More on Computers With Master’s Degrees and Accelerating Job Losses

“Six decades into the computer revolution, four decades since the invention of the microprocessor, and two decades into the rise of the modern Internet, all of the technology required to transform industries through software finally works and can be widely delivered at global scale.

Agriculture is increasingly powered by software as well, including satellite analysis of soils linked to per-acre seed selection software algorithms

Health care and education, in my view, are next up for fundamental software-based transformation

many people in the U.S. and around the world lack the education and skills … This problem is even worse than it looks because many workers in existing industries will be stranded on the wrong side of software-based disruption and may never be able to work in their fields again. ”

Marc Andreessen (Hewlett-Packard board member), Why Software Is Eating The World, Wall Street Journal, August 20, 2011


“Robots have the potential to replace humans in a variety of applications with far-reaching implications. … The development and implementation of robots for elder-care applications, and the development of human-augmentation technologies, mean that robots could be working alongside humans in looking after and rehabilitating people. A change in domestic and social responsibilities and a change in domestic employment

SRI Consulting Business Intelligence requirements could adversely affect lower income service-oriented workers.

By 2025 Internet nodes may reside in everyday things—food packages, furniture, paper documents, and more. … Streamlining—or revolutionizing—supply chains and logistics could slash costs, increase efficiencies, and reduce dependence on human labor.”

Disruptive Civil Technologies: Six Technologies with Potential Impacts on US Interests out to 2025,  Conference Report, National Intelligence Council, April 2008


See comments in the Reconnaissance Report for August 19, 2011 (immediately below).

Computers With Master’s Degrees Will Accelerate Service Sector Job Losses And Increase The Need For Non-Work Income Entitlements

Not Today's Business Computer“ARMONK, N.Y., – 18 Aug 2011: Today, IBM (NYSE: IBM) researchers unveiled a new generation of experimental computer chips designed to emulate the brain’s abilities for perception, action and cognition … cognitive computers are expected to learn through experiences, find correlations, create hypotheses, and remember – and learn from – the outcomes, mimicking the brains structural and synaptic plasticity.

IBM Unveils Cognitive Computing Chips, Press Release, IBM, August 18, 2011.


“IBM sees multiple applications for these cognitive computing systems, which would fit in the size of a shoebox. Among potential uses:

  • Computers that could take in inputs such as texture, smell and feel to gauge whether food was outdated.
  • Financial applications to monitor trading and recognize patterns in a way today’s algorithms can’t.
  • Traffic monitoring.
  • And system monitoring for waterways and other natural resources.”

Larry Dignan, IBM creates cognitive semiconductors: A step toward right brain computers, ZDNet Blog Between the Lines, August 17, 2011.


Global Employment By Sector, 1999-2009
Source: Global Employment Trends 2011, International Labor Org., p. 20


U.S. Employment Projections to 2018
Data Source: Rose A. Woods, Employment outlook: 2008–2018: Industry output and employment projections to 2018, Monthly Labor Review, November 2009.


The barriers to replacing intellectual and professional workers with machines are rapidly falling.  Already, computers are taking over customer service communications, digital archive research, teaching responsibilities, aspects of legal research, stock market trading, and other information gathering, information evaluation, and decision-making activities. With new computational technologies moving into the world’s workplaces almost everyday, the pace at which intellectual and professional work activities are being turned over to computers is accelerating.

The impact of this trend on global and U.S. employment can only be negative.  In every field of business, the world is crowded with competitors and the global rules governing competition are minimal and poorly enforced.  In this environment, no business leader can risk not looking at every new computational technology as a possible way to reduce labor costs faster than do competitors.

A very large proportion of the jobs that involve observation, evaluation, and decision-making activities are in service providing industries, including government, so the largest part of the negative employment impact of the accelerating use of computational technologies that emulate aspects of human thinking will be in this sector.  But the overall impact will be much greater.

Neither the agricultural sector, which is rapidly losing workers to automation, nor the industrial sector, which is already highly automated, will be able to absorb the very large numbers of workers likely to be displaced from service sector jobs.  Unemployment and underemployment will rise, and as they do non-work entitlements to income will have to play a much larger role in distributing the wealth created by the enormous and growing productive power of the world economy.

Otherwise, the future will be tragic.  The proportion of the world’s people living in poverty will increase, morbidity and preventable deaths will rise, the growth of the world’s middle class population will stagnate, and political upheavals and brutal governmental repressions will grow more numerous.

