Despite hundreds of years of technological innovations, rapid changes in industries, and fluctuating populations, the unemployment rate bounces between 3 and 20 percent (usually 5 to 10). We had 3 million some people in this country in 1790. We now have over 300 million. That same span saw the introduction of technology which DESTROYED the agricultural livelihood most people relied on. Meanwhile, the colonial american would have to compete against 100 times as many applicants today as he would have back then. So why aren't we all unemployed? Why do so many different decades, with wildly different technological and demographic situations, always face roughly the same unemployment rates?
Because employment faces feedback forces on both ends of the employment spectrum.
When people are idle, they want to do something, so they create ways to be useful to others in exchange for things. In today's America, people will bring hot pizza to your door in minutes.
Such an enterprise would have cost an unimaginable fortune in 1790 (you would have had to invent a network of roads... and the automobile... and electricity).
But every invention that makes pizza delivery possible, roads and cars and electricity, threatened to destroy some other industry (horses, wax candles?). As the candlemaker was losing his industry, he couldn't even envision the role of a pizza delivery driver. It makes no sense in his world. So of course, to him, everything looks dire.
You might think that we've never seen technological shifts as potent as today, that somehow this time it's different. But that ignores history. The overnight displacement of all industrial manufacturing by robots would be a blip compared to the decimation of agricultural labor over the last century plus. The economy is far more diversified now, and even within the sector, a smaller percentage of jobs would be lost. We survived the productivity boom in agriculture just fine. (Maybe with a little obesity to show for it.)
We freed up people to staff the front offices of advertisers and entertainment companies and to bring food to our doorstep.
Please give me an example where a modern day industry collapses, or is reduced by progress (such as automation), or by a new industry emerging ... and every job lost being replaced by another gainful-employment type job opportunity? Not in 1790, but in 1970-now.
And I don't mean were other industries absorb the unemployed, because they eventually fill up, and later on collapse themselves for various reasons, mostly more efficiency spelling less jobs.
Millions of auto-workers delivering hot pizzas? That's funny.
> We freed up people to staff the front offices of advertisers and entertainment companies and to bring food to our doorstep.
So is that.
At some point you tip over.
The job market (regardless of industry) always ends up reduced to a few specialists and many low paid automatons (people working in fast food for example, or the FoxConn workforce making iPads, etc) or machines ... relatively speaking.
*To counter my argument, I'll admit there is the internet and the printing press example; and all the jobs the internet has created. But is there enough new revolutions to offset the losses due to increasing efficiencies? I don't think so.
But it's hardly an exhaustive list. Neither was pizza delivery boy for new jobs. We also have oncologists, data scientists, app developers, and (modern) industrial engineers.
(If you want more, type into google "careers that didn't exist" and it will offer suggestions... 20, 10, even 5 years ago. simplyhired shows 72,000 "social media" jobs right now. Even though probably half of them are spam, it's thousands, for a phrase that we just made up a few years ago.)
In the 90s, manufacturing dropped like a rock, but overall, employment ticked up. So did median household income. The shift was primarily due to trade liberalization. The recent recession decimated jobs across many fields, as you'd expect from a drop of jobs due to flagging demand (driven by pressure towards deleveraging, not unexpected given high personal debt to GDP ratios).
So automation isn't displacing workers yet, other factors are. If the automation dystopia hasn't even begun, how do we know it's starting? We go on a hunch, and say technology will probably displace all jobs at some point in the future, maybe five years from now on no evidence, because it feels right?
Will new jobs and new sectors always replace the old? All of economic history suggests yes. Armchair speculation suggests no.
Go with whatever your gut tells you, and forgive me for opting for a more conservative reliance on metrics. Sometimes metrics are wrong, but that's where I hang my hat. I will have your back if we reach 35% unemployment in a few years (or ever). I hope you'll pledge to ditch linear economic forecasting if we hit sub-6% unemployment by 2017.