More data and the cloud help replace humans – and their salaries – on the job

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Posted: Thursday, January 24, 2013 12:00 am

This is the second in a three-part series on the loss of middle-class jobs in the wake of the Great Recession, and the role of technology.

Part 1: Technology takes a toll on middle-class jobs

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Art Liscano knows he's an endangered species in the job market.

He's a meter reader in Fresno, Calif., and for 26 years he's driven from house to house, checking how much electricity Pacific Gas & Electric customers have used.

But PG&E doesn't need many people like Liscano making rounds anymore. Every day, the utility replaces 1,200 old-fashioned meters with digital versions that can collect information without human help, generate more accurate power bills, even send an alert if the power goes out.

Children ride in the front seats of Tokyo's Yurikamome Line that runs without any drivers or conductors along Tokyo Bay. THE ASSOCIATED PRESS

“I can see why technology is taking over,” said Liscano, 66, who earns $67,000 a year. “We can see the writing on the wall.” His department employed 50 full-time meter readers just six years ago. Now, it has six.

From giant corporations to university libraries to start-up businesses, employers are using rapidly improving technology to do tasks that humans used to do. That means millions of workers are caught in a competition they can't win against machines that keep getting more powerful, cheaper and easier to use.

To better understand the impact of technology on jobs, the Associated Press analyzed employment data from 20 countries; and interviewed economists, technology experts, robot manufacturers, software developers, CEOs and workers who are competing with smarter machines.

The AP found that almost all the jobs disappearing are the mid-skill, mid-pay jobs — jobs with salaries ranging from $37,000 to $68,000 — that form the backbone of the middle class in developed countries in North America, Europe and Asia. In the United States, half of the 7.5 million jobs lost during the Great Recession paid middle-class wages.

Those jobs are being replaced in many cases by machines and software that can do the same work better and cheaper.

“Everything that humans can do a machine can do,” said Moshe Vardi, a computer scientist at Rice University in Houston. “Things are happening that look like science fiction.”

Google and Toyota are rolling out cars that can drive themselves. The Pentagon deploys robots to find roadside explosives in Afghanistan and wages war from the air with drone aircraft.

North Carolina State University this month introduced a high-tech library where robots — “bookBots” — retrieve books when students request them, instead of humans. Now, with customers scanning books themselves, the library is processing more books than ever while shaving 15 percent from staff hours by using part-timers more.

The advance of technology is producing wondrous products and services that once were unthinkable, but it's also taking a toll on the people replaced.

In the U.S., nearly 1.2 million secretaries vanished from the job market between 2000 and 2010, their job security shattered by software that lets bosses field calls themselves and arrange their own meetings and trips.

Over the same period, Labor Department statistics show, the number of word processors and typists plunged by 69 percent, telephone operators by 64 percent, bookkeepers by 53 percent and travel agents by 46 percent.

In Europe, technology is shaking up human resources departments across the continent. “Nowadays, employees are expected to do a lot of what we used to think of as HR from behind their own computer,” said Ron van Baden, a negotiator with the Dutch labor union federation FNV.

Two-thirds of the 7.6 million middle-class jobs that vanished in Europe from January 2008 through last June were the victims of technology, estimates economist Maarten Goos at Belgium's University of Leuven.

Does technology also create jobs? Of course. But at nowhere near the rate that it's killing them off — at least for the foreseeable future.

A look at three technological factors reshaping the economy and the job markets in developed countries:

THE WORLD-HERALD

Big data

At the heart of the biggest technological changes today is what computer scientists call “Big Data.” Computers are feasting on an unprecedented amount of information — from the Internet, from Twitter messages and other social media sources, from the barcodes and sensors being slapped on everything from boxes of Huggies diapers to stamping machines in car plants.

According to a Harvard Business Review article by Andrew McAfee and Erik Brynjolfsson of the Massachusetts Institute of Technology, more information now crosses the Internet every second than the entire Internet stored 20 years ago. Every hour, they note, Walmart collects 20 million filing cabinets' worth of information from its dealings with customers.

