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No jobs on the net

February 10, 2007

Yesterday, I wrote about the influence of computer automation in widening America's growing income gap. In today's New York Times, Floyd Norris reports on a new government study that documents what's been going on in the U.S. labor market over the past six years, since January 2001. It provides an eye-opening account of what happens when business, and in particular media, moves from the physical to the virtual world. For those who might be hoping that the decline in jobs in traditional media will be offset by growth in employment in digital media, the news is not good:

One chart shows the combined categories of publishing and broadcasting, both traditional and Internet-based. Over all, employment is down 11 percent. In those six years, employment in traditional paper-based publishing is down 13 percent. Broadcasting employment is off 3 percent. The traditional industries, between them, have shed 148,000 workers.

Did the Internet make up the difference? Just the opposite. Internet publishing and broadcasting now employs 36,600 people, and that figure is down 29 percent from six years ago. A larger Internet-related area covers Internet service providers, search portals and data processing. It now has 385,000 workers, down 25 percent over the last six years.

In the past information technology tended to reduce demand for low-skilled jobs but increase demand for higher-skilled specialists. Now, automation is moving up the skills ladder, as the Internet and sophisticated software combine to reduce the need for more categories of knowledge and creative workers. One has to wonder what new categories of employment will expand to absorb the losses.


I'm no economist, so I'll ask. Is the question "what" new categories, or "whether"?

Posted by: Rob Hyndman [TypeKey Profile Page] at February 10, 2007 11:16 AM

Agree overall, but with the following caveats --

Google is effectively sucking up the high end of the labor market. Even though under 10,000 people work for Google, this number represents a decent percentage of brains in the bay area.

Outside of Google, thousands of startup web 2.0 companies are draining tbe remaining programing / prouct management talent. Much of this is work for equity, and may miss the NY times count.

These two trends contribute to the feeling that the bay area has never been busier - even though the companies themselves are much leaner.

Posted by: frkrueger [TypeKey Profile Page] at February 10, 2007 11:41 AM

I think Doc Searls nails it with The Because Effect -- http://www.itgarage.com/node/736

Posted by: Bill Olen [TypeKey Profile Page] at February 10, 2007 12:32 PM

What if you included all of the jobs needed to support the "Internet publishing and broadcasting" industry indirectly? HP, Apple, Dell and others to supply the hardware, all of the small/medium and large software companies building applications to drive the digitizing of that business, the companies that deliver the content, provide bandwidth, images and Internet caching, and so on...

I'm not suggesting it's a net gain, or even a wash, but any attempt to measure the total gain or loss of jobs would be difficult, if not impossible, due to the 'drag' that follows a trend such as an industry shifting from a traditional to digital model.

This reminds me of a Fortune Magazine article a few years back where the writer was lamenting the loss of an entire group that used to operate the control room of a nuclear power plant. There was only one guy left! Meanwhile, he was sitting in a room filled with thousands of computers, probably the most complex software around, tons of networking, etc. etc. As if those aren't built by humans....

Posted by: Tim [TypeKey Profile Page] at February 10, 2007 12:44 PM

Well, the above makes complete sense.
First of all, one person can run a whole online company in his pijamas. When I registered to Microsoft and they asked what I do in my online work, I wasn't sure that to choose, since I, basically, do everything except for the one and only manager.
Secondly, I am in Junior High and running a whole company with my friend. The work we do, could be, proffesionally, accomplished by about a dozen workers. Please not that we are only in Junior High.


Posted by: Shaffer [TypeKey Profile Page] at February 10, 2007 12:56 PM

I'm not sure if it's automation that's really causing this; rather, I would say that it's the ease of distribution. Before the Internet, when more people got their news through local sources, you would have a lot of people duplicating work (for example: one story about a major natl. event for the NY Times, one for the Washington Post, one for the AP, and so on, down to the Columbus Post-Dispatch et al). It's not that we need (or have) fewer categories of knowledge; rather, it now takes fewer workers to inform the same number of citizens.

Posted by: Meelar [TypeKey Profile Page] at February 10, 2007 01:07 PM

Just looking at the chart, it seems to me that an interesting story here is this: the job growth is positive in those sectors where inefficiencies are more. Not just inefficiences, but doesn't it seem like these are also sectors where more artificial needs are created and serviced? Education, health care to a major extent, financial services and management consulting to a lesser extent, are more or less where the service offerings are bloated, don't do as much as they should to remove the "pain points" in the market. The way they are today, these sectors have managed to create artiifial needs to sustain themselves and are not able to deliver real solutions to real problems. Interesting also to see that sectors showing the lag in job growth look more like commodity products (which by the way, actually do something useful)? Internet seems just a part of the story.

Posted by: RK [TypeKey Profile Page] at February 10, 2007 07:18 PM

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