A good job is hard to find. They have become more valued than ever. We are witnessing an interesting occurrence as growth in worker productivity, output, and GDP are no longer accurate predictors of new job creation.
Productivity and output in many industries continue to increase but that doesn’t indicate that new jobs are being created as a result. This is not just due to AI and automation, but rather the advent of IA – or what is known as intelligent assistance. IA occurs by pairing a worker with new technology to assist them in the performance of their jobs. Workers and operations are made more productive by this integration, which leads to increased output per employee. While this increases the workers’ value with said company, higher output is no longer associated with an increase in the company’s labor force, as historically was the case.
With employees being made more and more efficient in their jobs, we might expect worker wages to rise at a commensurate rate with their increased efficiency and value, but that has not proven true. Worker wages have grown at a rate of around 15% since 1973, while in that same time period worker output has more than doubled, as depicted in the graph below.
My concerns with the data above are not centered on the disparity between increasing productivity and stagnant wages (I’ve written on that in previous columns). My focus here is on the growth of productivity and how that metric has ultimately become detached from new job creation. If rising productivity and increased output no longer generate new job creation – what will? Where will new jobs come from? Our economy is producing more goods and services than ever before and yet companies are progressively relying on a minimally efficient workforce to do so.
Another question that this graph raises is if the income of workers has risen only slightly since 1973 and yet worker production has over doubled in that same time, where are the fruits of increased efficiency going if not to the wages of existing or new workers? Largely to technology and R&D. Companies have to focus on continuing to increase innovation and efficiency to remain competitive. In a market where virtually everything is expected to be delivered ASAP and at the lowest possible price, the value derived through increasingly efficient operations is invested back into the company via improved processes and new technology. If a business isn’t investing in methods to increase output capacity while simultaneously finding ways to minimize the costs of doing so, they won’t be around in the next few years. The days where a manufacturing operation need employ thousands of workers to fulfill its increasing production demands is a memory. Even when a company has a demand for an additional skill set, they tend to supplement their operations as needed with short-term, ad-hoc contract labor.
As companies grow, they invest more into technology and improved efficiency than they do into expanding their workforce. A company’s workforce is still one of their largest investments and intelligent assistance is how companies are maximizing that investment. Upskilling workers and leveraging their knowledge, skills and abilities in concert with technology (ie, intelligent assistance) allows for vastly higher output while negating the need to hire additional workers to fulfill the demands of that growing output. There’s nothing immoral with this arrangement. It’s the natural progression of events one would expect in a market economy.
Finding a good career in our increasingly efficient workplaces will continue to be a challenge for many. As employers focus on increasing efficiency, work that is created is predominantly generated and performed outside the confines of an employer-employee relationship. We all know that gone are the days of your grandparents who worked at the same company for their entire career and retired with a golden watch. More jobs are being created in the temporary, contract, and gig economy than in permanent employment arrangements. Currently, an estimated 36% of the American workforce is finding work as freelancers and that number is expected to increase massively in the coming years. As workers are continually made more efficient, and with new work opportunities prominently being created outside of the employer-employee arrangement, it reiterates the point that a good job is getting harder to find.