Technology is probably to blame, wrote the report’s authors, Eleanor Choi and James Spletzer. Entrepreneurs no longer need people to do clerical and administrative tasks to help them get their businesses off the ground.
In the old days, say 10 years ago, “you’d need an assistant pretty early to coordinate everything — or you’d pay a huge opportunity cost for the entrepreneur or the president to set up a meeting,” says Jeff Connally, chief executive of CMIT Solutions, a technology consultancy to small businesses.
Now technology means “you can look at your calendar and everybody else’s calendar and — bing! — you’ve set up a meeting.” So no assistant gets hired.
Entrepreneur Andrew Schrage started the financial advice Web site Money Crashers in 2009 with a partner and one freelance writer. The bare-bones start-up was only possible, Schrage says, because of technology that allowed the company to get online help with accounting and payroll and other support functions without hiring staff.
“Had I not had access to cloud computing and outsourcing, I estimate that I would have needed 5 to 10 employees to begin this venture,” Schrage says. “I doubt I would have been able to launch my business.”
Technological innovations have been throwing people out of jobs for centuries, but they eventually created more work, and greater wealth, than they destroyed. Ford thinks there is reason to believe that this time will be different. He sees virtually no end to the inroads of computers into the workplace. Eventually, he says, software will threaten the livelihoods of doctors, lawyers and other highly skilled professionals.
Many economists are encouraged by history and think the gains eventually will outweigh the losses, but even they have doubts.
“What is different this time is that digital technologies show up in every corner of the economy,” says McAfee, a self-described “digital optimist.”
“Your tablet [computer] is just two or three years ago and it is already taken over our lives,” he says.
Peter Lindert, an economist at the University of California, Davis, says the computer is more destructive than innovations in the Industrial Revolution because the pace at which it is upending industries makes it hard for people to adapt.
Occupations that provided middle-class lifestyles for generations can disappear in a few years. Utility meter readers are just one example. As power companies began installing so-called smart readers outside homes, the number of meter readers in the US plunged from 56,000 in 2001 to 36,000 in 2010, according to the US Labor Department. In 10 years that number is expected to be zero.