NEW TECHNOLOGY ALWAYS CAUSES JOB LOSS

TECHNOLOGICAL CHANGE OCCURS EXPONENTIALLY

(THE FUTURE IS CLOSER THAN WE THINK!)

Technological change has been accelerating for the past sixty years. In 1965, there were only 64 transistors on a chip. Gordon Moore, the co-founder of Intel, suggested that the number of transistors would double every two years, while the cost of computing would halve (Moore’s Law). Now there are over 2 trillion transistors on a microchip!

Other major contributing factors to the increasing speed of innovation are:

• Improved communications between researchers around the world.

• Combining multiple technologies (as in autonomous driving).

It’s natural for us humans to expect change to be linear. Most people, even experts, have difficulty accepting the speed of exponential growth. In 2015, 352 international AI experts were surveyed to determine when they expected GO champions to be defeated by AI. Their average response was 12 years, when in fact it took 2 years!

2023 and 2024 have been years of significant technological advances – not only related to ChatGPT, but also in other fields (biotechnology, autonomous cars, drone warfare, material science, nuclear fusion, etc.). What can we expect in 2025?

THE 5 WAYS TECHNOLOGY CAUSES STAFF REDUCTIONS

Technology rarely automates entire jobs. It automates tasks – and a job consists of a number of tasks. Nevertheless, there are 5 ways in which technology causes staff reductions. We use the acronym PRAMS. (A baby carriage is called a pram in the UK, and I started life in a pram!)

P – Increased PRODUCTIVITY means less people needed to do the same job. (ChatGPT – or generative AI – allows much faster marketing content creation.)

R – New technology REPLACING the need to staff a significant function/department. (Customer service departments can be replaced by automated responders, except for a few staff for special cases.)

A – New system AUTOMATING manual work, eliminating manual tasks. (An on-line business expense entry system eliminates all the manual expense claim processing.)

M – Fewer people reduce the need for MANAGEMENT. (Two smaller teams may only need one supervisor or manager.)

S – Fewer people require fewer staff SUPPORT workers. (Fewer staff means less work for Human Resource Departments’ recruiting efforts.)

TECHNOLOGY IMPACTS THE 3 TYPES OF JOB TASKS DIFFERENTLY

Let’s analyze the tasks in a job in more detail and review how technology impacts them. Tasks can be classified as:

• Action (like paying invoices or welding or writing programs)

• Thinking (like planning or problem solving)

• People Interactions with managers, staff, and others affected by the job.

Technology impacts these 3 task classes differently:

• Action tasks can be replaced in part or totally.

• Thinking tasks can be assisted by tools providing data access and analysis.

• People Interactions are impacted by smaller teams needing less supervision and support.

MOST JOB LOSSES RESULT FROM THE AUTOMATION OF ACTION TASKS

Automated action tasks are the primary cause of job loss, which results when:

• The cost of automation is lower than the manual costs of labor. This is particularly true for unskilled tasks. Until recently, it has been the primary source of job loss from automation. And it will continue to be a primary source as automation costs drop and labor costs increase. (This is why increases in minimum wages – understandable as they are sociologically – have always resulted in increased unemployment.)

• Increased productivity reduces the number of people needed to perform a job (such as when generative AI suggests code to software developers).

• Jobs are eliminated (such as when autonomous vehicles no longer need drivers).

When employment is reduced, people interactions are reduced, and this also causes job losses. For example:

• Smaller team sizes require fewer managers.

• Fewer staff require less support (for payroll and HR functions).

NEW JOBS FOR NEW TECHNOLOGIES ARE FAR FEWER THAN DISPLACED JOBS

New technologies that increase the efficiency of existing operations will create new jobs. But the number of new jobs is a fraction of the jobs displaced. For example, virtual assistants will reduce the need for most customer service agents. But only a few new jobs will be required to maintain the virtual assistants.

Technologies that are new may or may not create net additional employment. Nuclear fusion energy plants will create new employment. Alternatively, employment for the manufacture and maintenance of electric vehicles will be far less than those displaced for internal combustion vehicles.

Sometimes the new jobs themselves are temporary. For example, prompt engineers will become unnecessary as generative AI models improve their understanding of context.

I’ve studied computers for several decades. There has always been a concern that jobs will disappear as tasks are automated. The growing economy for the past 40 years has countered that concern. Many jobs have disappeared. But new jobs and additional demand for existing jobs have increased overall employment.

30 MILLION COMPUTER SOFTWARE DEVELOPERS FACE REDUCING DEMAND

Every industry and profession faces a trend of creeping automation and reduced employment. Let’s discuss computer software developers. This job has been and will continue to be at the heart of the automation process.

It is also the job that society is promoting as the one most expected to experience increased demand. Educational facilities are adding courses. Career counsellors are encouraging clients to select it. Governments are funding upskilling and reskilling programs for it.

There are about 30 million professional software developers in the world, with 6 million in North America. And demand is increasing for developers to create computer software for AI applications, and to upgrade existing information systems.

Yet this function too is subject to automation.

In the 1990s, new programming languages (known as 4GLs) translated computer system specifications into computer code. This reduced the need for software developers. Then the internet arrived. Its complex programming environment made 4GLs redundant.

Low-code and no-code applications have been introduced during the past few years. They create computer code from system specifications. In 2023, generative AI was used to create computer code. It was poor quality initially but is improving monthly.

Currently, a software developer can use Copilot to double productivity. This halves the need for developers! As the technology improves, one developer will be able to do the work of 5 or 10 or more developers.

