For sure, technology is killing jobs. But despite many job loss predictions and job loss data, we have far more jobs than before. Who is behind the job creation? Are technology inventions and innovations creating jobs? For example, some studies indicate that despite likely 85 million job losses due to automation, the exploitation of unfolding technology possibilities will create 97 million jobs. But what are the areas and processes of job creation? Does every industry, firm, and country equally benefit from the job creation effect of technology? Perhaps, NO. Is the job creation effect of technology responsible for growing inequality? If technology is a blessing for job creation, why are high-tech jobs concentrated in a few clusters of the world? Hence, we need to pay attention to job creation dynamics from technology to take advantage of it instead of being marginalized.
Unlike tigers, elephants, or lions, humans just do not roam around for food and shelter. They gather knowledge, ideate, invent technologies, innovate products and processes, replicate innovations, and extract increasing utility by deploying products. As a result, in performing those activities, job creation takes place. Hence, job creation is an inherent characteristic of humans’ relentless urge to have a better quality of living out of knowledge and ideas. For example, before 1899, there were no full-time R&D jobs in corporate America. But by the end of 2020, the Silicon Valley area alone was blessed with close to 1 million jobs. Similarly, technology is the underlying factor for creating 16 million jobs in India’s information technology and software industry. Hence, it’s time to take a deeper look at the nature of job creation, particularly due to technology.
Invention and reinvention effect on job creation:
For sure, the invention creates jobs. Inventions open the door of innovating products and processes for extracting more utility from our time and natural resources. As human beings are after more wealth, inventions trigger innovations, production, and consumption. Hence, it creates jobs. For example, before the invention of Television, Telephone, Radio, Computers, and many other products we use today, there were no jobs in innovating products around them and making those products. The invention of the Transistor alone has created an enormous information technology economy. Some of the epicenters of jobs out of this invention are Silicon Valley, Bangalore, and many others.
Reinvention has dual effects on job creation. For example, reinvention of the Automobile by changing the mechanical technology core with electrical, electronics, and software has reduced moving components. For instance, the drivetrain for EVs requires 17 or so moving components instead of 200 parts needed by the drivetrain of gasoline automobiles. Hence, there will be far less labor requirement for making EVs. But due to environmental friendliness, EV will likely be diffusing far deeper, creating many more jobs down the road. Similarly, the reinvention of horse wagons in the form of automobiles has produced a net positive effect on employment.
Innovation and reinnovation create jobs:
The invention opens the door of innovating new products and processes and reinnovating existing ones. Hence, new jobs are created for innovating products and producing copies of them. Bedsides, job creation takes place for distribution, operation, and maintenance of innovations. For example, to drive each Automobile, there is a job for a driver. Similarly, there are jobs for spare parts producing and repairing. As further advancement leads to diffusing deeper, innovation and reinnovation are at the core of job creation.
Job creation due to deepening scientific discovery and invention mine:
Among many others, Thomas Alva Edison is a great inventor. Instead of pursuing scientific discoveries, he relied on intuitive observations and tinkering to generate ideas, leading to owning 1093 patents. But upon creating a buzz with light bulb invention, he soon realized that tinkering was not good enough to make a flow of ideas for keep advancing the light bulb. Hence, he embarked on establishing America’s first R&D lab in 1899. But to reinvent it as the LED light bulb, Nichia had to make a Novel Prize-winning scientific discovery.
Knowledge and urgency are critical ingredients for generating ideas of invention, innovation, reinvention, and reinnovation. Although intuitive knowledge was good enough to come up with ideas in the past, there has been an increasing need for deep scientific knowledge for them. For this reason, in America, until 1950, inventors without college degrees used to dominate the patent recipient list. Since then, the statistics have been favoring inventors having graduate degrees, like Masters and PhDs.
In our mission of digging out knowledge, it’s getting harder to find meaningful knowledge to make the same level of advancement in our idea space. For example, as of 2017, to double roughly the density of transistors on an integrated circuit every two years, a study finds that the research effort behind the chip innovations rose by a factor of 78 since 1971. That means to maintain the same innovation space in the integrated circuit, the number of researchers we need today is more than 75 times larger than the number that we required in the early 1970s. Besides, research finds that research efforts must double every 13 years to maintain the same level of economic growth out of ideas. Hence, there has been an exponential growth of R&D jobs.
Examples of growing R&D need for reinvention and reinnovation:
Upon relying on a few years of effort of tinkering and mechanical engineering, Carl Benz invented the Automobile. But its reinvention effort has been drawing the billions of dollar R&D effort. For example, the mission of reinvention of Automobile making it autonomous has already consumed more than $80 billion in R&D investment. Similarly, Tesla has been burning billions of investors’ money over more than 18 years in the reinvention effort of making its electric vehicle. Researchers perfecting the lithium-ion batteries have also received a Nobel prize to fuel this electric vehicle mission. Hence, it’s fair to say that there has been an exponential growth of high-paying R&D jobs in driving our mission of wealth creation out of knowledge, ideas, invention, and innovation.
Automation creates jobs:
Job creation out of automation appears to be absurd. Automation is about delegating roles from humans to machines. Hence, killing jobs is its natural tendency. But in the absence of automation, how could have millions of unskilled workforces of Bangladesh, Indonesia or Vietnam qualified for export-oriented factory jobs? Despite the availability of low-cost labor, why are shoe and apparel factories using high-end machines, automating many parts of the production process?
The production of copies of any product demands codified knowledge and skills, experienced earned tacit capability, and innate abilities. Due to relative ease, innovators target automating codified knowledge and skill. The process begins with job division and organizing tasks as a production line. It keeps proceeding to innovate tools for automating codified knowledge and skill further, leaving only innate abilities for humans to supply.
For example, the software has been producing patterns in cutting fabrics or developing photomask for silicon wafer processing. Hence, knowledge requirement has been substantially reduced. The continuation of such a trend leaves only innate abilities for humans to supply. For example, the production processes of shoes, automobiles, or textile products have already reached a situation demanding only innate abilities from the human. Due to this reason, the unskilled workforce of Bangladesh, Indonesia, and many other countries have qualified for factory jobs. Hence, automation is the underlying force for enabling this workforce to produce high-quality products for the export market.
Competition of wealth creation out of ideas is creating jobs:
For sure, profit-making competition is at the core of driving economic growth out of ideas. But the same competition is also turning investment in pursuing ideas into waste. In a competitive market, the challenge is not just to have knowledge and ideas to offer a better alternative. For turning investment behind ideas into profitable revenue, innovators must win the global race. Like many other races, most participating ideas end up in wasteful investment. For example, more than 90 percent of startups, upon getting funding, are failing within three years. But those journeys have been creating jobs. There could have been no such failure if it were a command-driven economy. As opposed to competition, a central decision would have determined the fate of an idea. But that would have slowed down our progression. Hence, profit-making competition in a competitive market is a great driver of job creation.
For sure, technological advancement has been creating jobs. It takes place for several reasons. In addition to producing more copies of innovations, there has been an exponential growth of employment for knowledge discovery, invention, and innovation. Besides, automation itself creates jobs. Furthermore, the intensifying competition in profiting from ideas has been creating a growing number of jobs. For leveraging this aspect of technology, we need to have greater clarity and appropriate strategy and policy. Furthermore, job creation analysis will bring a balance in the debate of the future of work.
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