For those who take advantage of change,
it’s a powerful ally. For those who fail to understand or exploit it, change
is a deadly enemy.
Nowhere is that more clear than in the
labor market. The hurricane-force winds of demography, technology, and psychology
are sweeping away the safe assumptions of the past and leaving behind a whole
new reality.
Let’s
start with the most fundamental of all economic concepts: productivity.
From a labor standpoint, productivity is defined as the value of the goods and
services created per hour of labor input. America’s productivity soared 4.3
percent in the second quarter of 2008, while labor costs fell at an annual rate
of 0.5 percent.1 This was a pleasant surprise because
many economists had begun to worry that inflation would be triggered by
increases in wages.
Since
early 2007, the economy has been stuck in a period of slow growth with
inflation pressures confined to the prices of energy and food. As we’ve
explained earlier, the economy continued to avoid recession quarter-by-quarter
because of rising productivity.
In many industries, companies are
deploying robots and automating jobs that were once done by human workers.
Manufacturers have used automation to boost their productivity for decades. But,
it wasn’t until the 1970s that it began to transform service businesses like
gas stations, where electronic pumps allowed drivers to fill their own tanks,
and banks, where ATMs let customers withdraw cash and make deposits without the
help of a teller.
More recently, the Internet has empowered
people to make travel arrangements, trade stocks, and create their own music
playlists. Now, many retailers are adding self-checkout lanes. All told,
millions of customer service jobs are being “outsourced” to the customer
through automation.
Before long, even more cashiers will lose
their jobs as RFID tags will be used in most stores at point-of-sale
checkouts. Sensors will detect purchases and automatically charge the
customer’s credit card. Shoppers will save time, while merchants, like Wal-Mart,
Target, The Home Depot, Kroger, and Safeway, will cut their costs and lower
their prices as they reduce their payrolls even further.
This is only the beginning. ...
