New Jobs, Old Jobs, and Recycled Jobs

One of the key reasons the innovation sector—unlike manufacturing—has so many jobs is that even today it remains a remarkably labor-intensive sector. The main production input in scientific research is human capital—in other words, people and their ideas. Writing software still requires hours of typing on a keyboard. All you have to do is visit a workplace to see which production inputs are really important. In a factory, the dominant components of the factory floor are clearly the machines, and everything else, including the location and activities of the people who operate them, revolves around them. In a lab or a software company, it’s clearly the people who matter, and everything revolves around them. Ironically, the workplaces where the most innovative technologies are created are still largely dependent on human labor, while the workplaces where traditional goods are made are largely run by robots.

Take digital entertainment, for example. Adding digital effects to a movie requires hours and hours of creative labor. I realized just how labor-intensive the process was when I went to see Avatar with a programmer named Kent Matheson, who had worked on the film at George Lucas’s special effects company, Industrial Light and Magic. Matheson had spent weeks designing one of the starships that appeared on the screen for just a few seconds of the two-and-a-half-hour-long movie. My good friend Ben Von Zastrow works a few miles north of Pixar in a smaller independent studio called Tippett Studio. His job is to create computer-generated small furry animals for movies. Technically, he is a lighting artist. Of course, there are no physical lamps or sets; Ben uses software to shed light on animated creatures. He works alongside a team of other digital artists with evocative names like animator, modeler, texture painter, compositor, and puppeteer, but all of them create images by typing on a keypad. It took Ben and his team three full months to create something as simple as a small wolf for the movie Twilight: New Moon.

 The fact that creating images with a keyboard remains so laborious is not a bad thing for the workers in this sector. On the contrary, it is a very good thing, because it means more jobs for them—at least for now. Of course, the day will arrive when some new software will enable digital artists to create starships and furry animals in weeks instead of months, and then in days, and eventually in hours or minutes. In the beginning, digital artists will be thrilled, because they will be able to do their jobs much more easily and quickly. But in the long run it will mean fewer jobs. In the same way that tractors and combines replaced farm workers and robots replaced factory workers, powerful computers and better software will someday do the work of digital artists.

Jobs that today look more like art than labor will eventually become commodified, standardized, and mechanized—they will lose their luster, and their numbers will start to shrink. This is likely to happen not just in digital entertainment but in most other parts of the innovation sector, as technological progress reduces the need for human labor. We must hope that when this happens, promising new ideas and products will appear and the cycle of old and new jobs will start all over again.

A common fallacy is to think that all jobs in innovation, because they involve new technologies, are “new jobs.” But in many cases they are just replacing existing jobs, and in some cases they might even result in fewer jobs overall. For example, travel websites have undeniably created social value, because they have made booking plane tickets and hotels cheaper and more convenient. Thousands of “new” Internet jobs have been created for those who design and manage the sites of companies such as Expedia and Travelocity, but the job losses have been far greater, as countless travel agencies across the country have had to shut down. Similarly, Netflix has increased the variety of rental movies available, but this is proving disastrous for thousands of neighborhood video stores.

Innovation keeps churning out an ever-changing roster of jobs, and yet the net effect is positive. An analysis of the French Internet sector found that since the advent of the Web, the Internet has created 1.2 million jobs (both for positions directly linked to the Internet, such as software engineering, and positions outside the sector, like delivery of online purchases) and destroyed 500,000, thus generating a net gain of 700,000. In other industrialized countries, the best estimates are that 2.6 jobs are typically created for every one destroyed. Importantly, although the job losses are geographically widespread, the job gains are mostly concentrated. In the case of travel websites and Netflix, Seattle, New York, and the San Francisco Bay Area have experienced employment gains, since this is where the websites tend to be located, while all other cities have suffered a loss of retail jobs.