As I See It: The Other Intelligent Design
May 23, 2016 Victor Rozek
When you are 25 years old, a quarter century sounds very much like a lifetime, but it’s probably less time than the Kardashians collectively spend admiring themselves in the mirror. Still, in the time it took another generation to come of age and embark on their career paths, the law of cause and effect as it pertains to the job market was turned on its head: working people had become all but irrelevant to the creation of wealth.
Nowhere is that more evident than in IT. While manufacturing has long since resigned from the nuisance of hiring Americans in favor of automation and cheap labor, IT grew to become an opportunity dispenser. Decades of rocketing innovation gave promise to endless job possibilities. But a funny thing happened on the way to inexhaustible employment. As computers gained intelligence, the job dispenser turned stingy and selective.
Here’s a sobering statistic courtesy of teacher/activist Paul Buchheit. “Just 25 years ago GM, Ford, and Chrysler generated a combined $36 billion in revenue while employing over 1,000,000 workers.” Note that in spite of a heavy reliance on automation and robotics, the auto industry still managed to sustain over a million middleclass jobs.
But in barely a blink, IT all but severed revenue from labor. “Today,” says Buchheit, “Apple, Facebook, and Google generate over a trillion dollars in revenue with 137,000 workers.” It’s an extraordinary inversion: less than 14 percent of the total employed by the auto industry produced about 28 times the revenue. Such miserly labor-to-production ratios probably haven’t been seen since agriculture became mechanized.
The profit generated per employee is unprecedented and increases each time human functions are supplanted by software. According to Buchheit, Merck, Allergan, and Pfizer all rake in significantly over $100,000 per employee. Exxon and Phillips 66 are both well over the $250,000 mark. But for top-dollar returns, nothing approaches IT.
Facebook and Google squeeze out over $300,000 per employee; but Apple is the iprofit winner, garnering a whopping $500,000 per person. The inescapable conclusions are that more customers are being serviced by fewer employees, and a growing number of critical functions rely on machine intelligence rather than human intelligence. In the process of machine maturation, millions of middleclass jobs have disappeared.
Certainly, well-compensated technology jobs still exist, but as computers become smarter, those job numbers shrink and the competition for top spots becomes fierce. Buchheit offers the following examples: Netflix provides mediocre movies (my opinion, not his) to 57 million customers “with less than 2,200 employees.” They do, however, enjoy a median salary of $180,000. “Google is worth $370 billion but employs only about 55,000 workers.” By contrast, Buchheit notes that back in the mid-1960s “AT&T was worth less in today’s dollars but employed about 750,000 workers.” Topping the list of those doing more with less is Facebook’s messaging application WhatsApp that has a scant “55 employees serving 450 million customers.”
“Service,” of course, has become more synonymous with “availability” than actual customer contact. If only one percent of WhatsApp users were unhappy (and they are bound to be miserable about something), that’s 4.5 million dissatisfied users that no help desk could ever hope to assuage. Besides, people making six-figure salaries probably aren’t encouraged to talk to anyone outside the company. It would be a waste of their time and talent.
The computer-generated suffocation of middleclass jobs is predicted not only to continue, but to accelerate. In this century alone, half of all jobs losses were directly related to the replacement of people with computers, says Buchheit quoting researchers at the University of Chicago. And sometime during the 2030s, forecasters at Oxford University predict that half of all jobs will vanish.
The dilemma for this generation of IT job seekers is that they are entering the market during a time of diminishing family-wage jobs and a rising cost of living. It starts with tuition. In slightly more than one generation, the cost of an education rose a staggering 1,120 percent. Thus, graduates are saddled with the equivalent of a mortgage long before they own a house. If fact, odds are they will never own a house unless they inherit one–or at least a sizable down payment.
In the time it took the preceding generation to make its bones in the marketplace, the cost of medical care rose by 601 percent; the cost of food grew 244 percent; and the cost of living indoors went up by 380 percent.
As for the pay of a typical worker, the Pew Research Center released a report this May indicating that middle-class incomes fell from $77,898 to $72,919 between 1999 and 2014. All is not lost, however. If you’re able to enter the job market at the top, as Millennials are said to aspire to, your problems will be infinitely more manageable: the average CEO pay rose 937 percent.
As robotics replace muscle and algorithms replace judgment, and affordable computers outthink and outperform us, the larger question is what advantage will there be in employing humans? After all, humans only work a fraction of available hours; they get tired, go home, become ill, take vacations, waste time on social media, change jobs when it suits them and, being human, are subject to more fits of irrationality than Donald Trump during a debate.
The revenue-per-employee calculations are instructive, but perhaps lacking in relevance. As we enter the age of intelligent and autonomous machines, a more useful measure is how much money does a company earn per system, or robot, or software product? If the Supreme Court classifies corporations as “people,” then perhaps intelligent machines should be classified as employees, their earnings taxed and set aside as a security net for the retraining of millions who will inevitably be displaced.
From drones to driverless vehicles, to software that writes financial reports, to fully automated warehouses and manufacturing plants, to robots that perform an infinite variety of tasks from maid service to surgery; the elements of the revolution are in place on a thousand fronts. When the tipping point comes untold numbers of workers will find themselves unprepared and unwanted.
If the Oxford prognosticators are right, and half of all existing jobs will disappear within the next two decades, we can either prepare for that eventuality now, or deal with what promises to be desperate consequences later.