The Bureau of Labor Statistics released a widely celebrated jobs report this week, showing 288,000 jobs were added in June, bringing unemployment closer to pre-recession levels.
It’s overwhelmingly great news for much of the economy, but lurking in the shadows is a force displacing more people into part-time work or out of the labor market altogether.
Technology displaces jobs through a number of mechanisms: globalization, automation, and decreased wages in low-pay work. While it is difficult to know if the trends from the most recent jobs report are cyclical or permanent, the report shows, at the very least, that the associations we see between technology and the economy are not reversing.
Not returning to work
Economists “keep expecting people who have become discouraged during the recession and slow recovery to start looking for work again,” wrote the Wall Street Journal’s Phill Izzo, “But that hasn’t happened. In fact, the number of unemployed who were re-entering the labor market actually fell in June.”
The graph below from Fivethirtyeight shows the economy is still full of discouraged people not looking for work (“discouraged workers”)
Retiring baby boomers account for some of the declining participation rate in the job market, but not all of it. Globalization and automation is also shrinking the total U.S. workforce. “Fax machines, e-mail, and the internet enable a growing number of contingent workers to provide services from their homes or other non-traditional sites.This, in turn, permits firms to reduce costs by reducing the size of their facilities and paying only for work actually needed,” explained Stephen F. Befort in the Berkeley Journal of Employment and Labor Law [PDF].
Economist Peter Kuhn finds that people who make more are working more, while those making less are working less, because the inequality of each hour of work is growing, providing less incentive for low-payed people to find work.
When firms do need work, they may not be hiring full-time workers. In June, much of the jobs bump is due to a 275,000 increase part-time workers.
The graph below from The Atlantic shows the share of the economy that is part-time work (blue) vs. the unemployment rate. Part-time work has not dropped as steadily as the unemployment rate.
New technology platforms for part-time work, or “contingent workers”, are helping the unemployed find work. Brian Chesky last week explained how flexible work platforms, such as Task Rabbit, or his own housing rental service, Airbnb, are helping beleaguered citizens pick up work through occasional gigs.
For a service like car ride sharing app, Uber, it is both destroying traditional jobs in the Taxi industry, but giving new jobs to part-time workers who drive their regular cars as cabs. In this regard, technology both displaces workers and helps others find new hope.
The jobs report is good news, but it has not reversed the long-term trends towards discouraged and part-time workers.