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What New Technology Has Wrought

We blame our financial crisis on the non-regulation of large banks with reason but our joblessness is not just the result of the financial crisis. It is also the result of the changing technologies.  And this has gone on for quite awhile. First it was the technology advances in agricultural that threw thousands off the farms. So millions migrated to manufacturing jobs in the cities.  Before robots, automobile plants gave a large proportion of the working class a middle class income. Then manufacturing jobs disappeared in large numbers, partly due to international corporations taking jobs abroad and partly due to technology.

Service jobs don’t pay as well as manufacturing jobs. But even in serven jobs, automation has come. Years ago a good living could be made as a secretary, the vast majority of those jobs are gone. We are our own secretaries. Today a parking lot has no attendants, just a machine to print your ticket and take your money. Now it is the service jobs being auomated.  These kinds of manufacturing and service jobs which used to give the working class a wage are leaving us.

Of course, we still have an important manufacturing sector. High tech was the largest overseas industry export, with U.S. high-tech manufactured goods comprising 17.8 percent of total U.S. exports in 2009.  The Tech America Foundation reports that the U.S. high-tech industry lost 115,800 net jobs in 2010, for a total of 5.75 million workers. Of course, we don’t know how many of these jobs were shipped overseas and how many were losses to the recession or to automation. We do know that we are still importing more high-tech merchandise than we export.
  • U.S. high-tech imports reached $299 billion in 2009, down 11 percent from $336 billion in 2008.
  • U.S. high-tech merchandise exports totaled $188 billion in 2009, down 16 percent from $223 billion in 2008.
The Economic Policy Institute, a Washington think tank, says American companies have created 1.4 million jobs overseas this year, compared with less than 1 million in the U.S in 2010. Even the manufacturing jobs remaining are under threat by the use of visas bringing in high tech professionals instead of hiring Americans. Why would this happen? Because hiring foreigners for domestic jobs is cheaper.

What strategies can we adopt? Some countries protect their workers. Brazil is booming and it has a government that seeks to protect jobs through tariffs. But American policymakers, regardless of party, believe that tariffs backfire. Unfortunately, it is more complicated than that. And our public policymakers don’t do well with complicated. Take the controversy over the Obama administration’s attempt to support the solar panel industry. We used to be the largest producer of solar panels in the world. China has become the number one producer of solar panels in the world but if we supported the solar panel industry the way China supports its solar panel industry, we would have remained number one. When the Obama administration sought to financially support the solar panel industry, the administration came under attack when one loan failed.

How can we possibly change the path we have taken? Not easily. The first step is to recognize that we have a problem. And public policymakers are not willing. Our Congress is tied into campaign donations from multi-national corporations that wish to continue sending jobs overseas. So the very leaders who should be focusing on the quality and quantity of jobs are compromised.

Josh Lerner. professor at Harvard Business School, cited that there are government strategies which are useful. The Bayh-Dole Act of 1980, encouraged innovation because universities got automatic title to research paid by the federal government. And this encourages universities to engage in research. President Obama has encouraged the growth of green jobs without much success to date. But at least it was a recognition that the problem is there.

The Kaufman Foundation found that from 1980-2005, nearly all net job creation in the United States occurred in firms less than
five years old. This data set also shows that without startups, net job creation for the American economy would be negative in all but a handful of years. So clearly at least one possible strategy would be for our policymakers to support startups. But there are few strategies out there. We need to focus on how to create good paying jobs.


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