We Now Know the Middle-Income Job Is Basically Extinct, But What Do We Do About It?

Categories: Schutze

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There's a big Associated Press story making the rounds now, based on work at MIT and elsewhere, all about the permanent loss of many high and better paid jobs like meter reader and travel agent, gone forever because those posts have been filled by robots and software.

Good jobs are gone forever and crappy jobs are growing, as employers use technology to get the work done without employees. Somewhere in the backs of our minds, we already knew that, right? But here's the real question: if technology is making it easier to make money without hiring people, who gets the money?

If employers are being handed a kind of free gift from the software sector -- here's a cool way to sack all your workers and crank out even more brake drums -- what are the workers supposed to do? Wash cars on the corner and live like coolies? Dry up and blow away?

The AP story reported that permanent job loss at middle income levels is way worse than even the experts had believed:

The numbers startle even labor economists. In the United States, half the 7.5 million jobs lost during the Great Recession were in industries that pay middle-class wages, ranging from $38,000 to $68,000. But only 2 percent of the 3.5 million jobs gained since the recession ended in June 2009 are in midpay industries. Nearly 70 percent are in low-pay industries, 29 percent in industries that pay well.

So here's my point. The technology that allows the brake-drum-maker to churn out more product with way fewer employees is not something the brake-drum-maker invented. It's a general societal benefit produced by all the best aspects of American (and world) culture including higher education, a zeal for innovation and a willingness to take risks on good ideas.

I don't believe anybody would want to see any of that go away. In this country anyway, there will never be much taste for repressing progress in technology and science in order to protect the status quo.

But as a society how should we allocate and spend the vast new profits generated by technology and innovation? What are doing with that money now? If you don't know, you need to go take a long slow drive around Preston Hollow, the Park Cities and the other super-rich venues in our region.

Where 20 years ago there were lots of big houses, now the streets are lined with hyperventilated fantasy castles - joints so huge they make the Cinderella Castle at Disney World look like a duplex. So how did that happen? Did all of our rich people, entrepreneurs and coupon clippers, suddenly get a dose of about 100 more I.Q. points? Do those fantasy castles reflect some sudden surge in genius and virtue at the top of the money tree?

Or maybe the enormous growth in income disparity and the sudden bloating of wealth at the top merely are symptomatic of the same thing shocking those economists looking at automation and the erosion of the middle class. The concentration of cash at the top, in other words, could easily be a structural trend fueled by technology.

Of course, that is not how our new bazillionaire class is viewing it, as we saw so clearly in the recent election. Mitt ("Old 47") Romney stated it succinctly for us: the people whose jobs have been hollowed out at the middle of the society are whining losers and the bazillionaires are a new Randian super-race.

So let's ponder another possibility. Let's say the American voting middle class regains its confidence somehow, regains its dignity and its guts and sets about redressing some of this crazy imbalance that has taken place basically while nobody was minding the store? What if we used the communitarian power of government, specifically the tax code, to divvy some of this money up in new ways?

If the bazillionaires had to trim their lifestyles back down to something in the order of three-fourths Cinderella-size, what kinds of things could society do with some of those bazillions? What about pouring it into lower elementary public education so that every kid with normal abilities in public school gets to the end of third grade able to read, write and do arithmetic? There's a huge game-changer right there for our society.

What if we were able to take some of the vast new profits generated by robots and web pages and direct that money to climate change research? Isn't preventing the extinction of life on earth a worthy social goal? In not, what's your other idea?

My gut tells me this is where a lot of the crazily anti-social rhetoric on the super-rich far right really comes from. There are people who have made a ton of money in recent years who really have devoted their wealth and their lives to paying back. Sadly we seem to see more of them devolving into a kind of mad-dog last-ditch attempt to convince themselves that they deserve to hoard it all and everybody else needs to wander out on the ice floe and die.

The shift in employment driven by technology is something we all helped create, in a way, because we all helped make this country what it is today. So we all have an obligation to rope it down, get it back under control and put it to work for the greater good. Otherwise it's a gun to our heads.

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158 comments
j.walter.miller
j.walter.miller

Jim, I understand you are livid with the demise of labor unions as we know it.  Those unions artificially propped up wages for a generation.  Those same unions hastened the invention of automation that allowed companies to shed the yoke of pension heavy, overpaid, impossible to fire employees that proved to be more trouble than they are worth.  

There are plenty of middle class jobs.  The dental hygienist that cleans my teeth makes 70k a year.  She's 25 years old.  My younger peers in the software business are making close to 100k in some cases and they are 26 - 29 years old.  

