That Used to Be Us: How America Fell Behind in the World It Invented and How We Can

by Thomas L. Friedman

  This shift is happening all through the workplace—improving productivity for every company, wiping out whole categories of jobs, and raising the bar for higher-skilled ones.

  Who Ate My Job?

  In September 2010, Harvard University’s Lawrence Katz and MIT’s David Autor, two labor economists, produced a paper for the National Science Foundation entitled Grand Challenges in the Study of Employment and Technological Change, which helps explain how this phenomenon is playing out today.

  The big change wrought by the merger of globalization and the IT revolution, argue Katz and Autor, was the creation of “a labor market that greatly rewards workers with college and graduate degrees but is unfavorable to the particularly less-educated males.” This trend is called “employment polarization,” or skill-biased technological change. It means that a computer or a robot makes an educated person more productive and able to sell his or her goods and services in more markets around the world, but often makes a less-educated person less employable. When globalization and IT converge, the best-educated workers get raises and the least-educated get pink slips—or don’t get jobs in the first place. Tom’s New York Times colleague David Leonhardt makes the point with a few grim statistics (April 11, 2011): “In the worst economic times of the 1950s and ’60s, about 9 percent of men in the prime of their working lives (twenty-five to fifty-four years old) were not working. At the depth of the severe recession in the early 1980s, about 15 percent of prime-age men were not working. Today, more than 18 percent of such men aren’t working. That’s a depressing statistic: nearly one out of every five men between twenty-five and fifty-four is not employed. Yes, some of them are happily retired. Some are going to school. And some are taking care of their children. But most don’t fall into any of these categories. They simply aren’t working. They’re managing to get by some other way.”

  Broadly speaking, today’s job market can be divided into three segments, which are steadily collapsing into two. The first includes what are known as nonroutine high-skilled jobs. A nonroutine job is one whose function cannot be reduced to an algorithm that can then be programmed into a computer or robot, or easily digitized and outsourced abroad. These jobs involve critical thinking and reasoning, abstract analytical skills, imagination, judgment, creativity, and often math. They require the ability to read a situation, to extrapolate from it, and to create something new—a new product, a new insight, a new service, a new investment, a new way of doing old things, or new things to do in new ways in an existing company. Nonroutine high-skilled work is generally the province of engineers, programmers, designers, financiers, senior executives, stock and bond traders, accountants, performers, athletes, scientists, doctors, lawyers, artists, authors, college professors, architects, contractors, chefs, specialized journalists, editors, sophisticated machine-tool operators, and innovators.

  Far from supplanting these nonroutine jobs, the merger of globalization and the IT revolution has made those who do them even more productive. These workers use Google to do their own research; they use Windows to produce their own PowerPoints; they use Macs to design their own online ads, posters, and apps, as well as to edit their own films and to design their own buildings. They use laptops to create their own spreadsheets and crunch their own numbers, and cell phones to make their own trades and gather their own information. They can do all these things anywhere and do them faster and more cheaply by themselves than any secretary, clerk, or assistant can. If you fall into this nonroutine high-skilled category of work, then globalization and the IT revolution have been your friends, making you individually more productive, globally more attractive, and most likely better paid.

  In the second category are routine middle-skilled jobs, involving a lot of standardized repetitive tasks, of either the white-collar or blue-collar variety. They include factory assembly-line work, number-crunching and filing in the back room of a bank or brokerage house, routine reporting for a newspaper, transcribing interviews or doctor’s notes, producing a PowerPoint presentation for the boss, making routine sales calls, or tracing lost luggage. This routine middle-skilled work has been devastated by the merger of globalization and the IT revolution. White-collar routine work—someone managing files in a bank or brokerage, for instance—which could be reduced to algorithms either got digitized and computerized or outsourced via the Internet to much cheaper labor markets. Even some high-skilled work that could be routinized fell into this category, such as reading X-rays or filing tax returns. Thanks to globalization and the IT revolution, those tasks could be turned into bits and bytes and transmitted overnight via fiber-optic cable to India, where lower-paid radiologists or accountants could perform them and send the results right back over the same cable by the next morning. Globalization and the IT revolution have not been kind to any kind of routine work, whether white-collar or blue-collar.

  “Eventually we will all pump our own gas,” adds Curtis Carlson, the CEO of SRI International. “By that, I mean that services that can be automated and modified to allow us to do the task ourselves will go that way—online services, bag our own groceries, phone operators, your assistant, etc. Mainly it is for cost but we often like it more because it gives us more control.” Indeed, remind us again why you need a salesclerk to check you out at the drugstore? You don’t, which is why CVS pharmacies have been automating all their checkouts, so now you do it yourself while one better-trained employee watches over you and the computercheckout machines.

