Does Software Cause Unemployment?

As more and more pieces of business are automated and brought online, does that mean there is less of a need for people to do the work? Could the rise of the internet be what is keeping unemployment steady at 9.2%?

A recent article at forbes makes this proposition:

Over the past twenty years, the technology industry, led by companies like Microsoft, have given us powerful databases, operating systems, networks and software applications that have made it easier for us to accomplish more tasks than we did before with less people. And it’s not just Microsoft who you can blame.

Blame Sage, who makes Enterprise Resource Planning and Customer Relationship Management software that has enabled businesses to automate their marketing campaigns, build workflows for alerting managers when inventory needs to be replenished and generate workorders and invoices that are immediately emailed without employing teams of people.

Blame Rackspace and Amazon and other cloud based infrastructure providers, who allow us to host all of our business applications on their servers, thereby eliminating many in our information technology departments and cutting back on wasted time from downed computers and security flaws.

He’s got a point — businesses are becoming more efficient with less people, thanks to the internet and software systems. For example, when is the last time you visited a bank teller? I know I haven’t seen one for years because I do all my banking online and through ATMs. When I shop, I do it online rather than local retail stores.

Not only have I contributed to this trend when I buy, but I’ve been a key player in building these job-sucking software systems. In fact, when I worked at Arthur Andersen, I remember a project where we wrote a system specifically to replace a group of twenty data entry people. One member of my team was responsible for getting the “requirements” from the data entry group. This consisted of documenting their job so that we could then implement it in code. Ouch.

Of course, the data entry team knew that our system would replace them and they were a understandably a hostile audience for the requirements gathering. One especially contentious meeting left our analyst in tears. Was she right to be sad that the system we were building would cost these people their job?

But isn’t greater efficiency the definition of progress? For example, 58% of the labor force were farmers in 1860. Through more efficient equipment and growing techniques, that number has dropped to 2.6% by 1990. In other words, many farmers have lost their jobs as farming has become more efficient. Would life be better for the country and the world if more of us were still farming?

I would argue that the world progresses by becoming extremely efficient at one field so its labor force can move onto another (more advanced) field. The problems occurs when people cannot be easily retrained for new jobs and occupations. So maybe the issue is not with the internet and automation, but with the education system?

Thankfully, the internet is about to increase unemployment in the education system as well with the rise of the Khan Academy. But don’t worry, it’s more efficient so it has to be better…right?

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