Is Unemployment here to stay?

Editor's Page

By Frank Thomas Smith

It was 15 years ago in Helsinki, Finland. I was attending a conference of the Association for Social Development, an international group of anthroposophically oriented organization development consultants. A Danish consultant gave a talk which I will never forget. An attractive woman in her forties – I guessed – she smiled once upon being introduced (I forget her name, so I'll call her Ingrid.) and once at the end of her talk. What she said in between was serious indeed.

She specialized in unemployment – not how to avoid or overcome it, but what to do, as an employer, when it happens. And, as far as we as consultants were concerned, what to advise the employer to do when he must fire someone. Ingrid asked us to try and feel what a family's breadwinner must feel when he is given two weeks pay (USA) or two months pay (Europe) and told not to come back. What does he tell his family? And when? Or is he more likely to go to the local pub first in order to put off the moment as long as possible and get glassy-eyed drunk?

Obviously, she was not talking about golden handshakes. She was talking about organizations which, for one reason or another, feel that certain employees have to go – whether they are redundant, or simply are no longer necessary and therefore are like millstones on the company's neck. The main reason for this situation is, of course, technology and automation.

Actually, I had had that experience myself, decades ago, when I had recently gotten out of the army. I was working in the subscription department of a magazine and scientific book publisher in New York City – Walter J. Johnson, Inc. I had been there only about six months when I was called by phone to the owner's office. The owner? Mr. Johnson himself? I had my own boss, a Miss Ellis, a nice, efficient middle aged lady who was a relative of the owner and who had hired me. I looked over to her, but her head was buried in papers. I had to walk through another large room full of employees in order to get to Mr. Johnson's lair. Speaking with a heavy German accent (Johnson was not his original name, nor was Ellis hers) he told me that although he had been informed by Miss Ellis that I was a good worker, the economic situation of the company was such that he was obliged to let me go. He handed me a check for what they owed me plus two weeks salary. I then had to return through the office of ducking employees who knew that no one of my low station ever went to the boss for any other reason than to be fired. My face was hot with shame, as though I had somehow failed and was to blame for my own downfall, or had leprosy. I was informed by a mail room employee with whom I had become friendly that they always hired in the fall and fired in the spring. Miss Ellis did the hiring for her department, but refused to be the hatchet lady to fire the victims. Max – what he called Mr Johnson – was a penny-pinching bastard, he judged.

My situation was very different from most of the downsized of today, however. First of all, I was young, had no children...yet, it was a time when the classified sections of the newspapers were full of ads seeking personnel and I didn't like the job anyway. As it turned out getting fired was a blessing because it put me on the path to working in the airline business and becoming a globetrotter. Ingrid, our Danish consultant, was talking about times when an unskilled or semi-skilled worker being laid-off meant a long time in the ranks of the unemployed. She said that the employer should not just pay a compensation, however generous, and say good bye. Rather he should ask the reject to keep coming to the office, that they needed him or her. To tidy up, or whatever. That he would be free to look for a new job, but it's always easier to find one if you're still employed, so that you're not begging, just looking for something better, more worthy of your talents. If the company is large enough to have a personnel department (sorry, “human resources”) they should do all possible to help him find a new job, making their resources truly human.

Things like that, and more, Ingrid told us. But her final words were what most impressed us: “Make no mistake, unemployment is here to stay. We are in a technological age – and this was 15 years ago – in which the machines, the computers and the robots and whatever more they will think of, will replace the human being ever more.”

I had also had a personal opportunity to acknowledge the truth of that. My first job in the airline business was as a ticket agent for American Airlines at La Guardia Airport in New York City. It was a different world then. We wore uniforms almost indistinguishable from those of the pilots. Besides ticketing, we did the check-in for flights that left about every ten or fifteen minutes. We were very polite to passengers: Yes, Ma’am, No Sir – but we didn't take any shit, especially not from shoe salesmen and students.

After a couple of years, when my family was growing, I was appointed an “acting” Passenger Service Manager – a kind of trouble shooter without a pay raise. Still I had hopes of being promoted to a permanent position and from there an ascending career. But then the incommodious happened. American Airlines was the first airline to install a computerized reservation system. The reservations office was physically located in Manhattan, the airport in Queens. So every time a passenger appeared at the check-in counter with a reservation but without a ticket, we had to telephone reservations on a direct line and say: “Ticketing pax Smith, John flight 365 date Cincinnati". The reservation agent at the other end – invariably a woman, don't know why – would check the flight passenger list and confirm: “Smith, John holds 365 date Cincinnati, return 364 Jan. 10.” I'd say: ”Ticketed 106 La Guardia”. She'd say: “HR res NYC”. Sometimes we even got to know each other, these 106s and HRs, at Christmas parties or when they occasionally passed through the airport as passengers: “Are you106?” she might ask.

All of American Airlines' flights were handled the same way by hundreds of Reservations agents with telephone headsets in huge rooms. With the advent of the computerized system they were all fired, except for some supervisors, who were kept on when possible in other areas – such as the airports, where they were no longer supervisors however. But they were, for the most part, competent people with much seniority. It was the main reason why I went looking for a new job...again. (There were other reasons, too personal even for here.) I somehow convinced the head of the enforcement division of IATA (International Air Transport Association) that I was just what he was looking for to be one of the fingers of his hands...his metaphor. It was a job I kept for over 30 years in various countries and continents. I doubt that such employment even exists now; it seems to be all short or medium term contracts.

Well, though, I mention all that to show how technology had begun to replace humanity many moons ago and has continued doing so at an alarmingly progressive rate.

The myth used to be: yes, but now there are many more jobs in the service sector: you know, white collar, technology, etc., so everyone will just have to get more educated. Problem is, according to W. Brian Arthur, professor at the Santa Fe Institute, that technology is quickly taking over service jobs, following the waves of automation of farm and factory work: “This last repository of jobs is shrinking – fewer of us in the future may have white collar process jobs – and we have a problem.”

Recognition of the problem, its potentiality at least, goes much farther back than the few decades of my experience. In 1930, the much maligned economist John Maynard Keynes warned of a “new disease” that he termed “technological unemployment,” the inability of the economy to create new jobs faster than jobs were lost to automation. He could hardly have imagined, though, the pace that automation has picked up in recent years because of a combination of technologies including robotics, numerically controlled machines, computerized inventory control, voice recognition, online commerce and faster and more efficient computers and bandwidth.

We – the world, that is – are still in a recession, a particularly deep one as far as such cycles go. But the recession is receding. Corporations are doing fine. The companies in the stock index are expected to report record profits this year, an estimated $927 billion. And corporate profit as a share of the economy is at a 50-year high.

However, the job count has not risen. Go figure.

I figure it this way. Let's say a company has 100 employees. A recession comes and in order to survive it must shed 50 of them. The recession ends. The company realizes that it didn't do so badly with only 50 employees because it was able to substitute the ones shed with state of the art technology and “lean management” efficiency. They hire back 20, only the ones they really need. Recession gives surviving management the opportunity to reduce the work force, trim the fat, so to speak – that is, reduce costs and, often, increase efficiency.

So yes, my dear Ingrid, I fear you were right: Unemployment is here to stay.

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