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The Impact of Technology on the Workplace – 5 Steps to Protect Your Job

By Michael Lewis

factoryDo you find it hard to make ends meet these days? You are not alone. For millions of workers, wages and disposable personal income have flat-lined or fallen during the last decade. According to the Center for Budget and Policy Priorities, median income for working-age households (headed by someone under the age of 65) slid from $62,541 in 2000 to $55,640 in 2011, a 12.4% decline. While wages have been stagnant, the prices of everything from healthcare to housing has risen dramatically above the rate of inflation, leaving almost half of Americans living paycheck to paycheck.

According to the Federal Reserve, most Americans have lost value in their homes, investment accounts, and retirement funds with an average loss of 38.8% in the years between 2007 and 2010, wiping out 18 years of savings and investments. Not surprisingly, according to a U.S. Gallup poll, the number of Americans worried about maintaining their standard of living, being able to pay medical bills, or losing their jobs are on levels last seen in 1991 and 1992.

Politicians blame their political rivals for our woes and promise that, with economic recovery, jobs and higher wages will return. But is the solution as simple as they claim? When will the rate of unemployment return to acceptable levels?

Future Employment Trends

Extrapolating current employment trends into the future doesn’t bode well for future generations, who could be trapped by decades of the following:

1. Low Job Growth

In the decades between 1940 and 2000, America experienced a minimum 20% increase in the number of non-farm jobs from the prior 10-year period. For the first time, the country actually lost jobs between 2000 and 2010, while the decade between 2010 and 2020 is on pace for only a 10% increase.

In past recessions, job levels have always returned to their previous high level within 36 months of the bottom. However, 42 months after the Great Recession ended in 2009, the country gained less than one-half of the jobs lost (3.5 million new jobs versus 7.5 million previous jobs). The largest source of new jobs has always been new companies and new industries. For example, in 2005, start-up companies less than five years old accounted for 99% of new jobs, according to a study by University of Maryland economist John Haltiwanger, but even those companies hire fewer people today (4.7 employees) than in the mid-1990s (7.6 employees).

2. High Unemployment

Recessions always lead to corporate efficiencies, and in most cases, recovery and higher sales create demand for more labor. But not this time. According to Lawrence Mischel, president of the Economic Policy Institute, “We have a system where corporations have been able to achieve a level of productivity they had before the recession even with 8.8% unemployment. They managed to achieve prosperity without anyone else having any prosperity (through automation and process redesign). To me, that’s not an economy that is working well.”

There are currently more than four unemployed workers for every job opening, according to federal job data. This imbalance also negates any pressure on companies to raise salaries in order to attract employees.

3. Low Wages

A report by the National Employment Law Project reported that “during the economic downturn, 40% of the jobs lost came from high-wage industries – yet high-wage industries accounted for only 14% of the new positions created in the past year.” Simply put, America has lost jobs in the high- and mid-wage industries and replaced them with low- and minimum-wage jobs with an average wage of $12.91 per hour.

The trend to lower income has been evident for more than a decade. Our current situation was best described by Princeton economist Alan Binder in the “Wall Street Journal”: “The American story for two centuries was one of real wages advancing more or less in line with productivity. But not lately. Real average hourly earnings (excluding fringe benefits) now stand roughly at 1974 levels. Yes, that’s right, no real increase in over 35 years.”

4. High Taxes

According to the Tax Policy Center, approximately 46.4% of U.S. households didn’t pay personal income tax in 2011, although 60% of those non-payers pay payroll taxes (their tax liability is too low to qualify for income tax). The percentage is a little higher than the historical average of 40% due to the recession.

The demand for government revenues or taxes is driven by the cost of war, most recently Iraq and Afghanistan, as well as an explosion of social programs. Since 2001, we have spent more than $1.4 billion for wars in Iraq and Afghanistan, more than $323 million per day for the last 12 years. But those costs have been dwarfed by what we spend on social programs.

According to Nicholas Eberstadt in “The Wall Street Journal,” “The growth of entitlement payments over the past half-century has been breathtaking. In 1960, U.S. government transfers to individuals totaled about $24 billion in current dollars, according to the Bureau of Economic Analysis. By 2010, that total was almost 100 times as large. Even after adjusting for inflation and population growth, entitlement transfers to individuals have grown 727% over the past half-century, rising at an average rate of about 4% a year.”

