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The Old Saga of Not Enough Jobs

Will technology continue to displace human labor?

February 11, 2004

Will technology continue to displace human labor?

In the early days of the industrial revolution — in 1811 to be exact — a group of textile workers in Nottingham, England, broke into a new factory and destroyed machinery.

Rightly fearful that the sweep of mechanization through the textile industry would put skilled traditional textile workers out of work, the Textile Guild of Nottingham was soon followed by brethren in half a dozen other British towns.

In 1812, the destruction of machinery was made a capital crime. And over the next five years, a score of men were executed for destroying power looms in Yorkshire and Manchester.

Other "Luddites," as the protestors were known, in honor of their first leader, Ned Ludd, were killed by armed guards or exiled to Australia.

By 1817, the threat to textile looms had passed, but not the basic idea of the Luddites.

Almost without interruption for 200 years, every day, somewhere, workers have been protesting the loss of their jobs to mechanization.

And almost without interruption as well, some journalist or academic somewhere has been scribbling a theory that proves that human labor everywhere soon will be obsolete. “There won't be enough jobs,” is the usual conclusion.

Modern government policy — notably the French policy to shorten the workweek to 35 hours — is sometimes also based on the premise that there will not be enough jobs to go around.

At first sight, this seems like a plausible idea. Almost everyone worries about jobs. But think about it. If there were fewer people in France, would the job situation look better?

Does a densely populated country, say the Netherlands, stand at a disadvantage in finding employment for its workers compared to a sparsely populated country, say Russia?

Does a country with relatively rapid population growth, say the United States, suffer from higher unemployment than a country with slow population growth, such as Germany?

What Luddites past and present fail to appreciate is that — although mechanization piled on top of mechanization does indeed reduce the number of workers needed to produce today's output — the total number of jobs does not decline. Some jobs are destroyed, while others are created.

Flexible labor markets — in which both the location of economic activity and wages respond to supply and demand — generally keep the number of jobs roughly equal to the number of job seekers as total output grows.

Among advanced economies, no matter how big, no matter how densely populated, the number of jobs typically fluctuates between 92% and 97% of job seekers — even as jobs are destroyed every day by technology.

Consider the horse. A century ago, the streets and fields of Europe and America were filled with working horses. Today, only the odd mounted police officer, cowboy or carriage driver works with a horse.

The horsepower of internal combustion or electric motors has replaced draft animals. But even today, there are plenty of horses. They are leisure time accessories, providing enjoyment for upper income families.

In a roughly similar way, human work has moved from the labor of field and factory to service activities. Refrigerator repairman? Librarian? Spa manager?

Most people today have occupations that the Luddites of 1811 could not even have imagined. How could two-thirds of workers possibly find employment that has so little to do with production of goods?

Looking back over a few decades, this is a very good question indeed. What happened to all the farmers? Where did the steel mill jobs go?

A change that today looks like a few thousand jobs lost (jobs that workers and communities fight to save, just like the Luddites did) will in a generation turn out to be part of a trend that wipes out whole sectors, leaving the economic landscape barely recognizable.

So, there is nothing to worry about? Far from it. Job loss — from international trade as much as from technology — can be terribly painful, for workers like the Luddites and for whole regions.

A strong social safety net can help families make changes in skill, residence or education level, which the job market will reward. Workers who lose their jobs deserve support and help in these transitions.

More fundamentally, as the structure of jobs changes, so too does education requirements for the entire population. Today's jobs require a higher level of literacy and numeracy than in the past and this trend seems only to be getting stronger.

As much as the rich countries have increased the average level of education, there seems to be no diminution in the gap between the average income of more and less educated workers.

In some countries, notably the United States, the gap has grown substantially.

Even if technology and economic structural change are ultimately no threat to human labor — indeed, even if they drive up productivity and raise incomes — it still is not easy to live with the destruction of jobs.

The impulse that drove the Luddites is perfectly understandable in today's radically different economy. The Luddite goal of running technological change in reverse can never work. They were wrong to fear that employment would disappear.

But the Luddites' protest makes perfect sense from the viewpoint of their families' interests. As workers face the same traumas today, we owe them support as they grapple with economic transitions.