February 2, 2015
The Jobless Economy

By Cliff Ennico
SucceedingInYourBusiness.com

I should really stop reading newspapers.  All they do is get you depressed.  And angry.

When you write a column like this, you read a lot.  An awful lot.  You have to stay on top of just about every development having anything to do with the world of entrepreneurship and small business.

And when you read so much, you sometimes see patterns between stories that most people would think have nothing to do with each other.

As an example, here are several recent news stories, each from a different newspaper or news source:

• Amazon.com plans to lobby Congress and the Federal Aviation Administration (FAA) to allow low-altitude drones to carry packages from Amazon warehouses to their ultimate destinations


• A local school board requested a 5% increase in the annual school budget, explaining by way of apology that almost the entire increase was due to increases in "salaries and benefits for our teachers and administrators, which account for over 90% of our total expenses each year"


• The U.S. military increasingly seeks to use drones to replace ground troops, especially when conducting operations in distant or remote areas that are difficult to access on foot (think Afghanistan)


• A local restaurant has done away with waiters and buspeople. A host (or hostess) guides you to a table equipped with several "tablet type" smartphones. You can then order your meal from the smartphones. Either the host or a kitchen person delivers your meal directly to the table. Your kids can play video games while you wait for your food and when you're done you pay your bill by credit card on the smartphone, with an automatic X% tip to the host or kitchen personnel. You can even split the bill with your dinner companions with 100% mathematical accuracy.


• A startup company works with colleges and universities to develop "online" versions of popular courses -- professors contribute course materials, pre-recorded lectures, assignments and other content, which are made available as a "package" to other universities for a fee.      

Okay, now for the pop quiz:  what do all of these news stories have in common?     

They're all about efforts by both large and small companies to eliminate the human element, otherwise known as "labor" or "people".  That's right. Businesses at all levels of the economy are looking to improve productivity by eliminating jobs . . . and people.  Permanently.     

It's no secret that since about 1980 we have been living in the middle of one of the great technological upheavals in human history - one I predict will rival the Industrial Revolution of the 1800s in historical importance.     

There have actually been several such upheavals in the last couple of centuries, but this one is different.  Very different.     

In the past, when technology changed things, it led to what one famous economist called "creative destruction."  A lot of people lost their jobs, but the new technology created lots of other jobs, so there was a net balancing effect.  Certain jobs requiring human effort were replaced by other jobs requiring human effort.  The railroad eliminated the need for oxcart drivers (if your last name sounds like "Wagner" or "Waggoner" you know what your ancestors did for a living), but created opportunities for them to morph into engineers, stokers, conductors and porters on the new Iron Horse.  When the automobile came along, many of those railroad folks became taxi drivers, auto salespeople, highway workers, mechanics, and so forth.     

But the current technological revolution - a "double whammy" of computerized information technology and mechanical robotics - isn't doing that.  It's killing jobs, but it's not replacing them.     

The digitalization of corporate America - which I've written about frequently in this column - has cost millions of middle-management corporate jobs.  But aside from the tens of thousands of jobs it has created at Google, Amazon, Apple, Microsoft and other such companies (extremely high-skilled jobs requiring advanced degrees in mathematics and science), it has not replaced anywhere near the jobs it has destroyed.     

Millions of Baby Boomers, now facing their 60s and 70s with low retirement funds, will discover that they are permanently obsolete and will have no choice but to retire unprepared.  Summer jobs for high school kids - that first critical step on the labor ladder -- will disappear.  Young people with only high school or liberal-arts college degrees will find themselves increasingly "shut out" of low-skilled service jobs as machines take them over.  Even the military, increasingly automatized, will no longer be a safe harbor for those who can't add value anywhere else.     

The consequences of this jobless revolution are too many to mention. Workers who don't fit into the new order may well become a permanent underclass, demanding "womb to tomb" welfare benefits that will send tax rates through the roof for the privileged few whose jobs haven't been digitized.       

Am I the only person in America who finds it ironic that one of the principal architects of this new economic order was a man named Steve Jobs?

Cliff Ennico (www.succeedinginyourbusiness.com), a leading expert on small business law and taxes, is the author of “Small Business Survival Guide,” “The eBay Seller’s Tax and Legal Answer Book” and 15 other books. COPYRIGHT 2014 CLIFFORD R. ENNICO. DISTRIBUTED BY CREATORS SYNDICATE, INC. Permission granted for use on DrLaura.com.

 

Posted by Staff at 11:53 AM