overall, management was looking at a 35-40% reduction in required staff over 2 years.

I suggested that: 1) they stop hiring for a time, and allow normal attrition to help; 2) re-examine what their business actually did, how it did it, and what kind of resources actually needed to be where, and; 3) shift human employees to tasks that required human creativity, intelligence and interaction and let the automated systems handle the brainless, repetitive stuff.

It took them some real thinking and hair-pulling, but a hiring freeze, stretching implementation to 3 years instead of 2, an attractive buy-out to get some early retires, a business re-org and some training made it all work. You know who got hit the hardest? The drones in HR - 9 employees went to 2, one of whom became part-time and was able to work from home (she advocated for that because she had small kids, and phone, network and computer technology - specifically document imaging and moving most HR functions from paper to inter- and intranet - made it easy to do), and since HR folks rarely have skill sets useful elsewhere in most businesses, the other 7 were casualties

Rob said...

I watched the video, Wow! I did not see anything false on that and a couple of comments were very uncomfortable.
"Bots don't have to be perfect, just make fewer mistakes" was one of them... That is as true as it gets.

Bob said...

Kurt9 and Peter do sound to me like they're "whistling past the graveyard".

Kurt9 said: "Automation is an incremental process, one that started 150 years ago, that will continue as an incremental one."

The incremental stage is almost over.

Post Alley Crackpot said...

Comedy will take longer to automate.

"Waitron? OH WAITRON?"


"There's a fly in my soup ..."


kurt9 said...


I am a control system/industrial automation system integrator. If anyone knows anything about automation, it is me since I do it for a living. I stand by my previous comments.

Quartermaster said...

Kurt, just because it has been incremental to date does mean it will remain so. We can point to many things where there was a tipping point and events afterward ran like dominoes falling.

kurt9 said...

There is no tipping point. Deep learning algorithms, the underlying programming technique driving all this talk of AI, is a real breakthrough. But most of its effect will be realization of decent machine vision (something that still sucks today) and motion control, in the industrial automation scene. But it will not replace humans entirely on the factory floor or construction site. There will always be jobs for good electricians (meaning guys who can design and wire a control panel - not like typical construction electricians), mechanical people and troubleshooting and repair people. Trust me on this. I know what I'm talking about here.

I have no idea on the automation of "office work". However, I will say this. 95% of desk jobs involve information management, which is what computers are designed to do. Deep learning will simply lead to computers that are more capable of decision making and managing information.

The other reason why I think the AI automation take over of all of the jobs is a load of hype is because Silicon Valley is currently in a bubble (one that is ending however). We always get these techno-utopian dreams trotted out during the tech bubbles. Then they go away once the bubble has ended.