Note: this is a synthesis of several previous posts.
The death of middle class jobs (Associated Press):
As software becomes even more sophisticated, victims are expected to include those who juggle tasks, such as supervisors and managers — workers who thought they were protected by a college degree.
At the beginning of the 20th century, about 50% of of the American workforce was employed in agriculture. Today it is less than 10%. Yet there is still food for consumption and export, notwithstanding the major issues with some industrial agricultural practices. A similar shift is happening now. Jobs in manufacturing, information processing, or other types of routine work are quickly disappearing.
Today, we are seeing that routine producing work keeps getting automated while technical improving work, for which standardized processes can be developed, usually gets outsourced to the lowest cost of labour. This type of work can be supported by formal learning, namely instruction, based on explicit processes and procedures, for which good and best practices can be developed. However, the value of this work is diminishing, because of its fungibility, which is defined as the property of a good or a commodity whose individual units are capable of mutual substitution (wikipedia). “Jobs” are based on the inherent premise that one worker can be substituted by another. Software and global digital communications are making this type of tangible work a commodity, where over time, price tends to zero. Anything that can be codified and digitized, will be.
There is still valued work to be done, though. Complex work, like craft & building, can provide unique business advantages, is difficult for competitors to replicate, and cannot easily be digitized. Innovative & thinking work can identify new business opportunities and create real competitive advantage. But craft work takes time to develop, and innovative thinking has to continuously evolve and adapt to the changing environment. However, it is obvious that the valued work in any enterprise is increasing in variety and decreasing in standardization. Valued work, in an economy increasingly based on intangible value, is moving to the right, as shown in the figure below.
Supporting informal learning and helping connect implicit knowledge amongst workers are becoming business imperatives. These will also drive the creation of intangible value. But intangible value cannot be easily measured even though it produces most of our economic value today. For instance, the Standard & Poors stock index is comprised of more than 80% intangible value.
Craft & building work combined with innovative & thinking work (not jobs), is where long-term business value lies. Therefore, learning amongst ourselves and sharing implicit knowledge to create intangible value, is the real work in organizations today. This is social learning, and it is an essential part of work in a creative economy. It is a major shift away from most of our industrial practices, especially HR.
The challenge for organizations, institutions and governments is to help as many people as as possible make this shift, and to support those who cannot. The New York Times (May 2010) reported: “For the last two years, the weak economy has provided an opportunity for employers to do what they would have done anyway: dismiss millions of people — like file clerks, ticket agents and autoworkers — who were displaced by technological advances and international trade.” But jettisoning workers is not a viable long-term strategy. As Andy McAfee remarked when United Technologies laid off workers, even though its stock was at an all time high and sales had increased by 35% – “I simply want to point out that if this example is part of any larger trend, then we cannot rely on economic growth to fix our current problems of unemployment or underemployment.”
As early as 2003, a report by the Federal Reserve Bank of Dallas, showed that we are moving to an economy that values emotional intelligence, imagination and creativity. How we get there will depend on what we do now in preparing people for an economy of intangibles. It could be a future described by TechCrunch – “America is well on the way towards having a small, highly skilled and/or highly fortunate elite, with lucrative jobs; a vast underclass with casual, occasional, minimum-wage service work, if they’re lucky; and very little in between.”
But it can be a much better future if organizations, institutions, governments, and especially individuals start to focus on thinking and building skills, as well as being innovative and honing their craft skills. This means helping all people develop their talents to do work based on initiative, creativity, and passion. Our work structures need to support informal learning so people can share implicit knowledge while creating intangible value.
Realizing that the era of “jobs” is over, would be a good start.
Acknowledging that our existing education and training institutions are mostly ill-suited for this challenge would be another step.
Finally, we have to create better mechanisms to account for value and redistribute wealth in an intangible economy.