A while back I posted a diary about how digitalization, convergence, and automation are creating an unprecedented reduction in employment. Yesterday, I compared two companies in the same industry in order to point out the disparity in worker productivity. Either time, I heard from people who pointed out that I was falling prey to the Luddite Fallacy, and that new technologies and new industries will come around and create new employment opportunities.
Being that this has become something of an obsession in my futurist brain, I spent this morning crunching the numbers even more, and the results are nothing more than alarming. The jobs are disappearing and they are not coming back; at least not in a way that will get us anywhere near full employment ever again.
As of 2009, the United States labor force came in at around 154 million people, and the total GDP of the US is $14.27 trillion. In a full employment scenario, this means that each worker is generating, on average, $92,667 of revenue. In a good scenario of 4% unemployment, each worker is generating, on average, $97,074 of revenue.
Now let's take a look at the revenue that is being generated per employee of the Dow Jones Industrial Average:
3M - $332,000
Alcola - $309,000
AMEX - $471,000
AT&T - $405,000
Bank of America - $401,000
Boeing - $387,000
Caterpillar - $345,000
Chevron - $4,075,000 (!)
Cisco Systems - $566,000
Coca-Cola - $335,000
DuPont - $530,000
ExxonMobil - $3,892,000 (!)
General Electric - $565,000
Hewlett-Packard - $352,000
The Home Depot - $340,000
Intel - $422,000
IBM - $240,000
Johnson & Johnson - $521,000
JPMorgan Chase - $458,000
Kraft Foods - $412,000
McDonald's - $56,000 (!)
Merck - $363,000
Microsoft - $628,000
Pfizer - $611,000
Proctor & Gamble - $564,000
Travelers - $833,000
United Technologies - $268,000
Verizon - $407,000
Wal-Mart - $192,000
Walt Disney - $253,000
A couple of observations from these numbers: 1) I, for one, welcome our oil-pumping robot overlords, and 2) Thank goodness McDonald's still employs counter help.
In total, the components of the Dow Jones Industrial Average generate $2.5 trillion in revenue (17.5% of GDP) and employ 6.5 million people (4% of the US work force). The average DJIA employee generates more than four times as much as revenue as is necessary for the average worker to generate under full employment.
"Ah", goes the argument of the Luddite Fallacy, "but there will be new technologies which will create new industries and new jobs!" Well, let's take a look at a bit of emerging industry:
Apple Inc. - $1,251,000 per employee
Amazon.com - $1,184,000 per employee
Google - $1,192,000 per employee
Netflix - $618,000 per employee
Amgen - $834,000 per employee
Costco - $486,000 per employee
Starbucks - $76,000 per employee (which, like McDonald's, will go up dramatically when counter help is eliminated)
Over and over, the numbers re-iterate the point that, while labor is not being rendered obsolete by emerging technology, unskilled and semi-skilled labor is certainly threatened. The vast floors of cubicle-dwelling, paper-pushing bureaucrats are being phased out and replaced with digital systems that allow the highly-skilled workers to collaborate more efficiently.
At some point in the near future, regardless of which party is in power, we are one of many nations that will have to begin to have serious talks about income subsidization. The rapid advancements in new technology are unquestionably a boon to those with the intelligence, education, and skills to fully utilize them, and they deserve to enjoy the rewards. At the same time, those who are unable to work these highly skilled jobs will have to be assured of at least sustenance, unless we are willing to risk the possibility of tens of millions of our fellow Americans living out of boxes and foraging for food - not to mention the dramatic increase in crime, civil unrest, and, most importantly for business, the erosion of the consumer base.
I know that the Liberty McBootsraps of the world will abhor the notion, but we've hit the tipping point where there is simply not enough work available for the people who are looking.