We don't need buggy drivers anymore.  Most people don't have any use for cobblers.  The unions gave all of these individuals a false sense of security that their job would never change, that they would also see even increasing income and richer pension benefits.  

That union system has run it's course.  The age of unions is over.  And an adjustment will be made as these people find new occupations and careers.

Things change.  Time moves on.  

Untouchable
Untouchable

Let's say I outsource my widget battery to another country, because that country works cheaper. Then let's say that country (let's call it J) gets into a conflict with another country (let's call it C) over some uninhabited islands. 

Now, at first it seemed like a good idea to outsource this widget battery. Profit margins, invisible hand, etc. The problem is my widget battery has to go into something really important for travel. 

Because I outsourced the widget battery, it got compromised. Country C, or Country I or Country whatever passed around the design or placed something inside of it. Now when Country C and Country J (Which we have a treaty to defend) fight over some islands, my widget battery suddenly starts to fall apart. Along with the rest of my transport machine. 

Now I have to redo the whole fucking thing from scratch, quality control the bitch, act like it was all a glitch, calm investors down who have all ready been spreading rumors...

TheCredibleHulk
TheCredibleHulk topcommenter

Capacity is usually the thing that changes. If owner guy employs 10 men and these ten men produce 10 parts each, each day and that number of parts can support the wages and overhead required to employ those ten men and still turn a profit, that is a sound business model.

Now, say owner guy buys a machine that can be operated by one guy, but will fulfill the established quota of all 10 of the previous workers. Do you fire nine guys, or do you buy  more machines and take advantage of the labor savings to leverage a larger profit? Unless the technology is prohibitively expensive, most businessmen I know would try to up their profit, provided there is a demand for their product and cheap money around to borrow to finance the technology.

He probably won't have to maintain a 10 man workforce any longer, but he probably won't fire 9 guys, either. Chances are, a few of these folks fall off and have to try something new - just as their counterparts that are still employed have to learn something new to keep their jobs. It's even likely the fact that he can make more widgets, faster, actually creates demands for labor somewhere else in the chain, upstream, downstream or both. Not that this does the couple of laid off guys any good immediately, but, that's the way it goes...

All technological progress is going to come with growing pains for everybody.

Buggy whips, anyone?

TheCredibleHulk
TheCredibleHulk topcommenter

Looks like you've all got all the angles covered.


Libtards, Greedy capitalists, working poor, welfare, robots...


Very well, then. Carry on.

everlastingphelps
everlastingphelps topcommenter

It's not a linear relationship, it's a curve.  There is a backside to it.

MikeWestEast
MikeWestEast

The author has obviously never actually worked on a project that substitutes technology for labor or he would know the solutions just do not march out of the shrinkwrapped box and generate instant savings.  Many projects, almost half, fail.  It often takes a year or more to revamp your processes to work with the technology.  No automation after 1975 subs a robot hand for a human to screw a nut on a bolt.  The robot always does a completely different job than human because the parts on the line and method of attachment fit the capabilities of the technology.  That takes lots of money and time.  The comments that a manager "lucked" into a solution shows no understanding of the real situation.

It is not going to do any good to pay people more for same work because the higher salaries will simply justify more automation.  Projects that did not make sufficient pay back before the increase now become positive. 

whiteguiltlib
whiteguiltlib

Hey look! Shitty, senile rambling "progressive" naive white libtard propaganda from Schutze again. I'm totally surprised.

drtz
drtz

There are three ways to solve this: education, education, and more education.

Make sure and thank your Texas Legislators for the $5.4 billion education budget cuts in the last session.

roadsidecouch
roadsidecouch

Obama's answer is that the highly motivated displaced worker is supposed to get a government job everyone else is suposed to sit on their ass and watch TV for a living and collect their welfare, Obama phones, and make use of whatever money they can get from the government plantation which is owned by the people sitting on their butts doing nothing.  Oh, and one more thing: they have to vote for the Gimmedat Party.

