The Desperate Search for Good Jobs
By Shlomo Maital
Writing in the recent issue of Scientific American, the Swedish-British economist Karl Benedict Lund raises an issue at the core of our economic woes, and not sufficiently discussed: Where in the world will we find well-paying jobs for young people, jobs that can sustain and help the middle class to endure?
The problem is, in the past, new industries that were born out of innovation created jobs to replace the industries that were obsolete and dying. Sunrise industries’ new employment offset the lost jobs of sunset industries.
But no longer. Frey notes: The video-streaming startup Twitch, bought by Amazon for almost $1 billion, employs only 170 people. In the past a $1 b. company would employ many times that. Google has annual revenues of $66 b., and employs only 53,000. IBM, with roughly similar revenues, employs 8 times that (431,000 in 2013). Dell employs 108,000. But Dell and IBM are shedding huge numbers of workers. Once, Dell came along to absorb many of the 250,000 (!) workers that IBM shed in 1993-5. No longer.
And Facebook? Facebook employed only about 9,500 employees in 2014, with $8 billion in revenues. When Internet companies like Google, Twitter and Facebook can generate a million dollars in revenue per employee, the founders and shareholders rejoice, but ordinary folks who seek employment do not.
Frey’s research reveals this fact: only 0.5 per cent of the U.S. labor force was employed, in 2010, in industries that did not exist 10 years ago. And there are quite a few such industries.
How will society deal with innovation that creates wealth, products, services, and in general wellbeing, without actually producing many new jobs? Will we have to accept a bifurcated society, where a fortunate handful become millionaires and the rest of us scrounge for handouts? What happens when the old pattern of new industries creating jobs to replace ones lost by dying industries fails, and new industries simply don’t create jobs?
One possible solution: A great many more of us will need to become independent business persons, creating our own job by starting small businesses. This will take a whole new approach to the way we educate our young people, and a new support system that, for instance, can supply micro-credit to such businesses.