Job Changes + Bell Curve = Permanently Unemployed

The current recession has been particularly hard on the idiots but the future may be even worse.

The use of education level as a proxy for intelligence is well established. Of course there are smart people without degrees and there are idiots with them but I think it’s safe to say that if you didn’t at least complete high school, you’re pretty stupid. Some people look at the chart above and say, “Let’s give everyone a Bachelor’s Degree and the unemployment problem will be solved!” Clearly that strategy would not work, despite attempts over the last few decades to make it so. It’s not the degree itself that makes someone more employable but the intelligence and knowledge the degree (hopefully) represents.

IQ Normal Distribution

Two thirds of the population have IQs within 85 to 115 on a standard distribution. One sixth of the population (over 50 million people in the US) scores below 85. That one sixth is unlikely to have completed high school and if they did it was due to social promotion. (There’s a reason Johny can’t read and it isn’t always crappy teachers) These are the “unskilled workers” and have structurally high unemployment rates. (I would argue that “low skill” applied to adults is a code word for low intelligence.)

Since the Industrial Revolution there has been a steady process of human labor replacement in various industries. Human labor is fairly imprecise, unreliable and expensive. Machines are precise, reliable and relatively inexpensive. When a machine, computer or robot is developed that can do a job previously done by human labor in an industry, the people doing those jobs become unemployed. We see the process most often in the manufacturing sector but it happens everywhere. Computers have practically eliminated secretarial/clerical work. Automated systems are replacing manual labor in warehouses. Self checkout machines in stores replace human checkers. Looking forward we can see pilot-less airplanes and driver-less trucks and cars. (They exist today, it’s just a matter of time.) The standard answer to the problem of displaced workers is that they will retrain and get new jobs.

While a person of any intelligence level can do unskilled labor, a person of low intelligence can’t do any job. For the 1/6th of the population in the US that are in the under 85 IQ “low skilled” category, the jobs they can do will continue to disappear and no amount of retraining will make them qualify for the new high skilled (high intelligence) jobs. As technology progresses the structural unemployment line will move to the right on the IQ distribution, gradually easing more and more of the population into permanent unemployment.

Keep in mind that those unemployment numbers at the top of the post are for people actively looking for work. If you look at the actual participation in the labor force an even bleaker picture emerges.

As of July 2012 over half the people that lack a high school diploma aren’t part of the work force while less than a quarter of people with bachelor’s degrees or higher don’t participate in the work force. The BLS expects overall workforce participation to continue to decline in the future.

What happens in the future when more jobs require a higher level of education than a large part of the population is capable of achieving? Will rising wages world wide make low skill manufacturing uneconomical to outsource to other countries? Or will advances in automation even eliminate those jobs too? I do know one thing, a permanent class of unemployable people is a very bad thing to have if you want your society to remain “free”.

Idle and stupid is not a good combination.

(They tend to vote Democrat.)

Comments

Job Changes + Bell Curve = Permanently Unemployed — 5 Comments

  1. And the Democrats’ policy preferences (Minimum wage rates, Obamacare mandates) drive up the cost of low skilled work, hastening the disappearance of grocery baggers.

  2. IIRC, didn’t Ted Kaczinski (aka The Unabomber) rant about this in his manifesto? About how machines were replacing people, and eventually there wouldn’t be any more jobs?

    Fine line between genius and insanity…

  3. It’s not so much that machines are replacing people because that’s been happening for 200 years. It’s that the need for people who can be skilled workers is starting to exceed the pool of potential skilled workers.

    I expect that this will cause an even greater rift between the skilled and unskilled as the skilled command ever higher wage rates and the unskilled wages stagnate or decline.

  4. What I find truly startling is that in some areas, like CCTX, there are very few jobs for educated individuals than for skilled labor. On average right now, the people I know with a BA/BS earn 10/hr and the skilled labor earns 25/hr.