The Great Decoupling

tags: productivity

Author and and professor Erik Brynjolfsson is convinced that technology is increasing productivity at the cost of jobs, and he has a chart that he claims proves this point:

[…] as businesses generated more value from their workers, the country as a whole became richer, which fueled more economic activity and created even more jobs. Then, beginning in 2000, the lines diverge; productivity continues to rise robustly, but employment suddenly wilts. By 2011, a significant gap appears between the two lines, showing economic growth with no parallel increase in job creation. Brynjolfsson and McAfee call it the “great decoupling.” And Brynjolfsson says he is confident that technology is behind both the healthy growth in productivity and the weak growth in jobs.

Businesses are gaining profit on the back of technology. The goal of the innovation cycle is that they turn around and pour that money back into research that results in innovation which creates jobs. According to this reasoning, they’re either (1) not doing that, or (2) the jobs that are created are also highly technology-leveraged.

Here’s a snippet of the chart, taken from: How Technology Is Destroying Jobs. The white gap there is the problem – that’s the growing gap (“the great decoupling”) between productivity and jobs:

Brynjolfsson and Andrew McAfee wrote Race Against the Machine a couple years ago, I just ordered it.

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