Face Age: the Economics of Employment in the Robot Revolution

Accountants are looking over their shoulders. We see their faces contort with fear, they lengthen their stride, break into a run. They drop what they are carrying, wave their arms, panic.

But it’s no good. They are not fast enough. It it not long before they are caught and consumed. The sound of their shrieking is horrible, horrible!

Robots are picking them off.

“New technologies are “encroaching into human skills in a way that is completely unprecedented,” McAfee says, and many middle-class jobs are right in the bull’s-eye; even relatively high-skill work in education, medicine, and law is affected. ” MIT Technology Review.

Some are calling this a new robot age. But to be honest, robots have been chewing up professions and pooping out their bones for centuries now.

First, the man with a mortar and pestle was ground out by a miller with a water wheel.

Then a farmer with his hoe was trampled by an oxen pulling a plough. More recently, the chainsaw cut the lumberjack workforce in half, and the production line worker was outmuscled by a robot.

Robots have taken physical jobs. We are used to that. We actually like it and appreciate it. Who would want to work for Fedex delivering packages if they didn’t have trucks and planes?

We don’t even notice the amount of automation that already exists. In Japan, FANUC company turns off the lights at its factory for 30 days at a time. It runs without humans.

The difference now is robots are no longer simply mechanical. Inside each is a silicon chip and the power to run a whole lot of equations. They can make decisions, and that means they are coming for cognitive work.

The era since the 1950s might be known as the White Collar Age. An era in which cognitive work was done by humans, and they were well-rewarded for it. Accountants kept books, engineers designed buildings, economists ran models, coders wrote code, journalists wrote stories, call-centre workers took calls.

But repetitive cognitive jobs are suited in some cases to be done by robots. Here’s a business story written by robots. It’s perfect.

History shows us that the march of the robots crushes professions. But it need not crush the people that work in them, and it need not crush the economy. The mechanical robot age was followed by a period of very low unemployment.

Unemployment

Source: Bank of England

The socially inept might not like it, but the coming economic era is going to see humans flushed out of dimly lit rooms where they have been doing repetitive mental tasks.

All that practice, all that expertise will be wasted when the robots come. We nerds will come blinking into the light, resume in hand.

What jobs will be available?

The answer is that they will be human-facing jobs. Jobs where cognitive or physical work is mixed with emotional work.

The next era will be a “Face Age”. Where humans add value to services by being present in their delivery, face-to-face. Where we add value by exercising social skills. This could be intermediated by communications technology, but a human touch will be part of the bargain.

We can already see the leading edge of this trend in the first part of the economy to try to fully automate: call-centres. The boast that you will “talk to a real person” is now a powerful marketing message.

The waiter is a much maligned profession. A vending machine and a conveyor belt can do their job (and in parts of Japan, in cheaper restaurants, they do). But the continued existence of the waiter signals something.

1) Customers attach value to human interaction.

2) Complex problems pop up in tasks that seemingly should be routine.

I was at a pub last night and there was a guy trying to order “a bowl of plain rice or a boiled potato”. The young lady taking orders may have rolled her eyes, but she also went and checked with the kitchen and came back with an alternative. That’s something a robot couldn’t or wouldn’t do.

I also suspect supermarkets will ease up on automated check-outs. There’s only so often they will let people put through Quinces as Granny Smith apples before they realise human operators add real value. (In this case it may simply be the gaze of a human reminding us of our moral obligations).

From a consumer perspective, dealing with a human is currently quotidian. It seems like all service jobs will always be low-pay jobs.

But this is not always going to be the case. Think about this: Who has a personal banker? Who has a butler? Who has a driver?

Machines are cheap and nasty. The only person in the organisation who can get away with not understanding email is the CEO. Meanwhile you see the wealthy roll with an entourage. Personal assistants, managers, bodyguards and nannies.

Madonna
I pinched this photo from the Daily Mail. That’s Madonna and her entourage.

In short, human interaction is on its way to be desirable and luxurious.  Personal services are a superior good and will likely occupy the role in our economy that consumption of physical goods has in the last 60 years.

This era will be one where while robots produce our basics we’re working in human-facing jobs to purchase yet more services delivered by people. That will be tough for people without much interest in social interaction.

