Where Did the Jobs Go?

(Library of Congress photo)

Once, there was an iceman working nearly every street in every town in America, including one of our grandfathers. The disappearance of the iceman and the rise of the refrigerator says a lot about how technology affects jobs — and points out what the presidential candidates are desperately avoiding when they talk about the economy.

My grandfather was an example of the “creative destruction” of jobs that economists (and lately presidential candidates) embrace. Technology both creates and destroys jobs, usually at the same time, and ideally because a superior product came along. Refrigerators were better than iceboxes. Eventually even my grandfather admitted it. If you look at the overall economy, the loss of ice routes was more than made up by new jobs making refrigerators.

The key word in creative destruction, however, is “creative.” Now we’re living in another time not unlike the 1930s, with a jobs crisis that’s partly a massive failure of financial markets and partly a huge technological shift in the nature of work. There’s no question the Great Recession slammed the global economy. But one reason why the jobs market has been so slow to recover is that technology is enabling us to do more work with fewer people — or with people anywhere around the world.

Check out the full blog, “The Iceman Goeth: Politicians Ignore the Biggest Threat to American Jobs,” at the Huffington Post.

The Economist’s Graphic Detail blog sums up the oddity of Facebook: huge, with an enormous customer base, yet with relatively few employees. Well, maybe not so odd. This sums up one of the fundamental ways Internet technology is changing the workforce: more production, fewer workers. In fact, in many cases the customers are doing things that companies used to have to hire people to do (like create content and solve technical issues).

However, this chart doesn’t cover the jobs Facebook created that aren’t actually on Facebook’s payroll. There was no such thing a few years ago as a social media coordinator, or an app developer. And let’s not forget Farmville. That’s harder to nail down.

In The Atlantic, Adam Davidson takes a look at manufacturing jobs in America and hits on an important point that is too often lost: wages alone aren’t the sole reason businesses move jobs overseas. It’s a combination of wages, skills and technology. Workers overseas may be cheaper, but if they don’t have the skills to do the work (or can’t handle the technology), then moving the jobs doesn’t make sense. Companies spend a lot of time calculating these decisions — and they are constantly in flux.

Nearly every manufacturing company in the U.S. goes through this same process: regularly, carefully studying its products to see if they could be made more cheaply in a lower-wage country. The calculation constantly changes, because the world changes. Sometimes that’s bad news for American industrial workers, other times it’s good news. Workers in China and Poland and Mexico, for example, have become more highly skilled, and their factories are now able to produce more-precise goods than they could a decade ago. But at the same time, the wages of those workers have risen, as have shipping costs. Unrest in northern Mexico or an oil-price spike caused by trouble in the Middle East can encourage manufacturers to keep production lines in the United States. The development of increasingly complex machinery can do the same: because expensive machines are more likely to pay off when they can be counted on to run 24 hours a day, every day, the availability of steady electricity, for instance, is essential.

We’re not just competing with other countries on labor costs. We’re competing on the total environment of what it takes to get things done. People often look at the low wages in other countries and figure we just can’t compete. But that’s giving up too easily.