Sun, Jan 27, 2013 - Page 9 News List

Recession and technology killing off middle-class jobs

Entire employment categories are beginning to disappear faster than labor economists had believed as computer software, robots and other devices become more sophisticated and powerful — and millions of more jobs will follow suit

By Bernard Condon and Paul Wiseman  /  AP, NEW YORK

However, to the extent technology has played a role, it raises the specter of high unemployment even after economic growth accelerates. Some economists say millions of middle-class workers must be retrained to do other jobs if they hope to get work again. Others are more hopeful. They note that technological change over the centuries has eventually created more jobs than it destroyed, though the wait can be long and painful.

A common refrain: The developed world may face years of high middle-class unemployment, social discord, divisive politics, falling living standards and dashed hopes.

In the US, the economic recovery that started in June 2009 has been called the third straight “jobless recovery.”

However, that’s a misnomer. The jobs came back after the first two.

Most recessions since World War II were followed by a surge in new jobs as consumers started spending again and companies hired to meet the new demand. In the months after recessions ended in 1991 and 2001, there was no familiar snap-back, but all the jobs had returned in less than three years.

However, 42 months after the Great Recession ended, the US has gained only 3.5 million, or 47 percent, of the 7.5 million jobs that were lost. The 17 countries that use the euro had 3.5 million fewer jobs last June than in December 2007.

This has truly been a jobless recovery, and the lack of midpay jobs is almost entirely to blame.

Fifty percent of the US jobs lost were in midpay industries, but Moody’s Analytics, a research firm, says just 2 percent of the 3.5 million jobs gained are in that category. After the four previous recessions, at least 30 percent of jobs created — and as many as 46 percent — were in midpay industries.

Other studies that group jobs differently show a similar drop in middle-class work.

Some of the most startling studies have focused on midskill, midpay jobs that require tasks that follow well-defined procedures and are repeated throughout the day. Think travel agents, salespeople in stores, office assistants and back-office workers like benefits managers and payroll clerks, as well as machine operators and other factory jobs.

A paper in August last year by economists Henry Siu of the University of British Columbia and Nir Jaimovich of Duke University found these kinds of jobs comprise fewer than half of all jobs, yet accounted for nine out of 10 of all losses in the Great Recession. And they have kept disappearing in the economic recovery.

Webb Wheel Products makes parts for truck brakes, which involves plenty of repetitive work. Its newest employee is the Doosan V550M, and it’s a marvel. It can spin a 60kg brake drum like a child’s top, smooth its metal surface, then drill holes — all without missing a beat. And it doesn’t take vacations or “complain about anything,” says Dwayne Ricketts, president of the Cullman, Alabama, company.

Thanks to computerized machines, Webb Wheel has not added a factory worker in three years, though it’s making 300,000 more drums annually, a 25 percent increase.

“Everyone is waiting for the unemployment rate to drop, but I do not know if it will much,” Ricketts says. “Companies in the recession learned to be more efficient, and they are not going to go back.”

In Europe, companies could not go back even if they wanted to. The 17 countries that use the euro slipped into another recession 14 months ago, in November 2011. The current unemployment rate is a record 11.8 percent.

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