No human could make sense of so much data. But computers can. They can sift through mountains of information and deliver valuable insights to decision-makers in businesses and government agencies. For instance, Walmart's analysis of Twitter traffic helped persuade it to increase the amount of “Avengers” merchandise it offered when the superhero movie came out last year.

“What's different to me is the raw amount of data out there because of the Web, because of these devices, because we're attaching sensors to things,” said McAfee, principal research scientist at MIT's Center for Digital Business and the co-author of “Race Against the Machine.”

So far, public attention has focused on the potential threats to privacy as companies use technology to gather clues about their customers' buying habits and lifestyles.

“What is less visible,” said software entrepreneur Martin Ford, “is that organizations are collecting huge amounts of data about their internal operations and about what their employees are doing.” The computers can use that information to “figure out how to do a great many jobs” that humans do now.

Gary Mintchell, editor of Automation World, recalls starting work in manufacturing years ago as a “grunge, white-collar worker.” He'd walk the factory floor with a clipboard, recording information from machines, then go back to an office and enter the data by hand onto a spreadsheet.

Now that work is conducted by powerful “operations management” software systems developed by businesses such as General Electric Intelligent Systems in Charlottesville, Va. These systems continuously collect, analyze and summarize in digestible form information about all aspects of factory operations — energy consumption, labor costs, quality problems, customer orders.

And the guys wandering the factory floor with clipboards? They're gone.

The cloud

Google's Council Bluffs data center provides over 115,000 square feet of space. GOOGLE

In the old days — say, five years ago — businesses that had to track lots of information needed to install servers in their offices and hire technical staff to run them. “Cloud computing” has changed everything.

Now, companies can store information on the Internet — perhaps through Amazon Web Services or Google App Engine — and grab it when they need it. And they don't need to hire experts to do it.

Cloud computing “is a catch-all term for the ability to rent as much computer power as you need without having to buy it, without having to know a lot about it,” McAfee said. “It really has opened up very high-powered computing to the masses.”

Small businesses, which have no budget for a big IT department, are especially eager to take advantage of the cheap computer power offered in the cloud.

Hilliard's Beer in Seattle, founded in October 2011, bought software from the German company SAP that allows it to use cloud computing to track sales and inventory and to produce the reports that federal regulators require.

“It automates a lot of the stuff that we do,” owner Ryan Hilliard said.

Automated Insights in Durham, N.C., draws on the computing power of the cloud to produce automated sports stories, such as customized weekly summaries for fantasy football leagues. “We're able to create over 1,000 pieces of content per second at a very cost-effective rate,” said founder Robbie Allen. His startup, which duplicates work done by human reporters, would not have been possible without cloud computing.

Smarter machines

The "bookBot" glides down a row of drawers at the James B. Hunt Jr. Library at North Carolina State University in Raleigh. The automated book retrieval system is just one of many innovations in the new, state-of-the-art facility. THE ASSOCIATED PRESS

Though many are still working out the kinks, software is making machines and devices smarter every year. They can learn your habits, recognize your voice, do the things that travel agents, secretaries and interpreters have traditionally done.

Microsoft has unveiled a system that can translate what you say into Mandarin and play it back — in your voice. The Google Now personal assistant can tell you if there's a traffic jam on your regular route home and suggest an alternative. Talk to Apple's Siri and she can reschedule an appointment. IBM's Watson supercomputer can field an awkwardly worded question, figure out what you're trying to ask, retrieve the answer and spit it out fast enough to beat human champions on the TV quiz show “Jeopardy!”

Computers with that much brainpower increasingly will invade traditional office work.

People who used to say “Let me talk to a person. I don't want to deal with this machine” are now using check-in kiosks at airports and self-checkout lanes at supermarkets and drugstores, said Jeff Connally, CEO of CMIT Solutions, a technology consultancy.

The most important change in technology, he said, is “the profound simplification of the user interface.”

