European companies had been using technology to replace midpay workers for years, and now that has accelerated.
“The recessions have amplified the trend,” Goos says. “New jobs are being created, but not the middle-pay ones.”
In Canada, a 2011 study by economists at the University of British Columbia and York University in Toronto found a similar pattern of middle-class losses, though they were working with older data. In the 15 years through 2006, the share of total jobs held by many midpay, midskill occupations shrank. The share held by foremen fell 37 percent, workers in administrative and senior clerical roles fell 18 percent and those in sales and service fell 12 percent.
In Japan, a 2009 report from Hitotsubashi University in Tokyo documented a “substantial” drop in midpay, midskill jobs in the five years through 2005, and linked it to technology.
Developing economies have been spared the technological onslaught — for now. Countries like Brazil and China are still growing middle-class jobs because they’re shifting from export-driven to consumer-based economies. However, even they are beginning to use more machines in manufacturing. The cheap labor they relied on to make goods from apparel to electronics is no longer so cheap as their living standards rise.
One example is Sunbird Engineering, a Hong Kong firm that makes mirror frames for heavy trucks at a factory in southern China. Salaries at its plant in Dongguan have nearly tripled from US$80 a month in 2005 to US$225 today.
“Automation is the obvious next step,” chief executive Bill Pike says.
Sunbird is installing robotic arms that drill screws into a mirror assembly, work now done by hand. The machinery will allow the company to eliminate two positions on a 13-person assembly line. Pike hopes that additional automation will allow the company to reduce another five or six jobs from the line.
“By automating, we can outlive the labor cost increases inevitable in China,” Pike says. “Those who automate in China will win the battle of increased costs.”
Foxconn Technology Group, which assembles iPhones at factories in China, unveiled plans in 2011 to install 1 million robots over three years.
A recent headline in the China Daily newspaper read: “Chinese robot wars set to erupt.”
Candidates for US president last year never tired of telling Americans how jobs were being shipped overseas. China, with its vast army of cheaper labor and low-value currency, was easy to blame.
However, most jobs cut in the US and Europe were not moved. No one got them. They vanished. And the villain in this story — a clever software engineer working in Silicon Valley or the high-tech hub around Heidelberg, Germany — is not so easy to hate.
“It does not have political appeal to say the reason we have a problem is we are so successful in technology,” says Joseph Stiglitz, a Nobel Prize-winning economist at Columbia University. “There is no enemy there.”
Unless you count family and friends and the person staring at you in the mirror. The uncomfortable truth is technology is killing jobs with the help of ordinary consumers by enabling them to quickly do tasks that workers used to do full time, for salaries.