Our unwillingness to cut entitlements and the low likelihood that foreign tensions will abate requires constantly escalating federal revenues, most likely paid by middle-income Americans through higher tax rates and fewer tax deductions.

looking for a job

20th Century Development of Industry & Technology

Mankind and civilizations throughout history have been affected at various times by forces that changed the way they lived and worked – the replacement of oral tradition with the written word, the democratization of education, the development of the scientific tradition, the Industrial Revolution, the application of economics to manufacturing – but no change has been as vast or as deep as the changes wrought by the computer.

During and following the last half of the 20th century, the computer enabled mankind to visit the Moon, communicate instantly with anyone any place any time, and explore the mysteries of life itself. The global economy has been reshaped by machines that can collect and analyze prodigious amounts of data in real time, telephones and communication devices linked through satellites, and robots capable of precision, strength, and durability far beyond human capacity.

All these advances have resulted in the following changes:

1. The Dominance of Multinational Corporations

The integration of technology and business has spurred the growth of multinational corporations whose loyalty is not to a single nation, but to the pursuit of profits. The top 10 companies in “Fortune” had combined revenues greater than the GDP of Mexico and Canada combined, equaling almost $3.5 trillion in 2011. Their aggregate revenues would rank fifth in the world ahead of Germany and Russia, only trailing the U.S., China, Japan, and India.

Technology allows and promotes enterprises of vast scale that previously would have been impossible to manage and direct. These companies serve worldwide markets with a cornucopia of products to meet every desire, transferring their production to lower wage markets as necessary to cut costs.

2. A Redefinition of “Work”

Computers have affected all aspects of commerce from the type, volume, and cost of products, to the location and size of facilities, to even the efficiencies of physical movement across countries and oceans. Work, as we know it, is not anchored to a particular site where everything is connected. Food that is grown in South America ripens on market shelves in North America, Europe, and Asia; automobiles from Japan and Korea are common in America and South Africa; a computer programmer in Israel designs websites for a Norwegian company; and a customer service representative in Mumbai, India resolves complaints from customers in Terra Haute, Indiana.

Manual labor is growing extinct, replaced by machines that work faster, error-free, and never get tired or bored. Assembly lines of hourly workers have been reconstituted into connected robotic work stations; telephone operators are disembodied voices programmed to efficiently direct calls or solve problems without human intervention.

As a consequence of computers, whole employment categories have disappeared and are not likely to return. Organizations have eliminated mid-management levels, as computers give executives greater spans of control, while the duties of secretaries, clerks, and bookkeepers have been redefined so that single employees can do the work of two or three workers. Travel agents have been replaced by self-service and online travel sites, while Southwest Airlines has transferred ticketing, check-in, and seating from airline employees to passengers, saving costs and increasing efficiency.

3. Growing Disparity Between the “Haves” and the “Have Nots”

As “The Atlantic’s” associate editor Jordan Weissmann states describing the United States’ income inequality, “The first wave of industrialization in the 19th century increased living standards, but also offered bigger rewards for factory owners than their workers… And by now, we’ve gone through several epic rounds of economic upheaval that have left us a vast gulf between the rich and the rest, as well as a welfare state that tries to mitigate some of the side effects of that difference.”

While wealth has always moved disproportionately from the majority to the few, the results over the past 30 years have been egregious: The top 1% of households doubled their share of pretax income, while the bottom 80% saw their share fall. Economically, the effect has been increased savings by the most fortunate, and reduced consumption by the majority.

4. Slower Future Economic Growth

Stagnant wages and fewer jobs led to a loss of purchasing power in the latter decades of the 20th century. The political and business response to the loss of purchasing power was an expansion of “easy credit,” where purchasing power is sustained by borrowing.

Most economists believe the latest expansion of credit, the increasing concentration of wealth, and the subsequent actions of the richest Americans investing the additional wealth in unsound debt instruments led to the most recent meltdown of the world’s economies. The growing level of government and personal debt cannot be sustained – therefore, income that might be invested in new businesses, improved infrastructure, or factory expansion is instead needed to pay down debt, dragging down economic growth.

Many countries have initiated steps to reduce government borrowings and encourage personal consumption in efforts to rebuild their economies. These efforts generally fail to recognize that the underlying cause is the inexorable evolution of technology. Therefore, it is important to determine how to replace income from jobs that no longer exist (and jobs that will be lost in the future) as technology continues to change the workplace.

struggling economy

Strategies to Protect Your Employment

While the country’s leaders struggle to develop economic and political solutions in response to the impact of technological innovations, there are several strategies you can implement to protect your job:

1. Maintain Exceptional Personal Relations

Likable people – those from whom we feel empathy and sympathy – are more successful and tend to be promoted and rewarded more often than those who are less likable. The Gallup Organization has conducted a personality factor poll in every election since 1960 and has determined that likability – not the issues or party affiliation – is the most consistent predictor of the final election result.

