High Tech Advancements and Job Growth

January 2021 Phil Hauck, Economic Disruption & Transformation Signals Team I was recently introduced to a futurist named Thomas Frey of the DaVinci Institute. In a recent blog post, he makes the point that all these high-tech advancements that are replacing jobs aren’t a negative, but historically have been a positive. The negative impact gets attention because it is “seeable,” an unemployment statistic. What’s unseen is this: When a robot replaces a job in a factory, the job-holder is theoretically now in a worse position, looking for another job and/or living on unemployment. But, Frey illustrates, the product that robot created will now appeal to more and more people, creating other jobs up the line, and provide a better quality of life. That, in turn, yields a more dynamic economy that spawns more jobs.

It’s a flywheel circle. The job that displaced worker will go to is one created by a prior tech advancement that is yielding a more dynamic economy.

Examples

• Long ago, the horse-shodder lost his job due to the advent of cars, so he/she went to work in a factory. The cars unleashed a massive wave of productivity that made all Americans richer, and his/her factory job ultimately paid much better than he/she ever made shodding horses.  You can watch this right now by looking at undeveloped countries like Ethiopia, that don’t yet have high levels of technology, and see their low standard of living. As tech gets hold, Frey’s Flywheel will result in a much better standard of income and quality of life.

• Today, you will see it, maybe not so much in new manufacturing jobs, but certainly in service ones. When people become more affluent they want more services–more meals out-to-eat, more vacations, more personal trainers, more ….

• Look at today’s boom in demand for engineers, who will create the next technological breakthrough, which will produce more economic growth (including high quality jobs).