In October 1996, at the last party conference before the election that would make him UK prime minister, Tony Blair tried to define the essence of New Labour. He started off by contrasting his party with the dying Conservative government, before summarizing his three priorities for power. They were, in order, “education, education and education.” The applause was thunderous — and, unlike the applause in recent Labour gatherings, genuine.
The idea that “education is the best economic policy” was at the heart of the progressive bargain with the market. President Bill Clinton said that “the information age is, first and foremost, an education age.” The World Bank and the International Monetary Fund insisted that education is the golden key to growth and inclusion. Universities enjoyed the longest period of expansion in their history as governments tried to make sure that half their young people graduated.
Well, here is the latest message on education from the corporate elite: Take your sheepskin and shove it. Amazon.com Inc., one of the trendsetters of global business, recently announced that it is eliminating almost 10% of its corporate workforce. Other companies that have decided to wield the axe include consultancies (Booz Allen Hamilton), car makers (General Motors Co.), retailers (Target Corp.) and service companies (United Parcel Service Inc.).
Graduates are entering the most challenging job market in years, with entry-level roles disappearing and summa cum laudes scrabbling for crumbs. Even newly minted economics PhDs no longer have a 100% employment rate. Yet at the same time, opportunities for skilled blue-collar work are growing. Companies report shortages of workers in healthcare, hospitality and, more importantly, engineering and construction. Ford Motor Co. CEO Jim Farley noted, in a LinkedIn post last June on “the essential economy,” that the US is short 600,000 factory workers and 500,000 construction workers, and will need 400,000 auto technicians in the next three years.
The reason for this asymmetry between white- and blue-collar jobs is simple: The rapid advance of AI. The technology is automating large swathes of cognitive work, starting with things that involved routine form filling and pattern recognition and quickly moving up the value chain to include more creative tasks. But at the same time, an army of workers is needed to build the physical infrastructure of the new AI economy, the server farms and data centers and the like.
A new working paper from the National Bureau of Economic Research looks at the impact of technological innovation on labor demand over two centuries. The authors conclude that, hitherto, innovation has consistently increased demand for occupations with higher educational qualifications, higher pay and a larger proportion of female workers. By mechanizing cognitive work, AI could be the first major technology to reverse that trend. The researchers project that, over the next decade, demand for high-education jobs will decline relative to mid-wage occupations by 0.59% a year for managers, 0.29% for professionals and 0.85% for clerical jobs. Occupations with a larger share of female workers will contract by 0.53% a year relative to male-dominated jobs.
The white-collar workers who do survive the jobs apocalypse are not likely to get off scot-free. Jensen Huang, the CEO of Nvidia Corp., predicts that the workforce of the future will consist of a combination of “digital humans” and “biological ones,” as companies spend trillions of dollars hiring, training and deploying digital nurses, accountants, and marketers. The remaining white-collar workers will not only have to put up with being monitored and second-guessed by machines. They will also need to compete with “digital humans” who never suffer from fatigue, never have to deal with family problems and never demand a pay rise.
