Technology vs. Jobs

A question from LinkedIn:

How do you view the relationship between Technological Innovation and Job Creation?  A net positive, a net negative, net neutral?

The relationship between technological innovation and job creation is threefold:

  1. Technological innovation creates (relatively few) high-paying jobs for people who develop, deploy, and maintain the new technology (including not only engineers, but salesmen and marketers as well),
  2. Technological innovation makes certain types of jobs obsolete, but
  3. The well-paid engineers, salesmen and marketers have a demand for everything a well-paid person tends to buy, from houses and cars to designer coffees and sushi restaurants to modern health care. Hence, the relevant industries experience job growth. Note that this job growth can occur in both unskilled (retail salespeople) and highly skilled (doctors and nurses) occupations…

As to whether it is a “net positive” or “net negative” process, the answer is, IN TERMS OF WHAT? The sheer number of jobs has steadily increased, as technological progress tends to lead to workforce shifting out of more productive (meaning, highly automated) industries into less productive (meaning, hard to automate) ones.

The effect on wages, meanwhile, has been diverging. Workers who operate expensive machinery (say, locomotive operators) and workers who require extensive training (as in, for example, registered nurses) see their wages increase over time; those who don’t, face wage stagnation in nominal terns and thus its slow deterioration in real terms…

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