Careerealism, an Internet employment firm, suggests a number of skills of likable people which can be used by everyone:

  • Be Passionate and Engaged. As a society, we like people who are engaged, have a sparkle in their eye, and believe in what they do. Passionate people are engaged in life – the more engaged you are, the more interesting you are, and the more people want to be around you.
  • Assume Goodwill. Don’t be paranoid. Few people are naturally disagreeable or seek to take advantage of others. Presume people have good intentions until proven otherwise.
  • Listen. The more you listen to others, the less you will worry about what you are going to say. When you respond, say something that demonstrates to the person that you heard them, and that you appreciate his or her perspective. Use the name of the person to whom you are speaking as a way of acknowledgement.
  • Practice Good Manners. Say “please” and “thank you.” Open doors for people, and let others go first. Don’t swear or use profanity, complain, or whine about situations that can’t be changed.

2. Excel at Customer Relations

Customers are the lifeblood of every business, and great customer service is crucial. If you can attract new customers and retain existing customers, you are a valuable asset of any firm. In most companies, a minority of employees deal directly with customers – they are the “tip of the spear,” the energy that turns the crank of commerce.

Company executives and highly paid consultants spend hours developing elaborate, extensive strategies to win in the marketplace and beat the competition, but the results always depend upon those few who implement the strategy through direct contact with customers. Be a person who delivers results.

3. Network Within Your Industry and Skill Set

Being recognized as a valuable and trusted resource for others can help you in your current job, as networking is a reciprocal exercise. It also exposes you to other opportunities if the need arises. Visibility is an asset in every occupation – the Jobvite Index 2012: Employee Referrals study suggested that 44% of new hires are referred by existing employees, and that candidates who were referred by employees are hired faster than other candidates.

4. Maintain and Add to Your Job Skills

According to a study by the New York Federal Reserve and New York University, one-third of the increase in the unemployment rate of college-educated workers between 2007 and 2011 was the result of the workers not having the right skills. Keeping up-to-date on the trends that affect your industry allows you to identify skills that you likely will need in the future, such as increased technical training, or better communication skills.

Potential sources of training include company programs, community colleges, and professional groups. To remain relevant in the future workplace, invest in yourself and your future.

5. Prepare for the Worst

Every company and industry is vulnerable to loss and even extinction due to the pace of technological change and the growth of the global marketplace. The life cycle of a company from start-up to decline has become more compressed, with companies launching, growing to dominate a market, struggling, and finally disappearing in bankruptcy or reformation in less than a decade.

Despite your best efforts, your job can disappear with the company’s decline. Employment is increasingly temporary, so protect yourself by limiting your debt and fixed expenses while building up a cash reserve sufficient to carry you to the next opportunity.

a great attitude and great customer service can help you keep your job

Final Word

The advantages of technology are visible in every facet of human activity, but each step forward is often accompanied by social and economic turmoil, a disparity in the benefits received and unanticipated, often negative consequences. Our knowledge has always exceeded our wisdom, and therefore, individual hardships and progress are two sides of the same coin.

Do you expect to be working for the same employer five years from now? Do you think the Federal Government should provide assistance to displaced workers?

Michael Lewis
Michael R. Lewis is a retired corporate executive and entrepreneur. During his 40+ year career, Lewis created and sold ten different companies ranging from oil exploration to healthcare software. He has also been a Registered Investment Adviser with the SEC, a Principal of one of the larger management consulting firms in the country, and a Senior Vice President of the largest not-for-profit health insurer in the United States. Mike's articles on personal investments, business management, and the economy are available on several online publications. He's a father and grandfather, who also writes non-fiction and biographical pieces about growing up in the plains of West Texas - including The Storm.

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  • http://twitter.com/TKBlogs Tahnya Kristina

    I just recently changed jobs and the technology advancements have been the biggest adjustment. I log into my computer with a finger print. It’s been hard but I am learning and enhancing my skills so at the end of the day it’s all good. Great post I am going to share it on Dinks Finance next Friday.

    • MLewis

      Tahnya,
      Thanks for writing and congratulations on recognizing the importance of maintaining and improving your skills. We’re in a brand new world and you’ll want to stay ahead of the curve.

  • http://mydebtucation.blogspot.com/ Mario

    I think even before the technology boom, the key has always been about paying attention to the world outside and constantly reeducating yourself. But now more than ever, career management has become as big a part of my professional life as setting my alarm and getting to work on time in the morning.

    • MLewis

      The times, they are a’changing. Smart people will keep ahead of the change. Good luck and thanks for writing again.

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