This productivity increase only applies to new coding. Many developers are assigned to maintain existing code. How long will it be before the efficiency of the AI will justify the re-write of legacy systems?

TECHNOLOGIES ARE BEING USED TO REPLACE HUMAN LABOR

Almost all industries and professions are introducing technologies that will reduce the need for human labor. But the penetration of the new technologies is at a very early stage.

A McKinsey Global Institute 2023 study forecasted that nearly 70 million U.S. workers would have to find new occupations by 2030. (Total US employment is over 160 million.) This will be caused by advances in robotics, artificial intelligence, and machine learning. The study observed that employing humans will become an illogical option in some professions! The unstated question was whether those new occupations would still be available.

Here are some examples of the current use of new technology:

• 3D and 4D additive manufacturing used to build houses, schools, and military barracks; boats and bridges; space rockets and moon bases; transplants of human bones and organs; shoes and food.

• Robots used to build cars, perform surgery, deliver shopping and sermons, conduct security, and comfort the elderly. Major impacts in manufacturing, retail, medicine, warehousing, construction, military, and disaster management.

• Drones used to deliver medicine, mail, cargo, pizza, and even bombs; for surveillance of dangerous locations, pipelines, road accidents, and homes for sale; for flying taxis, weather forecasting, and roofing.

• Artificial intelligence used to find new drugs and new materials, and to analyze x-rays and legal contracts. In use in every industry and in art, charities, and sports.

• Multiple technologies used in the transportation industry to establish autonomous operations for cars, buses, trucks, construction equipment, trains, ships, and aircraft.

NORTH AMERICA COULD LOSE MORE THAN 45 MILLION NET JOBS IN THE NEXT 8 YEARS

So, let’s get down to some forecasting. I’m using US statistics. But job losses from technology will apply to all countries. Less developed economies are likely to suffer more with their larger pool of unskilled or less skilled workers.

These statistics come from the US Bureau of Labor Statistics. The numbers are in millions. (Canada contributes its typical additional 10% to make up the North American totals.)

The 3 numbers are 2022 Employment, BLS Estimated 2032 Employment, and my 2032 Forecast.

Total Employment: 164.4 – 169.1 – 138

Construction: 7.7 – 7.9 – 3 (Mostly small projects)

Manufacturing: 12.8 – 12.7 – 5 (Probably less)

Wholesale Trade: 6.0 – 5.9 – 6 (Much import/export)

Retail Trade: 15.4 – 14.9 – 5 (Mostly on-line with virtual shopping)

Transportation/Warehousing: 6.7 – 7.2 – 1.0 (Almost entirely automated)

Information: 3.1 – 3.3 – 4.0 (Still re-writing old systems)

Finance: 9.0 – 9.4 – 7.0 (Major new changes)

Professional/Business Services: 22.6 – 24.0 – 20.0 (Supporting many new  entrepreneurs)

Healthcare/Social Assistance: 20.6 – 22.6 – 25.0 (More care workers; Less doctors and surgeons)

Leisure/Hospitality: 15.8 – 16.2 – 6.0 (Travel replaced by virtual experiences)

Agriculture/Forestry/Fishing/Hunting: 2.2 – 2.1 – 2.0 (No significant change)

Self-employed: 9.1 – 9.2 – 20.0 (The only option for many)

The net job loss shown is 30 million, but that includes the gain in self-employed. The net job loss for employed people is 42 million or 26%.

The main industries with significant losses are Retail and Leisure/Hospitality. They are followed by Construction, Manufacturing, and Transportation/Warehousing.

Like most futurists, I prefer to make forecasts far enough into the future that I will probably not be around to be proven wrong! 😊

Seriously, the forecast has limited validity. All the numbers are just guesses, including the BLS projections, and nobody has any idea what the world in 2032 will look like.

Readers are encouraged to replace the forecast with their own guesses. The purpose of the exercise is to consider the likely impact of unemployment on individual industries, and then total the employment numbers. That total will have less variability than the detail estimates.

HIGH UNEMPLOYMENT REQUIRES MAJOR GOVERNMENT STRUCTURAL CHANGES

No democratic country can handle unemployment in the order of 25% without making major societal and taxation changes – nevermind that it will get worse and there will be no recovery. (A discussion for another article!)

There’s a double financial whammy. High unemployment results in higher social support costs and causes a major drop in income tax revenues. (In Canada, federal income taxes represent over 45% of total revenue.)

Tax and welfare systems will require major structural changes. There are viable options. The challenge will be for government to recognize and implement them. This would require longer-term planning than is normal. A period of chaos is likely.

HERE IS A STRATEGY FOR ALL EMPLOYEES TO PROTECT THEIR INCOME

We’ve entered a time when accelerating technological changes are causing a turbulent employment environment. Every employee needs to maintain awareness of these changes, and to understand the probable impact on their industry, their company, and their job.

The changes won’t happen overnight. But the impact will accelerate as technological change builds on itself.

We can’t predict when jobs will disappear, but we can prepare for it. Or we can wait for it to happen, and compete with all the others who didn’t prepare.

I once had a client who was shutting down one of their plants. My role was to help the 300 employees find new jobs. The client gave 6 months’ notice. I was asked for help by a few employees in the first 5 months, a few more in month 6, but most approached me in month 7! Procrastination is human!

Employees who are ready to be proactive in protecting their income have 3 choices:

1. Assess alternative career options.

2. Start a side hustle or new business.

3. Become an invaluable employee (delaying the inevitable).

YOUR NEED FOR INDEPENDENT HELP

HELP IN CHOOSING YOUR STRATEGIC OPTION – AND IMPLEMENTING IT