So machines are getting smarter and people are more comfortable using them. Those factors, combined with the financial pressures of the Great Recession, have led companies and government agencies over the past five years to cut jobs yet continue to operate just as well.

The future for workers such as meter reader Liscano looks grim.

At Southern California Edison, digital meter installation ended late last year. All but 20,000 of its 5.3 million customers have their power usage beamed directly to the utility.

Nearly all of the 972 meter readers in Southern California Edison's territory accepted retirement packages or were transferred within the company, said Pat Lavin of the International Brotherhood of Electrical Workers. But 92 workers are being laid off this month.

“Trying to keep it from happening would have been like the Teamsters in the early 1900s trying to stop the combustion engine,” Lavin said. “You can't stand in the way of technology.”

Where is the reset being felt in the U.S.?

» Reduced aid from Indiana's state government and other budget problems forced the Gary, Ind., public school system last year to cut its annual transportation budget in half, to $5 million. The school district responded by using sophisticated software to draw up new, more efficient bus routes. And it cut 80 of 160 drivers.

» When the Great Recession struck, the Seattle police department didn't have money to replace retiring officers. So it turned to technology — a new software system that lets police officers file crime-scene reports from laptops in their patrol cars. The shift from paper eliminated the need for two dozen transcribers and filing staff at police headquarters, and freed desk-bound officers to return to the streets. The department has been able to maintain the number of cops patrolling the streets at 600 the past five years by reassigning 55 non-patrol officers to beats.

» Comerica, a Dallas-based bank, is using new video-conferencing equipment that lets cash-management experts make pitches to potential corporate clients from their desks. Those experts, based in Livonia, Mich., used to board planes and visit prospects in person. Now, they get Comerica colleagues in various cities to pay visits to local companies and conference them in. “The technology for delivering (high quality) video over a public Internet connection was unavailable 12 or 18 months ago,” said Paul Obermeyer, Comerica's chief information officer. “Now, we're able to generate more revenue with the same employee base.”

» Since 2007, telecommunications giant Verizon has increased its annual revenue 19 percent — while employing 17 percent fewer workers. The smaller work force partly reflects the shift toward cellphones and away from landlines, which require more maintenance. But even landlines need less human attention today because Verizon is rapidly replacing old-fashioned copper lines with lower-maintenance fiber-optic cables. Verizon also makes it easier for customers to deal with problems themselves without calling a repairman. Consumers can open Verizon's In-home Agent software on their computers. The system can determine why a cable TV box isn't working or why the Internet connection broke — and fix the problem in minutes. The program has been downloaded more than 2 million times, Verizon says.

Where is the reset being felt around the world?

» In South Korea, Standard Chartered is expanding “smart banking” branches that employ a staff of three, compared with an average of about eight in traditional branches. The bank has closed a dozen full-service branches, replacing them with the smart branches, and expects to have 30 more by the end of this year. Customers do most of their banking on computer screens, and can connect with Standard Chartered specialists elsewhere by video-conference if they need help.

» Dirk Vander Kooij's furniture-making company in the Netherlands needs only a skeleton crew — four people. The hard work at the Eindhoven-based company is carried out by an old industrial robot that Vander Kooij fashioned into a 3D printer. Using plastic recycled from old refrigerators, the machine “prints” furniture — ranging in price from a $300 chair to a $2,900 lamp — the way an ordinary printer uses ink to print documents. Many analysts expect 3D printing to revolutionize manufacturing, allowing small firms like Vander Kooij's to make niche products without hiring many people.

» The British-Australian mining giant Rio Tinto announced plans last year to invest $518 million in the world's first long-haul, heavy-duty driverless train system at its Pilbara iron ore mines in Western Australia. The automated trains are expected to be running in 2015 and will be more efficient partly because they won't have to change drivers. The trains are part of what Rio Tinto calls its “Mine of the Future” program, which includes 150 driverless trucks and automated drills.

© 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.


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