May 162013

Technologist Jaron Lanier says the internet has destroyed the middle classes.

He’s probably right, a similar process that put a class of mill workers out of a job in the Eighteenth Century is at work across many industries today.

Those loom workers in 18th Century Nottingham were the middle class of the day – wages were good and work was plentiful. Then technology took their jobs.

Modern technology has taken the global economy through three waves of structural change over the past thirty years, the first wave was manufacturing moving from the first world to emerging economies as global logistic chains became more efficient.

The second wave, which we’re midway through at the moment, is moving service industry jobs and middleman roles onto the net which destroys the basis of many local businesses.

Many local service businesses thrived because they were the only print shop, secretarial service or lawyer in their town or suburb. The net has destroyed that model of scarcity.

The creative classes – people like writers, photographers and musicians – are suffering from the samee changed economics of scarcity.

Until now, occupations like manual trades such a builders, truckdrivers and plumbers were thought to be immune from the changes that are affecting many service industries.

The third wave of change lead by robotics and automation will hurt many of those fields that were assumed to be immune to technological forces.

One good example are Australia’s legendary $200,000 mining truck drivers. Almost all their jobs will be automated by the end of the decade. The days of of relatively unskilled workers making huge sums in the mines has almost certainly come to an end.

So where will the jobs come from to replace those occupations we are losing? Finance writer John Mauldin believes the jobs will come, we just can’t see them right now.

He’s almost certainly right – to the displaced loom worker or stagecoach driver it would have been difficult to see where the next wave of jobs would come from, but they did.

But maybe we also have to change the definition of what is middle class and accept the late 20th Century idea of a plasma TV in every room of a six bedroom, dual car garage house in the suburbs was an historical aberration.

Just like the loom weavers of the 18th Century, it could well be the middle class incomes of the post World War II west were a passing phase.

If so, businesses and politicians who cater to the whims and the prejudices of the late Twentieth Century middle classes will find they have to change their message.

  7 Responses to “Rethinking the middle class”

  1. Great story, Paul. I’ve been wanting to write something similar. Quartz did a good wrap-up of this too.

  2. Paul, depending on the trajectory of the resources sector high wage jobs are likely to continue – those $200K+ dump truck operators may decrease in number but the plethora of other truck driving workers picking up their $150K+ a year will continue – and these are by far the larger aggregate – there ain’t no automated function on the highways mate.

    You might find it productive to read some of Dalia Marin’s work. She sees a radical change in traditional middle class work primarily due to globalisation – the offshoring of entire segments of middle-class work to cheaper providers – happening already in a raft of occupations and recently highlighted on ABC (I think) with a story on major Australian based accounting firms relocating significant volumes of work to equally qualified but far cheaper workers in Manilla. Mirrored by the shift offshore of a range of technical, engineering, computing and even legal services.

    As Dalia says – jobs of the future wiping arses at both ends of life.

  3. Paul – in regard to my comment above – Marins’s view is that those low skilled jobs are in fact exactly the kind that are likely to remain – the threat is posed toward jobs in the skilled areas that can be performed by anyone anywhere – entirely transportable transnational and yes, this is where the role of technology is essential.

    • Thanks 3d1k, I’ll have a look at Marin’s work.

      One of the things we should remember is that twenty years ago the consensus was that manufacturing is doomed and we should move to ‘knowledge based’ jobs like call centres, design and legal work.

      Now we’ve found all of those jobs can also go to lower cost centres.

      With robotics and automation a lot of lower skilled jobs which didn’t appear to be suitable for offshoring and outsourcing can be done by machines.

      I wouldn’t be so sure about the highway truck drivers either, we may well find self driving trucks are common in a decade or two.

  4. Here’s a salon article with a similar theme. Haven’t had a chance to read.

    Here’s the link to the Quartz article.

  5. […] Rethinking the middle class – Paul Wallbank […]

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