A troubling report by CIBC deputy chief economist on the decline of job quality in Canada is the latest reminder of fundamental changes across the employment sphere brought on by a range of factors including technological progress and globalization.
A notable shift has been the so-called "job polarization" effect in developed economies that has seen a gradual decline in the number of middle-skilled, middle-class white-collar jobs, while employment in higher-skilled areas such as medicine and architecture, or in non-routine, unautomatable jobs such as janitorial work or physical security remained relatively steady. The Globe and Mail's Sean Silcoff explored the issue two years ago in an ROB Insight column that explored why janitors have better job prospects than office managers.
The machines are taking over: That has been the cry of low-skilled factory workers in the developed world for decades, as automation displaced them by the millions. New research suggests that threat extends well into the white collar world: if you are a "middle-skilled" professional, your job is slowly disappearing, too.
That is the finding of a paper published earlier this year by the Federal Reserve Bank of St. Louis, based on a trio of recent studies that examine the impact of a term you'll hear a lot in the coming years: "job polarization."
According to the paper, this trend emerged following the three most recent recessions, in 1990-91, 2001 and 2008-09. Total employment following the recessions before 1990 began to recover from their lows within six months. But for these three recessions, it took closer to two years. Worse yet, after each downturn, job recovery in "routine occupations" – jobs that the researchers classified as requiring middle-educated individuals in middle-paid occupations – "was essentially nonexistent." This includes jobs such as sales, office and administrative work, production, craft and repair, and more menial tasks, such as operation, fabrication and labor. In other words, jobs based around routine tasks and procedures, and which machines in the digital age have become increasingly capable of performing cost-effectively.
"Job polarization is not a gradual process, but rather a phenomenon characterized by job loss in routine occupations during economic downturns," the paper observes. Manufacturing job losses accounted for just 38 per cent of those lost jobs, according to an August 2012 U.S. National Bureau of Economic Research study . The squeeze of permanent job displacement was felt across the great mushy middle.
But it's not just doctors and architects who can breathe easier: demand remains strong for jobs across the spectrum that require non-routine manual skills, including food service, security, even janitorial work. "These tasks are often difficult to automate, and they are also difficult to outsource because they usually must be performed in person," the St. Louis Fed paper says.
The implications are twofold, according to the paper: government policies that stimulate hiring in middle-income, routine jobs are likely to fall short, while education and training focused on non-routine skills is crucial. There could well come a day when "the daily routine" is something no human does from 9 to 5; the machines may be doing all that. At least there is still demand for humans to develop the programs to make them work. For now.
Sean Silcoff is a contributor to ROB Insight, the business commentary service available to Globe Unlimited subscribers. Click here for more of his Insights , and follow Sean on Twitter at @seansilcoff.
Sean Silcoff