Man Versus Machine
by Charles Wheelan, Ph.D.
Thursday, October 27, 2005

I'm not often moved by numbers, in part because of several tragic math experiences in high school, but also because statistics and equations can often obscure the more interesting big ideas. But I recently stumbled across a number that is the big idea when it comes to the 21st Century American economy.

Answer this: Between 1979 and 2002 (the latest year for which we have data), what happened to the median weekly earnings of American men without a high school degree? These are full-time workers, and the comparisons have been adjusted for inflation.

I'll give you some context. For college-educated men, the median weekly wage rose 20 percent in real purchasing power from 1979 to 2002. Women with college degrees did even better -- up 34 percent.

Now, back to the guys who dropped out of high school. What's happened to their typical paycheck over the past two and a half decades?

A. Up 10 percent -- only half what the college grads enjoyed, but, as my dad would say, still better than a sharp stick in the eye.

B. Up one percent -- or basically flat, meaning that the typical male low-skilled worker has not seen any improvement in his standard of living in two and half decades.

C. Down nine percent -- a standard of living almost 10 percent worse than a generation ago.

D. Down 27 percent -- meaning that over a 23-year period of relatively robust economic growth, low-skilled workers have seen more than a quarter of their purchasing power disappear and are now significantly worse off than they were in 1979.

The answer is d. Women who dropped out of high school did better, seeing their real wages fall only seven percent over the same period.

You Can Learn a Lot at the Movies
To understand the essence of what's going on, let me tell you about my night at the movies. I saw "Grizzly Man", a documentary by Werner Herzog about a guy who spends 13 summers in Alaska living among grizzly bears only to be eaten in the end by one of the animals he loved. That's not the relevant part of the evening, but it is an extraordinary film.

Here's the insight: As I parked my car in the garage, a mellifluous voice was saying repeatedly something along the lines of: "Please take your ticket with you. There is no attendant on duty. Pay for your parking at any of the kiosks inside."

I then bought my movie ticket at a different electronic kiosk (similar to the self check-in machines that most airlines are now using). Not only did the machine allow me to avoid waiting in line, but it also told me what percentage of the seats had been sold for every film at every time.

Both the automated parking and the automated ticket machine were new since the last time I'd been to that theater, no more than a few months ago. And that is why America's low-skilled workers are taking it on the chin. Forget the guy on the phone in Bangalore telling you how to use your new computer. He's a red herring. The job loss statistics tell the same story as they always have: Technology replaces far, far more low-skill jobs than foreign workers do. Think voice mail, ATM machines, automated customer service lines, self-serve gas, online bill paying, automated package tracking, and on and on.

Not one of those innovations is bad for the U.S. economy. Every one of them creates jobs -- albeit for people with skills in business strategy, engineering, software, marketing, and sales. And every one displaces people, like the guy who takes your $10 and gives you a movie ticket and $.50.

Want to Protect Your Job? Develop Your Skills

The 21st Century economy is not about jobs; it's about skills. After all, highly-educated people lose their jobs, too. What do you think happens when JP Morgan Chase merges with Bank One? Bruce Springsteen doesn't sing about those people because they are adaptable enough to turn around and do something else. At the time this column was written, the unemployment rate for college-educated workers was 2.1 percent, compared to 4.9 percent for the nation as a whole and 7.6 percent for workers with less than a high school diploma.

So what do we do for the people Bruce Springsteen does sing about? I'll be the first to tell you that the research on everything from job training to systemic school reform is relatively discouraging. Then again, so were the early attempts to put a man on the moon. The most important first step is to create the political will for massively upgrading the skills of those at the shallow end of the labor pool. Thinkers across the political spectrum have some clever and original ideas, but they need help getting past the baggage of their respective parties.

The Republicans need to ditch the absurd notion that tax cuts alone will help those at the bottom. The numbers are pretty darn clear: After 25 years of significant tax cuts and a steadily growing economy, there's not a lot trickling down to low-skilled workers that wasn't excreted by birds. Hence the Ukrainian proverb: A rising tide is good for those in big boats and bad for those standing on the bottom in heavy shoes. (Okay, that's not really a Ukrainian proverb, but doesn't it sound like it should be?)

The Democrats need to stop confusing things that lessen the pain in the short run with real solutions for the long run. Raising the minimum wage, for example, doesn't make anyone more skilled. It just charges more for the same increasingly outdated skills, which can be counterproductive. How? Just imagine that you own a movie theater and the minimum wage goes to $9 an hour. Would you be more or less likely to invest in automated ticket kiosks?

And, of course, there is some profoundly irrational individual behavior going on. Dropping out of high school is financial suicide. We can argue over whether it is a personal failure, a social problem, or some combination of the two, but let's agree on the key point: It's bad. Even finishing high school and skipping college is looking increasingly foolish. The median weekly wage for men with high school diplomas but no college fell 13 percent between 1979 and 2003.

The overriding lesson is simple: If your job can be done by a machine, then it soon will be. So try to be the guy who sells the machine.



aC. Sidebar

Stay in school, take your Flintstone vitamins, do your homework, and don't do drugs. The typical 80's and early 90's parental marquee that's some how is still deserving in this generation. I love school, that's why I’m in graduate school. I'm still planning on my International MBA degree from some school in Europe once my career takes off to a point that enables me too. Retooling one's self isn't a hard thing to do. Do what you like and love. Everything changes in the work-world, but if you have the passion for auto racing or becoming a lawyer, these worlds are changing. You have to anticipate the Danica Patricks or restrictor-plate challenges to dynamic governmental and global laws or diversity growth.

Nothing ever stays static in the corporate or blue-collar world, as shown from this article. Just as computer systems have to be more "agile" from IBM commercials, so should you. Changing times does not call for static people. Keep in mind this is in terms of academics and career motivation. You can still be the same high school jock that terrorized the nerds and the frizzy haired girl that always knew everything about life. You can still embody these personal traits, but personal traits don't pay for utilities, rent, mortgage, or insurance. Unless, you’re a stripper. Ummm....strippers. Okay, unless you're Homer as well.

Moral of the story? Do what my parents have been saying to me since the 80's. After all, aren't parents always right?