JimSX
JimSX topcommenter

In the end, the whole white hats/black hats discourse is a misdirection and a trap. Nobody believes rich people are plain bad. At least in business they are doing what the system allows, enables, affords and incentivizes. The more we make this ad hominem, the less chance we have of fixing anything. The problems are cultural,  moral and structural. This doofus down below in the comments , bragging about how much money he makes and how everybody else is a fucktard, would have been ridden out of frontier settlements on a rail in this country. Back in the day. Americans could spot a destructive self-serving sociopath when they saw one. This country was built by barn-raising communitarian civic-mindedness, people pulling together. All of this hate-the-poor money-bragging narcissism is outside traditional American values. Responsible civic-minded people from all points of the compass need to pull together and fix the barn.     

beckw
beckw

1. The Brake Drum maker is fortunate to live in a time when rapid technology advancement has allowed productivity increases that the maker can then capture in the form of profits.  That is not skill.  That is luck of his/her birthdate.  However, he must pay the technology marker (let's say a robot innnovator) a profit margin for the risk and years of their life building such robots.  And the robot maker must pay an incentive to the microchip/electric motor/software innovators.  I guess what Jim is asking is, how much of that profit can society capture before we start to disturb people's risk taking?  That is not an answerable question since it varies in each case and people's opinion will be strongly colored by their worldview/political beliefs.  

2.  This is not a hoarding money issue.  Unless the money is in physical cash, it is "working".  If the money is in a savings account it is being lent out by the bank to other businesses/start-ups.  If it is the stock or bond market, it is being used to capitalize other productive businesses/investments.  Perhaps the rich person's money is being invested in a wind farm, a smoothie shop, or a strip club, but it is out there everyday being invested and creating jobs.  

3.  Jim is correct that there is a societal problem with this trend.  Although the rich pay the vast majority of income taxes, they control a more disproportionate share of the wealth (I don't want to start a discussion of whether taxes should be based on wealth or income).  Also many wealthy today are not wealthy for productivity increases (a la Bill Gates), but are wealthy due to large lucky bets (a la John Paulson) that don't create value.

4. We are undergoing a structural shift in our economy and they are always painful.  Although jobs are being lost in the meter reader's case, they are exploding the in the case of the meter reader software writer's case.  We have acute labor shortages in various fields, but people lack the experience/education to do those jobs.  We need to use them money to "retool" the middle class and get them the skills they need for the 21st century.

5. This is not done yet.  Just as manufacturing is starting to return to the US as wages increase in Asia, there will be more settling out.  Avoid "push a button" jobs and try to learn a skill/craft/trade that is not easily replaced by a machine.  Using travel agents for booking routine tickets may be over, but agents that can fulfill custom, complex travel requests are thriving.  

bubbabgood2u
bubbabgood2u

All those rich people you mention in your story got rich selling AMWAY....didn't you know that.

fistofsouth
fistofsouth

Just for the record.  I'm a Gen-X HS Drop-out and I pull close to six figures.  How did I do it?  IT bub?  Do you think all those computers and the networks they transit maintain themselves?  Nope they sure don't so instead of sitting around sipping lattes in the late 90s worrying about how the world was coming to an end and how my generation was the first in American History t be less successful than the previous generation, I looked around and said..hmmm..where is the money going?  I followed said cash, got a certification and now I make more money than anyone in my immediate family  including all the dolts with Liberal Arts Degrees they still have yet to pay off.

Here's an idea, find a need and fill it.  You can get HVAC certified in a few months and have a job that can't be outsourced and one that can easily result in you owning your own business, clawing your way into the middle class and doing so without an ounce of student debt.  Fucking PRODUCE PEOPLE THAT"S WHERE THE MONEY COMES FROM.  YOU DON'T PRODUCE?  THIS IS AMERICA AND THIS IS TEXAS; WHAT FUCKING GOOD ARE YOU?


MikeWestEast
MikeWestEast

@bmarvel I think the argument is since management and stockholders will get less pro rata share of income/dividends, let's just give it to the employees.  First many of the stockholders are non-profit pension funds that do not pay taxes.  They are not affected and are not in a giving mood..  Additionally technology has changed since the 60's, the supposed glory days for that thinking.  Now you can rip a lot more costs out of the process with a big enough incentive.  It is a new game and you cannot go back, no matter how many times you click your red heels.

observist
observist topcommenter

@whiteguiltlib Yeah!  I can't believe some idiots come here just to post the same stupid shit over and over and over and over.....

bmarvel
bmarvel topcommenter

@JimSX"The more we make this ad hominem, the less chance we have of fixing anything." Like, for instance, references to Preston Hollow and the Park Cities? Or would that be more ad affinitam?

chasd00
chasd00

@JimSX "This doofus down below in the comments , bragging about how much money he makes and how everybody else is a fucktard, would have been ridden out of frontier settlements on a rail in this country"

Not really, the "doofus down below" would be the one building the country while his "fucktards" would have starve/frozen to death the previous winter. You either get to work, contribute, and fight out a living or you don't. Lets be real.

scottindallas
scottindallas topcommenter

@beckw you draw a false dichotomy when you write "how motivated will they be at higher tax rates"--I paraphrase.  This is false as effective tax rates seldom rise anywhere close to nominal rates.  But, the shifts that avoid those tax rates are indeed investments back into the firm.  Advertising, pensions/retirement, capital expansion/service and R&D are all deductible.  The higher the tax rates, the more we incentivize these more productive uses of capital.  

You allude to the next false characterization in your post.  In a different tax regime we might indeed get investments in real capital through banks; but what we get is financial speculation--I think you know that's something different, as again, you allude to.  Higher capital gains is not simple punishment; though it does make simple speculation less profitable and taxes it at a higher rate.  But, higher capital gains rates actually helps capital intensive producers; as higher cap gains means depreciation is more lucrative.  This encourages use of capital, rather than manipulation of capital.  

So, the tax code is not the crude simple instrument you describe.  Though, I liked other aspects of your post.  I'd like to reiterate, raising tax rates doesn't necessarily raise effective rates, though it will likely encourage more productivity.  Second, I'm not for "more taxes" we need taxes, and this is an underused facility, and should generate some increased revenues, and the businesses that are discouraged, aren't really doing that much for the economy.  If we cover our spending, which I'd like to reduce; lets reduce other taxation avenues first, as this one has some beneficial aspects and is already a vital tax tool that is already in use.

Daniel
Daniel

@beckweathers Indeed, custom, complex travel requests are the wave of the future for savvy travel agents. For instance, right now as we speak, there are enormous career opportunities in booking rugged "adventures of a lifetime" for gullible, self-confident dentists.

JimSX
JimSX topcommenter

@fistofsouth 

The personality trait you express most vividly is called criminal narcissism.

observist
observist topcommenter

@fistofsouthNot sure why you think that's much of a solution - it's a relatively small number of people that can make money from fucking produce.

Myrna.Minkoff-Katz
Myrna.Minkoff-Katz topcommenter

@fistofsouth I wouldn't be so cocky if I were you.  They'll soon figure out a way to get rid of you lot, as well.

everlastingphelps
everlastingphelps topcommenter

@fistofsouth When we line all these boomers who have wrecked teh country up against the wall, I'll be right there beside you, Fist.

whiteguiltlib
whiteguiltlib

@observist - someone has to come disturb this naive white-guilt libtard echo chamber once in a while.

bmarvel
bmarvel topcommenter

@chasd00 Kinda hard getting to work in an economy with 8 percent unemployment. And even harder to contribute when the only work available is McJobs.

JimSX
JimSX topcommenter

@chasd00 

What will you call the movie of your life? It's so exciting.

beckw
beckw

@scottindallas You make some good points about the relationship between effective and nominal tax rates as well as the capital gains rate and its effect on financial speculators.  I don't necessarily disagree with any of them.  Good points. 

However, if you read my point #1 about motivation, I never mentioned "taxes" nor "nominal" nor the "capital gains rate" nor many of the topics you brought up.  I only mentioned taxes in my third point (which I should have probably omitted).  In #1,  I was referring more to the point of how to divide the economic gain created by a productive business.  No mention of taxes.  I never got into a description of the tax code, but I'm sure if I did, it would be "crude". :)

My second point was made to distinguish productive uses of capital from speculation.  I disagree with you that banks only engage in financial speculation. Although many Wall St banks do engage in speculation primarily, there are still many banks that lend on hard, depreciable assets.  

Again, I was not trying to bring in the tax code.  It is above my pay grade.  I was trying to discuss the role of technology, productivity, entrepreneurs, and the role of society.  Apologies if my post got off topic.


everlastingphelps
everlastingphelps topcommenter

@JimSX @fistofsouth Self confidence != narcissism, especially when said confidence is justified.

Narcissism is more about defense mechanisms against exposure of that self-confidence being unjustified.  Being great doesn't make you a narcissist -- thinking you are great just because you make everyone tell you that is narcissism.

fistofsouth
fistofsouth

@JimSX @fistofsouth Leave it to a Boomer to bring up narcissism   Nope Jim I worship God, not myself.  Also being cognizant of the fucktards around me is just good practice and there's nothing criminal about it.

everlastingphelps
everlastingphelps topcommenter

@Myrna.Minkoff-Katz @fistofsouth So?  I'll figure out a new line.  As long as Someone has money, Someone is going to want Something.  It's up to me to figure out how to make that Something, and then I'll figure out how to make the best goddamn Something anyone has ever seen and charge far, far out the ass for it to these people with all this money sitting in their Scrooge McDuck vaults.

