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Changing nature of jobs is what’s ailing middle class

By David Crane      

Our political parties seem much more focused on a return to the past economy than seeking ways to thrive in a new economy. This is bad news for the middle class.

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Much of the election debate is focused on the plight of the middle class. The Conservatives are reluctant to acknowledge there’s a problem. But it’s doubtful whether NDP or Liberal plans—more money for child care, higher benefits to families with children and middle-class tax cuts—will seriously improve prospects for the middle class. This is especially true for younger Canadians who find middle-class opportunities lacking despite university degrees or community college diplomas. 

Weak economic growth and mediocre productivity performance mean that not enough good jobs are being created while wages show little after-inflation growth. There is less economic pie to share so pro-growth policies matter. 

But in pursuit of “shareholder value,” many companies are relying on temporary or contingent workers, not new full-time jobs, or are replacing people with machines that can work 24/7 with no sick-leave, vacations, strikes, or demands for better pay. And as technology advances, they look to technology to take on more tasks that were once dependent on human capabilities. 

It is this changing nature of jobs themselves due to digital technologies, and an accompanying move to  insecure temporary or contingent jobs and even a so-called “gig economy,” that is much tougher to deal with.

According to a study by a federal government think tank, Horizons Canada, some 13.6 per cent of Canadians in the workforce in 2012 were estimated to be in temporary jobs that were “often low-paying and with few benefits.” Moreover, it warned, advances in technology “may result in more part-time work, short-term contracts, micro-jobs and more foreign ‘virtual workers.’” Virtual workers in other countries could compete for Canadian work over the internet.

Not all is gloom. There have been remarkable changes in the composition of the Canadian labour force over the 25 years from 1990 to 2014, pointing to a better-educated workforce and presumably one much better positioned to meet the challenges of an economy very much in transition due to rapid technological change and globalization.

In 1990, in the core labour force aged 25-44, some 42.6 per cent had a high school education or less. By 2014, just 21.5 per cent fell into this grouping. In 1990, 48.8 per cent of Canadians in this key age group had a post-secondary degree, diploma or certificate; by 2014, 73.5 per cent were in this category. The remainder, with some post-secondary education, constituted 8.6 per cent of the labour force in 1990 and five per cent in 2014.

There are also many good middle-class jobs being created, though far from enough. Between 1990 and 2014 Canada added 4.7 million new jobs, bringing the total employed workforce to 17.8 million. Many of these were low-pay, low-skill jobs and a growing share were temporary or insecure jobs. Manufacturing lost 339,100 jobs. 

But in that 25-year period, some 668,100 new jobs were created in the natural and applied sciences. Another 544,600 were created in health occupations and 524,700  in business, finance and insurance occupations. Since 1997, 363,400 professional jobs in computer science and information systems along with 102,100 computer and information systems technicians have been created. These are middle-class jobs.

Overall, though, the quality of jobs is not keeping up with rising education levels. A Statistics Canada study last year found, for example, that 18 per cent of Canadians in the 25-34 age group who had a university degree were in jobs that only required a high school education while about 40 per cent were in jobs requiring just a community college diploma. 

The Horizons Canada report found that many in the workforce “have described their jobs as precarious as they lack security in terms of employment, income, skill and career development” yet “a growing number of jobs will be temporary or non-standard.” This raises questions about what a good job will look like in the future.

But it is also the speed of automation that is imperilling the middle class, with technology moving faster than workers can upgrade their skills. In the past, automation was less of a threat because new jobs could quickly replace those that disappeared.

“However, this time may be different,” warns Gill Pratt, an expert on robotics at the Defence Advanced Research Projects Agency in the U.S. “When robot capabilities evolve very rapidly, robots may displace a much greater proportion of the workforce in a much shorter time than previous waves of technology. Increased robot capabilities will lower the value of human labour in many sectors.” 

A study published by Oxford Martin School at Oxford University and Citi, the large U.S. banking group, agrees. “The digital revolution,” it warns, “may cause more upheaval than previous technological revolutions as it is happening ever faster and is fundamentally challenging the way we live and work” with the risk that “more and more workers would be left behind.”

And since it is easier for middle-class workers who lose their jobs to “skill down” to lower-paying jobs than to “skill up” to higher paying ones, we could see more inequality.

With advances in artificial intelligence, robotics, big data, machine–learning algorithms and machine-to-machine communications, we are moving closer to automating more jobs that have so far been the preserve of skilled workers. As the Citi-Oxford report says, “the challenge ahead for any country is managing the transition at a sufficient pace for workers to find new employment opportunities as existing jobs are being automated.” Otherwise many more people will be left behind. 

This is where much greater focus is needed. We may need a new social contract to assure an inclusive society, more investment in skills upgrading and education systems that prepare people for this new digital work world, greater public support for promising new technologies that can lead to new occupations and more encouragement for entrepreneurship, as various studies suggest.

Yet our political parties seem much more focused on a return to the past economy than seeking ways to thrive in a new economy. This is bad news for the middle class.

David Crane can be reached at crane@interlog.com.

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