Sunday, March 11, 2012

Efficiency improvements are pushing out low skilled office workers

One group of US workers that has been hit hard in the recent recession are the low paid sales and office workers. Office workers without college degrees in particular have suffered the most layoffs among the white collar workforce. In fact sales and office occupations were impacted in each of the three previous recessions, but the effect of the last downturn has been most severe.

Source: JPMorgan

One likely explanation for these job losses is that US firms, pressured by declining revenues have been trying to extract the most efficiency out of their staff. With the latest technology, a large office for example requires fewer office assistants. A tech savvy, often college educated office assistant can support a much larger number of staff than was possible in the past. Electronic filing and communications, sophisticated phone systems, online business travel planning and expense tracking, etc. bring significant productivity improvements to corporate offices.

Automation and outsourcing in areas such as employee benefits and payroll also reduced the need for office staff. Some of these office roles have been moved abroad. And more advanced and broader reaching websites now require a smaller sales force. The combination of technology price declines, broader use of the Internet by the customers, and pressures brought on by the recession have pushed businesses into increasing employee productivity. All the efficiency improvements however, though inevitable, came at the price of millions of jobs which are never coming back.
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