Policies of U.S. States Have Negligible Impact on Employment Growth

State Groups by Tax Rank
Data Sources: U.S. Bureau of Labor Statistics, U.S. Census, Tax Foundation.
States Top % By Tax Rank
Data Sources: U.S. Bureau of Labor Statistics, U.S. Census, Tax Foundation.
States Bottom 5 By Tax Rank
Data Sources: U.S. Bureau of Labor Statistics, U.S. Census, Tax Foundation.

Annual Change in Distribution of Percents of State Populations That Are Employed

2000 2001 2002 2003 2004 2005
Range 15.6% 14.5% 13.9% 14.0% 14.1% 14.5%
Minimum 30.9% 31.3% 30.9% 30.5% 30.6% 30.7%
Maximum 46.4% 45.8% 44.9% 44.5% 44.7% 45.2%
2006 2007 2008 2009 2010
Range 14.4% 14.3% 14.8% 16.0% 15.6%
Minimum 31.1% 31.1% 30.6% 28.7% 28.3%
Maximum 45.5% 45.4% 45.4% 44.6% 44.0%


What is striking in the first chart above (employment change for groups of states defined by Tax Climate Ranking) is that the patterns of change are so similar across the groups.  One might easily imagine the changes are choreographed.

This much unity of change is not consistent with the oft stated assertion that state policies have a large impact on state level employment change.  It is much more consistent with the proposition that state level employment change is driven primarily by economic forces that transcend state boundaries.

This interpretation is supported by variations within Tax Climate Ranking groups (second and third charts).  If state economic policies produced large employment effects, one would expect states with very different Tax Climate Rankings to proceed along visibly different employment change paths, while states with similar Tax Climate Rankings would proceed along similar employment change paths.  This isn’t the case.

The differences among the patterns of change for the closely ranked top ten states and among the patterns of change for the closely ranked bottom ten states appear to be greater than the differences among the patterns of change for groups of states.

Other employment change charts using the same formats  (not included here) display very similar patterns.  Again, patterns of change across groups are very similar  and differences within groups are as large as differences across groups.

For those charts the same employment change data were sorted differently.  One set of charts displays patterns of change for ten groups created by sorting the employment change data on percent of total population employed in 2000 (on the assumption that different initial employment levels might correspond to different policy histories and thus produce divergent change patterns).  The second set displays patterns for groups created by sorting the data on change in the percent of total population employed from 2000 to 2010 (on the assumption that differences among states in how well they performed over the decade might reflect policy differences other than Tax Climate that would produce noticeable differences in patterns of change).

The last item above, the table showing the distribution of percents of state populations employed,  offers more evidence that state employment levels change in unison.  Over the course of the decade the highest percent of population employed and the lowest percent change together, producing an almost constant range between highest to lowest.  Again, this is much more in keeping with conclusion that economic forces that transcend states in scope, not state policies, drive employment change at the state level.

A Plausible Explanation

It would be very surprising to find policy differences across states large enough to produce large differences in patterns of employment growth.

First, the states are part of a national governmental system in which constitutional provisions limit the policy options available to states, state governments are very similarly organized, and policy makers generally agree on the beneficence of the free enterprise system.  These factors inhibit the development of large policy differences among states.

Second, when a state enacts a policy or set of policies that seem to provide it with investment and employment growth advantages over other states, those other states adopt those or similar policies very quickly.  Thus, large policy differences will not persist.

Third, U.S. states are exposed to economic forces that are global in scope.  Global financial and production corporations move large volumes of money and commodities  across state and national boundaries.  So do many local businesses.  Ownership often transcends state and national boundaries.   States are subject to the policy rules of numerous  bilateral and multilateral trade and investment agreements entered into by the U.S.

These global economic forces are certainly powerful enough to overwhelm the effects of policies limited in scope to state boundaries and to wash away the employment change differences among states that policy differences might otherwise produce.

No Real U.S. Job Growth Until the World’s Middle and Lower Income Families See Real Income Growth

The distance between the richest and poorest countries has widened to a gulf. The richest country today (Liechtenstein) is three times richer than the richest country in 1970. The poorest country today (Zimbabwe) is about 25 percent poorer than the poorest country in 1970 (also Zimbabwe). It is sobering to see, amid enormous material prosperity in developed countries, that the real average income of people in 13 countries in the bottom quarter of today’s world income distribution is lower than in 1970.”

Human Development Report 2010 – 20th Anniversary Edition, The Real Wealth of Nations: Pathways to Human Development, p. 42.