No one "owes" me a job.  It's up to me to figure out what my job is.

fistofsouth
fistofsouth

@Myrna.Minkoff-Katz @fistofsouth Already tried, I've been laid off 8 times and yet I still produce.  If you live in an area where unemployment has not been over 10% in decades and you can't hold down a job then the problem is with you my friend.

bmarvel
bmarvel topcommenter

@whiteguiltlibStill using the word "libtard," whiteguilttlb? I'll bet you still say "fussbudget" and "cutpurse" and "scalawag." Oh, and "hippie." Yeah. That's a good 'un.

Daniel
Daniel

@bmarvel @Daniel Nailed it, Bill. She was a very sick, deeply untalented woman -- albeit charismatic, evidently. A meth-addled megalomaniac. If I want a philosophical train wreck rendered in sophomorically heroic prose, I'll take Nietzsche, thanks. At least before he lost his mind, he was brilliant and could turn a phrase.

bmarvel
bmarvel topcommenter

@Daniel That's what this country needs, a good dose of Ayn Rand: A deep contempt for everyone but yourself. A ravenous appetite to grab and gouge without limit. A quaint notion of American history based upon childhood memories of -- Tsarist Russia. And novels written in prose not so much immortal as lifeless. Then at the tag-end of a life spent largely on free love and drugging, cash in on the Social Security you spent so much of that life arguing was only for suckers. 

observist
observist topcommenter

@JimSX @chasd00 Either "The Little Red Hen" or "The Ant and the Grasshopper".  People have always been indignant about their perception of other people's lack of effort - they just haven't always had the means to anonymously and profanely express their indignation to the community

Daniel
Daniel

@JimSX @chasd00 

Wait -- didn't they already make a movie of The Fountainhead? (That was the one with Mr. Rourke, right? -- some kind of white-suited Moldavian with a midget sidekick, as I recall? Only in this episode, he's an architect and he's a misunderstood genius, like teenagers everywhere, only instead of indulging in self-pity, which would be emasculating, he hates all of humanity instead, wishing aloud that the fucktards would starve/freeze to death already, but it doesn't sound like a piteous bleat issuing from a needy ego, oh no sir! It sounds brave! And noble!)

animas
animas

The Life and Times of Alferd Packer

bmarvel
bmarvel topcommenter

@fistofsouth @JimSX God loves folks who use he word "fucktards." He really does. And, if asked, He even forgives them.

RTGolden1
RTGolden1 topcommenter

@fistofsouth@JimSX "Nope Jim I worship God, not myself.  Also being cognizant of the fucktards around me is just good practice and there's nothing criminal about it."   Really?

JimSX
JimSX topcommenter

@fistofsouth @JimSX 

Sorry, but being a sociopathic fuck-up who managed to make some money qualifies you for a lot less self-love than you seem to think you deserve.

observist
observist topcommenter

@fistofsouth @Myrna.Minkoff-Katz @everlastingphelps Uh huh - there are only 4 personalities in the US, one for each generation.  Within each generation, all individuals are the same.  So, if your kids love you, all Gen Y's love all Gen X's, and if you heard a story about hippies spitting on soldiers in the 60s, then everyone born between 1945 and 1963 was a solider-spitter... even the soldiers.

You reason like a high school dropout.

everlastingphelps
everlastingphelps topcommenter

@Myrna.Minkoff-Katz @everlastingphelps Who cares how they "feel"?  All they know how to do is feel.  They don't know how to think, and that is why it's up to GenX to take charge.  After we get rid of the Boomers, we'll hand all the millennials their participation awards and pat the on the head and they'll be happy again.  It's what the boomers trained them to do.

fistofsouth
fistofsouth

@Myrna.Minkoff-Katz @everlastingphelps No they don't my children and my nieces and nephews adore me because I have both an open mind and high standards.  I don't prance around talking about how "I changed the world" by spitting on soldiers, spreading VD and taking no responsibility for my actions.  Pedantic, do-nothing Boomers will never realize how much they are derided by the generations that preceded them an the generations that succeeded them.  The GI Generation, Gen-X and Gen-Y have far more in common with one another than have do with they do with Boomers. 

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