  Katz and Autor quote the Yale economist William Nordhaus as estimating that “the real cost of performing a standardized set of computational tasks fell at least 1.7 trillionfold between 1850 and 2006, with the bulk of this decline occurring in the last three decades … The consequence,” they write, “has been a sharp decline in the share of U.S. employment in traditional ‘middle-skill’ jobs. The four ‘middle-skill’ occupations—sales, office workers, production workers, and operatives—accounted for 57 percent of employment in 1979 but only 46 percent in 2009,” and the trend is clearly downward.

  The third segment of the job market involves workers doing nonroutine low-skilled jobs that have to be done in person or manually—in an office, a hospital, a shopping center or restaurant, or at a specific construction site, factory, or locale. These jobs do not require a lot of critical thinking or an advanced degree. They include dental assistant, hairstylist, barber, waitress, truck driver, cook, baker, policeman, fireman, construction worker, deliveryman, plumber, electrician, maid, taxi driver, masseuse, salesclerk, nurse, and health-care aide at a nursing home. No robot or computer can replace these jobs, and no one in India or China can take them away, either. They will always exist, but how many such jobs there are and how much they pay will depend on the overall state of the economy and local supply and demand.

  Putting all three categories together makes clear why the experts speak of job market “polarization.” Nonroutine high-skilled work becomes, if anything, more lucrative, depending on the overall economy. Nonroutine low-skilled work can pay decently, depending on the local economy and how well that worker performs. But white- and blue-collar routine work shrinks, gets squeezed on pay, or just vanishes. The net result of the “rising demand for highly educated workers performing abstract tasks and for less-educated workers performing ‘manual’ or service tasks is the partial hollowing out or polarization of employment opportunities,” conclude Katz and Autor.

  Andy Kessler, a former hedge fund manager and the author of Eat People: And Other Unapologetic Rules for Game-Changing Entrepreneurs, published a piece in The Wall Street Journal (February 17, 2011) proposing an even simpler and more evocative typology of the new labor market:

  Forget blue-collar and white-collar. There are two types of workers in our economy: creators and servers. Creators are the ones driving productivity—writing code, designing chips, creating drugs, running search engines. Servers, on the other hand, service these creators (and other servers) by building homes, providing food, offering legal a
dvice, and working at the Department of Motor Vehicles. Many servers will be replaced by machines, by computers and by changes in how business operates.

  This dichotomy between “creators” and “servers” focuses attention on the most important question every worker will have to ask himself or herself: Am I adding value by doing something unique and irreplaceable? Am I putting some extra chocolate sauce, whipped cream, and a cherry on top of whatever I do?

  We think the best way to understand today’s labor market is to blend Katz, Autor, and Kessler. That yields four types of jobs. The first are “creative creators,” people who do their nonroutine work in a distinctively nonroutine way—the best lawyers, the best accountants, the best doctors, the best entertainers, the best writers, the best professors, and the best scientists. Second are “routine creators,” who do their nonroutine work in a routine way—average lawyers, average accountants, average radiologists, average professors, and average scientists. The third are what we would call “creative servers,” nonroutine low-skilled workers who do their jobs in inspired ways—whether it is the baker who comes up with a special cake recipe and design or the nurse with extraordinary interpersonal bedside skills in a nursing home or the wine steward who dazzles you with his expertise on Australian cabernets. And the fourth are “routine servers,” who do routine serving work in a routine way, offering nothing extra.

  Attention: Just because you are doing a “nonroutine” job—as, say, a doctor, lawyer, journalist, accountant, teacher, or professor—doesn’t mean that you are safe. If you do a nonroutine high-skilled job in a routine way—if you are what we would call a “routine creator”—you will be vulnerable to outsourcing, automation, or digitization, or you will be the first to be fired in an economic squeeze. And just because you are a server, doing some face-to-face job, doesn’t mean you are safe. You, too, will be vulnerable to outsourcing, automation, foreign labor digitization—or you will be the first to be fired in an economic squeeze.

  Remember George Clooney. No one is safe.

  On March 4, 2011, lawyers in America woke up to this headline in The New York Times: “Armies of Expensive Lawyers, Replaced by Cheaper Software.” The story explained:

  When five television studios became entangled in a Justice Department antitrust lawsuit against CBS, the cost was immense. As part of the obscure task of “discovery”—providing documents relevant to a lawsuit—the studios examined six million documents at a cost of more than $2.2 million, much of it to pay for a platoon of lawyers and paralegals who worked for months at high hourly rates. But that was in 1978. Now, thanks to advances in artificial intelligence, “e-discovery” software can analyze documents in a fraction of the time for a fraction of the cost. In January, for example, Blackstone Discovery of Palo Alto, Calif., helped analyze 1.5 million documents for less than $100,000. Some programs go beyond just finding documents with relevant terms at computer speeds. They can extract relevant concepts … even in the absence of specific terms, and deduce patterns of behavior that would have eluded lawyers examining millions of documents. “From a legal staffing viewpoint, it means that a lot of people who used to be allocated to conduct document review are no longer able to be billed out,” said Bill Herr, who as a lawyer at a major chemical company used to muster auditoriums of lawyers to read documents for weeks on end. “People get bored, people get headaches. Computers don’t.”

