Angst for the educated

Schumpeter at The Economist has an excellent post on employment trends for university graduates.  His prognosis is dire.

It seems that the US and European job markets are undergoing a structural change that will have worrying consequences for a multitude of white collar workers.  For years, it was taken as gospel truth that a university degree was a guarantor of job security and a job-earning potential commensurate with a high quality of life.  As emphasized by the current recession, that seems to be changing.  Getting a white collar job (much less keeping it) has become a more tenuous process.  The reasons are manif0ld.

The supply of university graduates is increasing more rapidly than the rate at which they can be absorbed into the workforce.  Further, western white collar firms are under pressure from Asian professional service firms like Infosys and TCS, which have hungrier employees, willing to work harder and at a fraction of the cost and who supply a more-than-adequate product.

But these trends only exist because of technological developments.

… the demand for educated labour is being reconfigured by technology, in much the same way that the demand for agricultural labour was reconfigured in the 19th century and that for factory labour in the 20th. Computers can not only perform repetitive mental tasks much faster than human beings. They can also empower amateurs to do what professionals once did …

Also, a bigger change is under way:

… the application of the division of labour to brain-work. Just as Adam Smith’s factory managers broke the production of pins into 18 components, so companies are increasingly breaking the production of brain-work into ever tinier slices.


the reconfiguration of brain-work will also make life far less cosy and predictable for the next generation of graduates.

Automation and mass production techniques are doing to white collar jobs what they have already done to blue collar jobs.

  1. The process of production is being standardized and discretized
  2. Each discrete step in the process is then made geographically separable.  Like with manufacturing, the supply chain for many knowledge products has vertically disintegrated
  3. This allows the producer to relocate based on price

Knowledge production has been democratized.  Firms have realized that expert (and expensive) labor is not needed for all steps of knowledge production.  Certain repetitive, time-consuming, lower value products can be easily outsourced.  And so we have medical transcription from US or British hospitals, or discovery for US legal cases, conducted in India.


Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: