What Lawyers, Farmers, and Factory Workers Have in Common

Try to imagine a group of aging rock stars putting on a benefit concert to assist lawyers who have lost their jobs. Admittedly, this is not a likely scenario. Yet it seems that even lawyers are feeling the consequences of technology-based efficiency gains, just like farmers and factory workers before them.

With respect to lawyers (for those who still respect them), new, advanced software can review thousands of documents infinitely faster and much cheaper than their human counterparts. As the New York Times described in a recent article, law firms can dispense with highly-paid lawyers poring through files in large litigation and use "e-discovery" at a fraction of the cost.

The tale of the American workplace being affected by technology is an old one. In the early 1900s, farming was a very labor intensive endeavor--41% of our workforce was employed in agriculture according to the U.S. Department of Agriculture (USDA). But the efficiencies gained by technological advancements have greatly reduced the need for farmers. By 1945, 16% of the workforce was employed in agriculture. The number dropped to just 1.9% in 2000.

Nevertheless, as the USDA points out, the "output from U.S. farms has grown dramatically, allowing consumers to spend an increasingly smaller portion of their income on food and freeing a large share of the population to enter nonfarm occupations that have supported economic growth and development."

A similar phenomenon is occurring in manufacturing. A study at the University of Michigan-Flint found that manufacturing output has more than doubled in almost 40 years, even though U.S. manufacturing employment has dropped by over 25%. Overall, about 8% of the workforce currently hold manufacturing jobs as compared to 28% fifty years ago. Technology has greatly increased the efficiency of the manufacturing process.

We noted last time that manufacturing in the U.S. is not dying, it is evolving due to efficiency. Manufacturing continues, but just as the agricultural economy gave way to the manufacturing economy, the manufacturing economy has been superseded by the service economy. The Cato Institute declares that manufacturing is relatively less important to the U.S. economy today because our consumption has changed. We now spend less money on goods, such as food and manufactured products, and more on services.

Given this situation, the difficult task becomes finding new sources of high paying jobs as traditional manufacturing jobs constitute a smaller portion of our nation's economy. Creating a more highly educated, skilled workforce that is competitive in the world economy seems one likely answer. Staying at the forefront of technological advancement is clearly another.

Words of Wisdom

I call my lawyer and ask, "Can I ask you two questions?" My lawyer says, "What's the second question?" –-Henny Youngman