It could indeed be a tough time to have Asperger syndrome. The era where nerds could triumph may be waning, and the cool kids might regain the ascendancy. But it was always odd – is there another point in history where a Gates and a Zuckerberg could have become richer than Kings?

A human-facing services economy will operate much like our current one. Humans are already able to get food and clothing very cheaply. (source: ABS)

the basics

That percentage could continue to fall as automation makes production of basic goods cheaper and cheaper. Certainly a smaller and smaller share of people will work in those sectors. What do people do instead? They will work to meet humans’ higher-order needs. There will lots of different kinds of such jobs. High-skill human-facing jobs, like financial planners, medium skill ones like personal chefs, and lower level jobs like hairdressers.

Is this dignified? It’s an important question. You can find online the argument “we can’t all just hold doors open for each other” – that an economy built on the interchange of services is somehow debased.

But that depends on an outdated idea – that humans only really value the basics. This has been untrue for as long as humans have had more food than they needed. The moment the first cavemen had a surplus, they turned to story-telling, cave painting and ceremony. The Greeks focused on citizenship and later civilisations have added yet more layers of non-basic occupations to idolise, such as professional footballers.

Growing wheat or apples is a perfectly fine occupation, but I’ve argued before that higher-order services are more than merely dignified. Services are where the heroes and myth-making comes from, and complex interaction defines us as a species.

It would be folly to underestimate the ability of people to come up with new demands to occupy labour that might otherwise turn surplus: exhibit A: we now have nail artists.

Rapid changes in technology can cause localised unemployment, but the lesson of history is that demand grows, and humans will filter into the jobs that they do best.

There’s nothing to fear in the robot revolution … but it might be time to practice your smile and your small talk.

Do you really get a job by looking at job ads?

How exactly do people get jobs?

A few people I know are currently looking for work. I began to wonder if combing through advertised jobs is enough, and thought a little sample of my own experience might help answer that question.

1996. My first ever job was selling ice-creams at a festival in Melbourne called Moomba. I got the job through a friend’s dad. Pay and conditions were great.
Ad: 0%. Luck: 0%. Inside running: 100%.

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Back when I wore a watch

1998 After I finished school I got a job as a busboy at a cafe in a shopping centre. It wasn’t advertised but I handed my resume out to 20 businesses near my house and this one had an employee quit the next day. $8.50 an hour in cash seemed pretty good to me.
Ad: 0%. Luck: 100%. Inside running: 0%.

2000 I became a waiter at Pancake Parlour. Pay was a whopping $7.27 an hour. It was an advertised job for which I went through a quite involved interview process.
Ad: 100%. Luck: 0%. Inside running: 0%.

2001 Waiter at italian restaurant. Through a friend. I lasted about three weeks.
Ad: 0%. Luck: 0%. Inside running: 100%.

2002. Market research interviewer. A friend who worked there told me the place was hiring. Great pay and conditions so I joined the union. Ended up doing market research for big tobacco, but I didn’t mind because smokers loved to chat about smoking. It beat asking people about banks.
Ad: 80%. Luck: 0%. Inside running: 20%.

Teaching english2003 I applied to an ad for an English teacher in the small town of Qinhuangdao, China, where I found I could go months without seeing another foreigner.
Ad: 100%. Luck: 0%. Inside running: 0%.

2004. I parlayed my meagre teaching experience into a job as a tutor in the first-year economics subjects, which was among the best and most convenient jobs for a student ever.
Ad: 100%. Luck: 0%. Inside running: 0%

2005. My first full time job. I became a graduate Treasury policy analyst, living in Canberra.Treasury shot tidied up Ad: 100%. Luck: 0%. Inside running: 0%

2005. Ski instructing at Perisher Blue. A week-long “hiring clinic” for which you have to pay hundreds of dollars serves as both interview process and training.
Ad: 100%. Luck: 0%. Inside running: 0%

2008. Nauru budget adviser. I happened to have just finished my tutoring contract when I was asked by someone I knew in the federal government to come to an interview. I don’t think they interviewed anyone else.

nauru office Ad: 0%. Luck: 20%. Inside running: 80%

2009 Victorian government policy officer. Through a recruitment company.
Ad: 0%. Luck: 0%. Inside running: 0% (I’d say it was 100 per cent luck but luck should be good and this job wasn’t.)

