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A Farewell to Routine Jobs?

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Automation is causing the disappearence of more and more routine jobs. What will the consequences be for the future labour market?

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KLAUS Æ. MOGENSEN

Senior Futurist, Editor

Posted Jul 16, 2019 in Work Article from Scenario 02:2017

Researchers from the National Bureau of Economic Research (NBER) in the United States have looked at the evolution of middle-class routine jobs since 1979. Bank tellers and welders, among others, have traditionally received middle-class wages despite mostly handling routine work tasks. NBER finds that the share of such jobs has declined from 40.5 percent in 1979 to 31.2 percent in 2014. Roughly a third of this decline can be subscribed to a decline in the population groups that traditionally have done routine work – men under 50 with little education and women under 50 with mid-level education – but the rest reflects that people who used to do relatively well-paid routine work now are unemployed or doing low-wage physical work. Few from these population groups find employment in the new types of well-paid jobs that arise because of new technology and economic growth, and this is reflected in the trend of a middle class that shrinks while the economic lower and upper classes grow.

In the coming years, we will see even more routine work automated. In a report from 2016, McKinsey & Company estimates that about 70 percent of the routine work tasks that are being done today – constituting about half of all work done in the US – can be automated with already demonstrated technology. If the trend described by NBER continues, we will see more people moving from middle-class employment to low-wage work or unemployment.

The general assumption is that new technology creates just as many jobs as are taken over by technology. In reality, we have seen a decline in the share of citizens in the USA above age 16 that is employed or seeking employment, from 67.3 percent in 2000 to 62.7 percent in 2016. It hence looks as if the net effect of automation is a decline in the number of workplaces and more people dropping out of the labour market.

However, other factors than automation contribute to the decline in workplaces, including outsourcing and continued effects of the 2008 financial crisis. Historically, rising unemployment is in fact far more associated with financial crises than with technological progress. Seen globally over time, it is thus probable that new technology will create just as many jobs as disappear – including well-paying jobs.

Still, this doesn’t change that the share of routine jobs will decline in the future, since such jobs are particularly easy to automate. We can see this as a positive development, since routine work rarely is very exciting work. The open question is what will happen to the people who lose their relatively well-paid routine jobs. Will they, as we have seen over recent decades, end in low-paid jobs or long-term unemployment, or can they be retrained for the new jobs that arise? These new jobs will generally require different and higher competencies than the jobs that disappear, so this is far from certain. Maybe, at least in a lengthy transition period, we must expect to see a growth in the ‘precariat’ – people with tenuous or uncertain attachment to the labour market, and that most of these people will be fairly young.

Image: Frank Hebbert

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