  So this is the world we are in. This is where every conversation about how we must fix our economy and transform our schools has to start. In this world, America must have companies that are more productive—that are using the tools of hyperconnectivity in every way possible to produce more goods and services with fewer people—and we must have more and more companies that spawn decent-paying jobs.

  There is only one way to square this circle: more innovation powered by better education for every American. A healthy economy is one driven not just by greater efficiency and productivity but also by innovation. That is, more people inventing more goods and services that make others more comfortable, more productive, better educated, more entertained, healthier, and more secure—and finding ways to make these goods and deliver these services in America. American cities and towns cannot just sit around hoping Ford, Boeing, or Intel will come and build a five-thousand-worker factory there. Those big plants are scarce already, and they are going to be even scarcer in the age of robotics. What a town needs to thrive today is a hundred people starting companies that employ twenty-five people each, and twenty people starting companies that employ fifty people each, and five people starting companies that employ three hundred people each.

  In short, we need as many people as possible to be creative creators and creative servers. Some can do that by inventing a new product, others by reinventing an existing job, and others by delivering a routine service with some extra passion, a personal touch, or a new insight. This is what every employer is now looking for. If you have any doubts about that, just ask them. Or just turn the page.

  FIVE

  Help Wanted

  “What are you looking for in an employee today?”

  We put that question to four employers: one who employs low-skilled white-collar workers in India; one who employs high-skilled white-collar lawyers in Washington, D.C.; one who employs green-collar workers all over Afghanistan and Iraq (the U.S. Army); and one who employs blue-collar workers all over the world (DuPont). No matter what color the collar, all four employers gave nearly identical answers. They are looking for workers who can think critically, who can tackle nonroutine complex tasks, and who can work collaboratively with teams located in their office or globally.

  And that’s just to get a job interview.

  That’s right. The employers we interviewed consider all those skills “table stakes” today—merely the conditions of entry for a new job. Now they also expect all the workers they hire to think of themselves along the lines of what we’ve called “creative creators” or “creative servers”—people who not only can do their assigned complex tasks but can enhance them, refine them, and even reinvent them by bringing something extra. By listening to what these employers say, and what they are seeking in employees, we can understand the urgency of the need to adapt our education system to compete and thrive in the hyper-connected world.

  “We have never asked so much from people as we are going to now—leaders and led,” argues Dov Seidman, whose company, LRN, advises executives on leadership. “Today, we are asking every American to climb his own Mount Everest and make that cell-phone call from the peak: ‘Mom, guess where I am.’ In today’s hyper-connected marketplace, to be a leading company, now a company has to be a company of leaders—every individual has to contribute significant value and impact.”

  Herewith, the new help-wanted section.

  White-Collar Indian

  In February 2004 Tom went to Bangalore, India, to make a documentary program on outsourcing for the New York Times–Discovery Channel. Part of the documentary was filmed at the outsourcing company 24/7 Customer and its call center, manned by hundreds of Indians doing what were then relatively low-wage white-collar service jobs via long-distance phone lines. Late at night—daytime in America—the room was a cacophony of voices, with young Indian men and women trying to fix someone’s Dell computer or straighten out a credit card account or sell a new phone contract. It was a cross between a coed college dormitory and a phone bank raising money for the local public TV station. There were 2,500 twentysomethings, some with college degrees, some just out of high school, working either as “outbound” operators, selling credit cards or phone minutes, or “inbound” operators, tracing someone’s lost luggage or dealing with computer glitches.

  Seven years later, the company’s founder, PV Kannan, told us that we would not recognize his office today. “To begin with, it’s a lot less noisy,” he explained. That is because much of the voice work once done over long-distance fiber-optic phone lines or via satellite has now shifted to text messaging ove
r the Internet. Moreover, 24/7 Customer no longer just waits to receive calls about problems. “It’s all proactive now,” explained Kannan. “Now, when a customer goes online and, say, opens his phone bill or cable bill from the company we are working for, we know about it. Today most of the customer questions revolve around bills that they are looking at online. We know from our software that it is the first bill you have been sent by this cable or phone company. You thought you signed up for a $99.99-a-month cable package and the bill is for $278.00. We can track when you opened your bill online, and if you keep it open for more than two minutes a little dialogue box will pop up and say, ‘Would you like to discuss your bill?’ One of our operators will then interact with you online. This requires a very different kind of operator. So now when we recruit people they have to have the savvy to link things together, and they have to be able to multitask—to know what you are looking at, be sensitive to the context of the dialogue, and then pull up all the relevant information quickly and resolve the problem. So the way we recruit now is that we invite candidates to take an online test where all of this is simulated.”