Even with the economy in a funk and many Americans pulling back on spending, the rich are again buying designer clothing, luxury cars and about anything that catches their fancy. … Many high-end businesses are even able to mark up, rather than discount, items to attract customers who equate quality with price.

Stephanie Clifford, Even Marked Up, Luxury Goods Fly Off Shelves, New York Times, August 3, 2011.

Trends U.S. Blue Collar Earnings in Manufacturing

Chart source: Richard Wallick, Auto Industry Labor Costs in Perspective,  Bureau of Labor Statistics, Originally Posted: April 22, 2011.


Increased global spending on yachts, private planes, high end sports cars, multi-million dollar homes, $200 per person meals, and other luxury items does produce a number of new jobs in the world economy – but not many.

Income growth for the world’s middle and lower income working people does the heavy lifting for global job creation.  Increases in spending by middle and lower income families send huge numbers of the world’s global corporations, neighborhood businesses, and governments looking for new employees.

No real income growth for the world’s middle and lower income families translates into insufficient growth in demand for the increasing volumes of goods and services that can be produced by the world economy, and from there almost directly into no progress in the U.S. on reducing unemployment and underemployment.

The U.S. is deeply enmeshed in a demand starved world economy and U.S. economic policy does not directly address that aspect of our situation.

Global Technology and Education Trends Increase Global Competition for High End U.S. Jobs

“Taiwanese contract manufacturer Hon Hai Precision Industry Co. (2317.TW) said Tuesday it…plans to increase the use of robotic arms across its production lines to cope with rising demand for electronics and increasing costs…Hon Hai aims to increase robotic arms to 1 million units by 2013 from 10,000 currently…Hon Hai plans to increase automation on “dangerous and monotonous” tasks and to migrate more of its workers to “value-added” jobs such as product research and development.”

Lorraine Luk, Hon Hai Says To Increase Automation But Will Also Boost Work Force, Dow Jones Newswires, August 02, 201, published at FoxBusines,

“In 1998…Chinese universities and colleges produced 830,000 graduates a year. Last May, that number was more than six million and rising…the supply of those trained in accounting, finance and computer programming now seems limitless, and their value has plunged. Between 2003 and 2009…starting pay for college graduates stayed the same, although their wages actually decreased if inflation is taken into account.”

Andrew Jacobs, China’s Army of Graduates Struggles for Jobs, New York Times, December 11, 2010

“…among citizens between the ages of 25 and 34 in developed countries, America ranked 12th [for percentage of 25- to 34-year-olds with an Associate Degree or higher, 2007]. In this key demographic group, Canada, Korea, the Russian Federation, Japan, New Zealand, Ireland, Norway, Israel, France, Belgium and Australia are ahead of the United States. Also, Denmark and Sweden are close to parity with our nation.”

John Michael Lee, Jr. and Anita Rawls, The College Completion Agenda: 2010 Progress Report, CollegeBoard Advocacy and Policy Center,

“The world, in terms of choices available to educated, ambitious workers and entrepreneurs, is way bigger than just the United States, Japan and Europe.”

Paul Singer, founder of Elliot Management, as quoted in The Economic Manifesto of Elliott’s Paul Singer, By Evelyn M. Rusli and Azam Ahmed.

‘American jobs have been moving overseas for more than two decades. In recent years, though, those jobs have become more sophisticated — think semiconductors and software, not toys and clothes…[quoting Jeffrey Sachs, globalization expert and economist at Columbia University:] “What’s changed is that companies today are getting top talent in emerging economies, and the U.S. has to really watch out.”‘

Pallavi Gogoi, Many U.S. companies are hiring … overseas: One reason why U.S. unemployment remains as high as it is, Associated Press, 12/28/2010, published at MSNBC.


The U.S. is not alone in the world in the pursuit of high end jobs to grow middle class incomes and not likely to be successful enough in that endeavor to revitalize U.S middle class income growth.  The following global trends are moving strongly against high end job growth in the U.S. and the U.S. economic policy approach does not address these trends.

  • Rapid automation of production processes across the globe is increasing citizen pressure on the world’s governments to train more and more workers for high end jobs
  • Competition among the world’s numerous nations for investments that create high end jobs is intensifying as global employment growth stagnates
  • Expanding global investments in higher education are increasing competition among highly educated workers for an insufficient number of high end jobs
  • U.S.  corporations are taking advantage of the growing number of nations with educated workers to bargain with highly educated U.S. workers for wages and benefits concessions.