2010. Journalist at the Financial Review – I applied at a timely moment when a bunch of people had quit. But there was no job advertised and I had someone on the inside put in a good word for me.
Ad: 0%. Luck: 30%. Inside running: 70%

2013 – Freelance writing. I sell things mostly to people I know from my other jobs, but also via some cold calling.
Ad: 0%. Luck: 20%. Inside running: 80%

After having had 17 jobs, just six came from simply seeing an ad and applying. My crude averaging of the numbers (including some jobs I didn’t go into above) says ads explain 46 per cent of my jobs, inside running 32 per cent, and luck 22 per cent.

Screen Shot 2014-04-08 at 10.24.52 am

(I should note luck played a pretty big part in being born to a family that cared a lot about education and invested in my future. It also doesn’t hurt to be in a bunch of categories that are unfamiliar with the sting of discrimination. Is my experience strongly shaped by these privileges?)

The common trope is that 70 per cent of all jobs are not advertised.

Economic theory suggests a great benefit and a great cost. If firms are able to fill jobs quickly and minimise their search costs, that could be an advantage. But if it means they miss out on the best human resources, they suffer.

Despite the risks of hiring through word-of-mouth, the approach is not about to go away. This paper finds that firms that hire through referrals may be more profitable.

This expert recommends job hunters should spend: “20% of the time responding to job postings … another 20% ensuring your resume and LinkedIn profile are easy to find and worth reading, and the remaining 60% networking to find jobs in the hidden market.”

If my experience holds for everyone, its going to be advantageous to keep working in the same city, or at least the same country, where you have a bunch of connections. It also doesn’t hurt to be on LinkedIn.

But I want to know if the same is true for you. Have you got your jobs by responding to ads and going through rigorous processes? Have you been lucky? Made your own luck? Deliberately developed and used your networks? Please share your experience in the comments! (Look for the words “Leave A Reply” below)

Media and IT are the future, they said.

The total number of people employed in Information, Media and Telecommunications is the lowest since 1999, according to new official data from the ABS. In the last three months, under 200,000 people were employed in the sector, down 23 per cent from the peak over over 250,000 in 2006.

That got me interested. I recently left a job with a major media organisation, at the same time as some heavy hitters (1, 2). How bad was it getting?

The answer: REAL BAD. In the publishing game (books, newspapers) employment fell during 2013 to the lowest since records began in 1984.

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[All data from the Detailed Quarterly Labour Force series, Nov 2013].

Publishing is not the whole story.

Employment in traditional broadcasting has also seen very little growth. There were more people employed in the sector in one ebullient quarter of 1994 than during the most recent three months. (In 1994, SBS was finally available in all capital cities, but it broadcast the test patten for hours every day.)

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That all makes sense.

Online, the classic economic distinction between work and leisure is shaky. People work on the internet for free.

The proponent of the idea is a man called Clay Shirky, and I have written about him here. He claims people would happily give up TV watching for something a bit more active and participatory, and so free content is booming. Content is not just blog posts like the one you are reading, but Youtube videos, Wikipedia, Reddit, Open source software and more and more #doge memes.

Also it’s hard to charge for things online.

So far so good.

But thanks to the mysterious ways in which ANZSIC standards move, folk who work in communications are included in the information and media statistics. This shocked me more. The way this little sub-sector has collapsed puts the newspaper game to shame.

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This next graph may look less dramatic but the numbers of people involved are far greater. The communications sector is now employing fewer people than it has for ten years.

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See that steep ramp-up in 1999? That was the year I started university.

I had long hair, I was 17 and I weighed about 60 kilos. I was getting paid $8.50 an hour in my part time job bussing tables at a very busy Cafe in the local shopping centre. I was studying economics and politics – which I loved – but I had a nagging feelings of doubt.

All the headlines were pointing to IT being the great gold rush.  In 1999 the Nasdaq index rose from 2200 to 3700. Another undergrad friend of mine became an executive in an online company that was apparently booming. I felt like I had missed the plane.

Boy, am I glad I studied economics and politics.