The jobs that will survive into the future are not those that require special training or education. Instead, it is the jobs that cannot be disaggregated that will continue. Regardless of the physical or intellectual ability required, if the job can be broken down to elements that can be explained to a lower cost employee or a piece of software, then it is at risk.
“The Grapes of Wrath” is one of the great novels of the twentieth century. It tells the story of the Joads as they are forced off of their farm and into an uncertain future, at the mercy of an uncaring world. Many families in the USA and Europe currently feel like the Joads. Job insecurity, wage stagnation, and fear of changes taking place around them makes people hanker for a return to a better time. For the Joads, life had always been tough but predictable. For many working class people in today’s economy, life was both more predictable and easier in the period from the end of WW2 until the 1970s. This period ended when manufacturing jobs left developed countries.
In a climate of personal insecurity, it is easy to become tribal and blame those who don’t look or behave like the majority for this fear and uncertainty. Immigrants are the easiest and most traditional scape goats. Foreign governments are another easy target. Corporations and the wealthy are also on the list. There is no question that immigration, trade policies, regulations, taxation, and control of the political system are all real factors in the current situation but there are trends that are having a much larger impact than any of these and that will continue to impact workers in fundamental ways: automation, labor arbitrage, and the disaggregation of work.
The reference to automation will come as a surprise to no-one and most people can cite examples of how automation has impacted them or people they know. Labor arbitrage is another way of saying that work is moved to where wages are lower. Offshoring is the most obvious sign of labor arbitrage although onshore shared service centers are another possible outcome. However, the enabler behind both of these trends, and a major driver of change in its own right, is disaggregation, which is barely mentioned in the popular media. Whereas automation and labor arbitrage take an existing job and give it to a machine or to someone willing to do it for a lower wage, disaggregation has the power to fundamentally change the nature of the work.
Disaggregation of jobs
What we mean by disaggregation? Disaggregation is the process of breaking down a job into its constituent activities. Once the job is disaggregated, the activities may be reassembled using alternative solutions. This can, and often does, involve automation of some parts of the value chain and the skills needed are likely to change in the process, allowing fewer or lower cost employees to perform the work. During the industrial revolution, this often entailed replacing tradesmen such as blacksmiths, carpenters, and weavers with steam-powered machines manned by unskilled laborers. If you think back to the Joads’ lives on the farm, they had many tasks, from planting seeds to collecting eggs and salting meats. It would not have been possible to build a machine that could do all of this and there was no lower cost labor available, so directly automating their jobs or giving them to someone else were not options. However, if the job is broken down into smaller elements then some of these elements can be automated. In the case of the Joads, automation came in the form of a tractor and it was the ploughing and planting activities that were most impacted. Enough of the value chain could be automated that they rest of it could be abandoned or handled in another way.
Large consulting firms talk about ‘rightshoring’ or ‘rightsourcing’ to describe the task of deciding where the work will be performed. This could mean taking an accounting department in Los Angeles and automating the month end recurring journals, implementing an online expense claim system, moving the accounts receivable and payable functions to India, setting up the general ledger team in a shared services center in Boise, Idaho, and maintain a reporting team in Los Angeles. This is possible because the bookkeeping activities, which follow precise rules, were automated a long time ago and the other activities undertaken within an accounting function have been split up into smaller and smaller elements and then commoditized. This is a case where the work of the department has been disaggregated rather than the work of the individual. The concept can also be applied on the scale of the individual, the department, the company, or the entire industry.
In the past, logistical costs and communication lags made it difficult to disaggregate jobs. It was within the four walls of a factory or an office that most specialization occurred. However, the advent of containerization reduced global transportation cost and the wide adoption of the internet made global communication virtually instant. This allows for the aggregation of like activities across the globe rather than within the factory walls which means that smaller and smaller activities can be disaggregated from the value chain. There are therefore far more opportunities for automation and labor arbitrage than would have been imaginable just a few years ago.
Preparing for the future
Everyone reading this essay is an incumbent. You have skills and experience that have served you well up to this point in your career but they may not be relevant in future. You are probably asking yourself two questions at this point: will I be able to continue to earn a living and how do I take advantage of the trends to improve my situation?
I wrote earlier that the jobs that would remain were the ones that could not be disaggregated. These are generally the ones that require creativity since creativity cannot be reduced to a series of easily definable work activities. This includes research and development. If you are in the business of creating the future through software, robotics, or materials science, then you generally don’t have to worry about being out of a job. You are also likely to be safe if you are in a job that requires manual dexterity that isn’t repetitive. For example, flipping burgers requires manual dexterity but it is the same movement for each burger flipped, so these movements can be described, whereas replacing a broken faucet differs each time because of the variety of faucets, sinks, cabinetry, and homes involved.
What jobs will see the fastest declines? Those that are rule-based and routine with little creativity will go first. This includes accountants and legal assistants as well as drivers and first level customer support. It may be worth mentioning at this point that cars and trucks are likely to become self-driving in the next decade. The technology is almost ready and the biggest obstacles are legal ambiguity and social fear. This will eliminate hundreds of thousands of job in the USA alone. Driving, especially for long haul truck drivers, is dangerous, unhealthy, boring, and badly paid, but it pays the bills for those who do it. Unfortunately for those impacted, changes are likely to be quick once the technology is accepted.
What then should an individual do to stay relevant as the changes take place? Do what humans have always done: adapt. Careers, never mind jobs, are no longer for life and you have to be willing to jump to the next career when the time comes. Past generations moved from the farm to the factory and then from the factory to the office. This generation will see movement out of the office and, in many cases, back to the home.
How do you take advantage of this environment to improve your situation? Look at the job you do today and try to picture what it will look like in ten years given the trends that are taking place. Use the perspective of disaggregation to analyze the potential changes. Identify the elements of the job and break them down into activities that could be automated or moved to a lower cost location. Realize that if it can be automated or moved then it will be. Then figure out how to make the part that remains meaningful.
If you are a line manager looking for opportunities to improve your department, or an entrepreneur looking for opportunities, then disaggregation also provides a lens for assessing potential changes. If you can see the parts of the value chain that are likely to be automated or moved to another location, then you can drive the change rather than wait for it. There is no part of the economy and no company immune from the disaggregation wave and, as new business models are formed, they will lead to new opportunities.
The twenty first century will see an enormous amount of technological and social change. That is a blessing, not a curse, for those of us who are living in it. However, change brings with it a risk for individuals and there is a natural tendency to resist change for this reason. Many people have been negatively impacted by the changes that have taken place to traditional industries. These are the people most likely to want to return to a past that was better for them. There is, however, no way back and the future is bright for those willing to accept the need for flexibility.
To understand the changes that are taking place, the concepts of automation and labor arbitrage are useful but these should be viewed through a disaggregation lens as it is changes to parts of the value chain that will ultimately transform jobs and industries. It is through the disaggregation lens that individuals and organizations need to view threats and opportunities and through the disaggregation lens that they need to define the future for themselves.