As noted previously, predictions that technology would lead to the wholesale elimination of jobs and mass unemployment have persisted for many years, particularly during the automation debates in the late 1950s and early 1960s. Few academic
economists take such predictions seriously, partly because of the theoretical reasons discussed earlier and partly because of the U.S. record of employment growth.
Nevertheless, this prediction regained attention recently in the context of the dramatic spread of computers, which led some to claim that high technology destroys more jobs than it creates and that employment growth is not sufficiently rapid to offset this displacement (Aronowitz and DiFazio 1994, pp. 1 ff., 21).
Although he does not cite specific figures, Jeremy Rifkin, writing in the mid-1990s, described the economy as being in a "jobless recovery" in which continued layoffs and downsizing and increased numbers of permanently displaced workers foreshadowed
"massive unemployment" and a "near workerless, information society" (Rifkin 1995, pp.
xv ff., 5, 59). Although most economists would find this view exaggerated, two prominent trade economists, Paul Krugman and Robert Lawrence, claim that "the concern, widely voiced during the 1950s and 1960s, that industrial workers would lose their jobs because of automation, is closer to the truth than the current preoccupation with the presumed loss of manufacturing jobs because of foreign competition" (quoted in Rifkin 1995, p. 8).
Rifkin argues that the full displacement effects of automation during the 1950s and 1960s were suppressed by government spending on military, public works, and social programs and the introduction of new consumer products and services, all of which maintained demand and reabsorbed labor. In his view, limits on government spending and restructuring and automation in service industries mean that there will be no similar source of labor demand in the future, and employment in IT industries themselves will remain too small to compensate for the displacement that will result. Rifkin comes closer to the structural unemployment view when he argues that remaining jobs will have high educational requirements that limit the retraining and reemployment possibilities for workers displaced from less-skilled blue collar and white collar jobs (Rifkin 1995, pp. 32 ff.).
Although it is hard to disentangle all of the variables Rifkin invokes, some perspective on the question of "the end of work" can be gained by examining trends in employment.3 Figure 1 shows that between 1948 and 2000, total employment more than doubled from less than 60 million workers to more than 135 million workers, with some
3 All data are from the Economic Report of the President (Executive Office of the President 1989, 2000).
sign of a modest acceleration since 1970. These numbers give no indication of a jobless or workerless economy. These statistics do not adjust for declines in hours worked since World War II, but there is general agreement that most of this decline ceased by the early 1970s and represented a gain in leisure time for workers that most viewed as a benefit rather than as a form of involuntary underemployment (Schor 1991).
Figure 1. Total Employment: 1948–2000
50,000 60,000 70,000 80,000 90,000 100,000 110,000 120,000 130,000 140,000
1948 1952 1956 1960 1964 1968 1972 1976 1980 1984 1988 1992 1996 2000 Year
Employment (thousands)
Source: Economic Report of the President (1989, 2000), Washington, DC: Government Printing Office.
Even if the number of jobs is not falling in an absolute sense, a growing job shortage may exist relative to the number of job seekers. Figure 2 shows that the
unemployment rate tended to rise to higher levels during each recession since the 1950s and remained relatively high during the 1970s and 1980s. However, the long expansion of the 1990s broke this pattern, and unemployment dropped steadily to its lowest level since the boom of the late 1960s. By 2000, unemployment was only 4 percent, a level bettered only in the 1951–53 and 1966–69 periods. Rifkin's (1995) prediction of massive unemployment appeared just as the economy drove unemployment to levels not seen in 30 years.
Figure 2. Unemployment Rate: 1948–2000
1948 1952 1956 1960 1964 1968 1972 1976 1980 1984 1988 1992 1996 2000 Year
Unemployment Rate
Source: Economic Report of the President (1989, 2000), Washington, DC: Government Printing Office.
Nor is it the case that declining unemployment merely represents withdrawal from the labor force among those displaced. Figure 3 does not suggest any dramatic declines in the employment/population ratio over time, except for the trend toward earlier retirement for men when incomes were rising, which few attribute substantially to technological displacement.
Contrary to Rifkin's assertion, some evidence indicates that IT as a share of total investment across seven OECD nations is positively related to total and service sector employment growth between 1985 and 1995, although other data suggest a negative relationship between productivity growth and manufacturing employment growth for a larger set of countries (OECD 1998, pp. 50 f.).
The economics literature on skill-biased technological change raises more serious concerns that the buoyant growth in overall employment masks employment declines for less-skilled workers. Some believe that the lower wages accompanying the lower
employment rates among less-skilled workers are another indication of declining demand for these workers. If wages did not decline, employment would have fallen even more.
Indeed, with the exception of the last few years of the late 1990s boom, the real wages of production and nonsupervisory workers has remained stagnant or declined slightly since 1973 after growing roughly 75 percent between 1947 and 1973 (U.S. Department of Labor 1999; and author's calculation from Executive Office of the President, Economic Report of the President, various issues).
Figure 3. Employment/Population Ratio: 1948–2000 (persons age 16 and over)
25 30 35 40 45 50 55 60 65 70 75 80 85
1948 1952 1956 1960 1964 1968 1972 1976 1980 1984 1988 1992 1996 2000 Year
Employment/Population Ratio
Source: Economic Report of the President (1989, 2000), Washington, DC: Government Printing Office.
All
Females Males