Where will the jobs be?

Global affairs is a stew with many ingredients and seasonings.  The flavours vary in different parts of the world. As of summer 2016, they include a US election, the fallout from Brexit, war and terrorism in the Middle East and parts of Africa, a stuttering Chinese economy and politics in the South China Sea, tensions on Russia’s European borders and events in numerous other places. Keeping track is challenging, let alone trying to understand how they interact.

 

An analysis of international affairs used to be simpler or at least appear to be. Parts of the world were not as connected as they are today, largely as a result of falling communication and transportation costs. These have lead to changes in the way people move, where and how they travel, as well as how, and the frequency with which they talk to each other.

 

When I moved to Canada from the UK over 60 years ago, it took ten days to travel from London to Vancouver by train, boat and train. A long distance phone call was exorbitant, the $3.00 per minute in 1962 dollars would translate into over $21.00 in today’s dollars. You just did not call. Snail mail and telegrams were a cheaper substitute. Few today using the internet would know how a telegram was transmitted and its cost. One result is that information and events which seemed to be unconnected no longer are, meaning that analysis and forecasting of events are much more difficult….at least for me.

The future for jobs?

Consider the issue of jobs and employment. With the mechanization of many jobs, how will future generations be employed? This question is frequently posed to grandparents enjoying , at least at the moment, a comfortable retirement. The following is one way to think about it.

First, reflect on what has happened to employment and occupations since the 1900s. The level of unemployment (employment) has fluctuated, but except for the 1930s and a few shorter periods it has been around 5% or less. WW2 solved the unemployment crisis and brought women into the workforce for wartime, if not later peace-time, production. It provided an enormous fiscal stimulus, and the immediate postwar period lead to civilian spending which was depressed during the war. When I first studied economics, a big macro question was whether there would be a return to the depression years. It did not happen for what now appears to be obvious reasons, but didn’t at the time.

Second, technological change always brings employment impacts in terms of level and type of jobs. Around 1900, about 25% of the labor force was in agriculture, today it is less than 2% in North America, while farming output has grown enormously, and with it rising labour productivity. But this took place with the growth of jobs associated with mechanization, and the development of improved strains of meat and crops. In a sense, jobs in agriculture morphed into jobs in machinery, equipment, agriculture research labs and firms producing new and improved plants and animals.  These were not counted as farm workers but in an indirect sense they were.

 

Similar adjustments took place in other industries as technology peculiar to those industries took hold, none more so than recently with the introduction of computers, the internet and all that. Jobs in almost all industries except perhaps hairdressing and undertaking have been affected. As new technologies are introduced, some jobs become obsolete while others open up often requiring a different type of education and training.

 

One difference is that today’s technological tsunami may be having a faster and perhaps more devastating effect on jobs than did the previous agricultural one. It has translated understandably into a political backlash as seen in both the US (Trump, Sanders and the dislike/distrust of Clinton) and Europe with Brexit, and the rise of mainly right wing political parties seeking to distance their countries from immigration, the EU and its bureaucracy.

 

How will this all pan out? Only God, Allah, Buddah or Brigham Young probably knows. I don’t. My gut instinct is that over time economic adjustments will be made that are not too disastrous for those of us and our children, who at present enjoy a remarkably high standard of living, at least relative to a century or even half a century ago. What it will require is for many existing workers to be retrained, and for new entrants to the labour force to receive a different type of education/training.

What type of education/training?

In the last 50 years, the proportion of people attending university has risen markedly as many feel that a degree is necessary for lifetime success. The data show that those with a degree tend to have higher lifetime incomes, than those with only a high school diploma. But at the same time many successful entrepreneurs were university dropouts including Bill Gates from Harvard – later he received an honorary degree from the university. People with technical training can often earn six figure salaries. Granted these are a small proportion of the population and workforce, but they point to one road to employment opportunities.

In recent years, community colleges providing education and training in the trades are experiencing increased enrollment as young people, and older people who have lost their jobs, receive training suitable for today’s workforce. This is merely a continuation of the idea apprenticeships and that education is a life-long process and not just undertaken at the start of life. A combination of university courses and trade skills is one option, as is a mix of academic courses and work related activities including apprenticeships. All point to adjustments being made and the need for these to occur during a person’s working life.

 

More on what and where are the jobs of the future? A topic for a future posting.

 

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