Technology gives rise to “cheaper products and cool services,” says David Autor, an economist at MIT, one of the first to document tech’s role in cutting jobs. “But if you lose your job, that is slim compensation.”
Even the most commonplace technologies _ take, say, email _ are making it tough for workers to get jobs, including ones with MBAs, like Roshanne Redmond, a former project manager at a commercial real estate developer.
“I used to get on the phone, talk to a secretary and coordinate calendars,” Redmond says. “Now, things are done by computer.”
Technology is used by companies to run leaner and smarter in good times and bad, but never more than in bad. In a recession, sales fall and companies cut jobs to save money. Then they turn to technology to do tasks people used to do. And that’s when it hits them: They realize they don’t have to re-hire the humans when business improves, or at least not as many.
The Hackett Group, a consultant on back-office jobs, estimates 2 million of them in finance, human resources, information technology and procurement have disappeared in the U.S. and Europe since the Great Recession. It pins the blame for more than half of the losses on technology. These are jobs that used to fill cubicles at almost every company _ clerks paying bills and ordering supplies, benefits managers filing health-care forms and IT experts helping with computer crashes.
“The effect of (technology) on white-collar jobs is huge, but it’s not obvious,” says MIT’s McAfee. Companies “don’t put out a press release saying we’re not hiring again because of machines.”
What hope is there for the future?
Historically, new companies and new industries have been the incubator of new jobs. Start-up companies no more than five years old are big sources of new jobs in developed economies. In the U.S., they accounted for 99 percent of new private sector jobs in 2005, according to a study by the University of Maryland’s John Haltiwanger and two other economists.
But even these companies are hiring fewer people. The average new business employed 4.7 workers when it opened its doors in 2011, down from 7.6 in the 1990s, according to a Labor Department study released last March.
Technology is probably to blame, wrote the report’s authors, Eleanor Choi and James Spletzer. Entrepreneurs no longer need people to do clerical and administrative tasks to help them get their businesses off the ground.
In the old days _ say, 10 years ago _ “you’d need an assistant pretty early to coordinate everything _ or you’d pay a huge opportunity cost for the entrepreneur or the president to set up a meeting,” says Jeff Connally, CEO of CMIT Solutions, a technology consultancy to small businesses.
Now technology means “you can look at your calendar and everybody else’s calendar and _ bing! _ you’ve set up a meeting.” So no assistant gets hired.
Entrepreneur Andrew Schrage started the financial advice website Money Crashers in 2009 with a partner and one freelance writer. The bare-bones start-up was only possible, Schrage says, because of technology that allowed the company to get online help with accounting and payroll and other support functions without hiring staff.
“Had I not had access to cloud computing and outsourcing, I estimate that I would have needed 5-10 employees to begin this venture,” Schrage says. “I doubt I would have been able to launch my business.”View Entire Story
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