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the new business normal

Driverless cars, like the ones pioneered by Google, have the potential to wipe out the taxi and trucking industries.Eric Risberg/The Associated Press

The new economy is chockablock with contradictions.

Entrepreneurs are making fortunes with digital companies existing on a cloud. And there are a plethora of new job titles. Who would have thought five years ago that "Android instructor" would be an actual job?

At the same time, numerous sectors face a marked scarcity of openings, even as existing employees feel more overworked than ever. There may boundless wealth out there, but only the 1-per-centers seem to be making it (or as economists specify, it's more like 1 per cent of the 1-per-centers). In short, working life is good, and for some it's great, so long as your job isn't one of those made redundant by technology.

"As with the Industrial Revolution, [the digital revolution] is making us a lot richer as a society, but it's much more uneven," said Erik Brynjolfsson, an economist at the Massachusetts Institute of Technology. "If you take the total sum, people are better off in terms of the value that they have, but some individuals are worse off. Yet there are more winners than there are losers."

Some, such as economist Robert Gordon of Evanston, Ill.-based Northwestern University, argue that costly, inadequate education and other factors such as our aging population are creating serious economic and job pressures. Dr. Brynjolfsson sees a more positive picture. He believes digital advances are strong enough to offset the negative impact on the economy, even as the disruption to the job market continues. (Both make their cases in TED talks here, here and here.)

We shouldn't see computers as competition for jobs, said Dr. Brynjolfsson, who co-authored The Second Machine Age, looking at the effects of machines now performing cognitive rather than just physical work. Rather than competition, computers should be linked ever more closely with work, he said. As an analogy, he notes chess champion Garry Kasparov. Famous for his man-versus-machine matches, Mr. Kaparov helped take the game into an entirely new realm of play with "advanced chess," in which man and machine team up against an opponent also using a computer.

But with the mass reshuffling of jobs, two key questions arise. Firstly, will there be enough jobs to go around? Governments used to encourage business investment as a sure way to spur job growth. "But now, even when you have a billion-dollar investment, it may only create very few jobs, because a lot of that investment is in technology," said Anil Verma, director of the Centre for Industrial Relations and Human Resources at the University of Toronto's Rotman School of Business.

Yet there are many ancillary jobs outside the brick-and-mortar sense of building a business. These may be indirect or temporary. Adam Saunders, a professor at the Sauder School of Business at the University of British Columbia in Vancouver (Dr. Brynjolfsson was his academic adviser at MIT), argued that "for every dollar of software or hardware, there are nine or 10 dollars of organizational change and consulting and all kinds of other changes around technology that are often not measured."

In other words, some argue that all the digital benefits to jobs may be difficult to detect fully with traditional metrics.

This leads to Prof. Verma's second question. Where will the jobs come from and where will they be lost? Take Google's driverless car, as an example. Could this one day bring the demise of the taxi industry, or even trucking, in the future? If a driverless car is basically a search engine gone mobile, processing myriad information every few feet, there's great potential for the vehicle to do more than just take techies to and from work in Palo Alto.

Wage inequality is in the air in every discussion on jobs, and it's on the bestseller list with Thomas Piketty's widely discussed book on the income gap, Capital in the Twenty-First Century – just as Jeremy Rifkin's The End of Work was a focal point of discussion in the mid-1990s, with its look at the decline of jobs in the service, manufacturing and agriculture sectors and its wholesale rethinking of the nature of work.

But modelling jobs data was different in 1995. Back then, productivity still had the potential to raise wages across the economy, even in less productive sectors. As some sectors reaped the benefits of productivity and their wages rose, wages in less productive and labour-intensive sectors might also rise in order to retain those workers, economists explained. Widespread upward wage pressure is not always a good thing. In economics, it's known as Baumol's cost disease (after New York University economist William Baumol).

Today, Dr. Brynjolfsson argued, we're seeing a kind of anti-Baumol, as digital productivity holds down many wages. Yet, like years past, it's also replacing whole professions. Witness clerical, information processing and bookkeeping jobs taken over by software.

"I would say it's not really downward [wage] pressure. It's really a gap between the haves and the have-nots. If you ask me what will be the No. 1 issue that will be facing the new society, it's income gap," said Benjamin Tal, deputy chief economist at CIBC World Markets, who has written a number of recent studies on labour trends.

A number of fields still badly need highly skilled workers, from engineers to doctors and other medical professionals. And the energy sector still has a continual demand for specialized workers, inevitably keeping Alberta a centre for new jobs. But Mr. Tal noted that skilled foreign workers are often prevented from filling these roles because of a lack of co-ordination between the public sector (which is allowing skilled workers into Canada) and the private sector (which should be hiring them), and they often face a huge language barrier.

For many Canadians, it also comes down to insufficiently specialized education. Canada ranks the highest among Organization for Economic Co-operation and Development countries in university graduates earning less than half the national median income, according to a CIBC study. One solution could be more co-operation between community colleges and universities. Why not allow a student to get a bachelor's degree in history and a minor in plumbing, Mr. Tal asked, which could help prevent the high costs for some who find they need to return to school after university to learn a trade.

He and other economists say that technology advances may be inevitable, but their impact on the labour market isn't. It's very much up to us to choose how we allow technology to affect jobs. "So far, we have been very good at studying the issue, but not doing much about it," Mr. Tal argued.

How to keep up with the times

Key takeaways in the new economy, according to MIT's Erik Brynjolfsson:

Stay agile and learn new skills – these are a must in an era of constantly changing job functions, most of which are linked to computer skills.

Learn how to do things machines can't do well – creativity and interpersonal relationships aren't a computer's forte.

Maintain physical dexterity – elder and infant care, cooking, gardening, all areas are where man beats machines. Dr. Brynjolfsson used to include truck driving in this group, but with the introduction of driverless vehicles, who knows?

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