For those of you who believe the Internet will be a transforming technology, it might also be helpful to keep in mind that such transformations can be hugely unsettling, and take quite a long time to become obvious.Still, there is something out of character with job growth coming out of the last handful of recoveries from recessions.
What we historically expect to see is a sort of "shark fin" pattern of job growth. Since 2000, though the fin was almost non-existent after the early 2000s recession.
It is an inverse fin after the "recovery" from the 2008 recession. Does that relate to a broader economic transformation? If so, we are in for a jarring, unpleasant ride, in the medium term.
In 1850, a decade before the Civil War, the United States’ economy was small, in fact not much bigger than Italy’s. Forty years later, it was the largest economy in the world. What happened in-between was the railroads.
Deep changes like this are not unusual. Every so often—every 60 years or so—a body of technology comes along and over several decades, quietly, almost unnoticeably, transforms the economy and creates a different world for business. So the issue is whether mobility, applications and the Internet might be such a wave. The second economy
If so, the changes will take decades to play out.
If something that big is going on with information technology, something that goes well beyond the use of computers, social media, and commerce on the Internet, a second economy is being built. But there will be casualties. When the shift of developed economies "from farm to factory" occurred, there was widespread dislocation. Think of the United Kingdom in the mid-1980s, "A Christmas Carol" and all that.
In the early 20th century, U.S. farm jobs became mechanized and there was less need for farm labor, and some decades later manufacturing jobs became mechanized and there was less need for factory labor.
Now business processes—many in the service sector—are becoming “mechanized” and fewer people are needed, and this is exerting systematic downward pressure on jobs. We don’t have paralegals in the numbers we used to. Or draftsmen, telephone operators, typists, or bookkeeping people.
A lot of that work is now done digitally. We do have police and teachers and doctors; where there’s a need for human judgment and human interaction, we still have that. But the primary cause of all of the downsizing we’ve had since the mid-1990s is that a lot of human jobs are disappearing into the second economy. Not to reappear.
If something that big is going on with information technology, something that goes well beyond the use of computers, social media, and commerce on the Internet, a second economy is being built. But there will be casualties. When the shift of developed economies "from farm to factory" occurred, there was widespread dislocation. Think of the United Kingdom in the mid-1980s, "A Christmas Carol" and all that.
In the early 20th century, U.S. farm jobs became mechanized and there was less need for farm labor, and some decades later manufacturing jobs became mechanized and there was less need for factory labor.
Now business processes—many in the service sector—are becoming “mechanized” and fewer people are needed, and this is exerting systematic downward pressure on jobs. We don’t have paralegals in the numbers we used to. Or draftsmen, telephone operators, typists, or bookkeeping people.
A lot of that work is now done digitally. We do have police and teachers and doctors; where there’s a need for human judgment and human interaction, we still have that. But the primary cause of all of the downsizing we’ve had since the mid-1990s is that a lot of human jobs are disappearing into the second economy. Not to reappear.
Perhaps that is why recoveries from recessions starting in 2000 have been so different.
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