When Your Replacement’s Name Is HAL

At its best, technology makes us richer and creates jobs.

Instead of having 10 people each baking 10 cakes a day, you have 10 people manning machinery that bakes 10,000 cakes a day. Profits soar, allowing you to hire a bunch of new pastry chefs for your rapidly expanding cupcake division. Such scenarios have been essential to the success of the U.S. economy over the course of its history.

This is also what Peter Drucker pointed out in Managing In Turbulent Times. “Few companies that installed computers to reduce the employment of clerks have realized their expectations; most computer users have found that they now need more, and more expensive, clerks even though they call them, ‘operators’ or ‘programmers,’” Drucker wrote. “Similarly, the old fears that ‘automation’ would result in large-scale unemployment have universally been disproven; all automation might do is to shift employment from fairly low paid manual to much more highly paid professional or technical work.”

But now, as an article this week in the Financial Times pointed out, economists and others are starting to wonder whether the old models are breaking down.

“At the heart of the conundrum is why current technological advances, which in previous cycles sustained employment growth even as they have made workers more productive, have become job-devourers,” the FT reported. Said James Manyika, a director of the McKinsey Global Institute: “The past decade marks the only 10-year period in the past 80 years when employment in the U.S. has declined at the same time that productivity has risen.”

Some say that there’s insufficient innovation today to generate the new jobs needed to offset the displacement of workers. Others say that innovation is so breakneck in its speed that workers lack the skills needed to take advantage of new opportunities (a point we’ve discussed before). [EXPAND More]

Drucker may have well seen some truth in both explanations. “As a result of the shift to knowledge work, the unskilled worker is speedily reverting to a position of social impotence and unimportance,” he pointed out in The Age of Discontinuity.

He addressed the problem with equal starkness in The Frontiers of Management. “This shrinkage of jobs in the smokestack industries and their conversion to being capital-intensive rather than labor-intensive, that is, to automation, will put severe strains—economic, social, political—on the system,” Drucker wrote.

What do you think: Is technology today killing more jobs than it’s creating—and why? [/EXPAND]