Mona Vernon, senior director of emerging technology at Thomson Reuters (and a former RA of mine) pointed me to an amazing Bloomberg chart of the day showing that “ the number of people employed in New York City in “securities and commodities contracts intermediation and brokerage,” which includes investment banking and securities dealing, fell to about 101,200 in March, a decline of more than 30 percent from the peak in December 2000 and the fewest in Bureau of Labor records dating to 1990.”
This employment decline has taken place despite the fact that US financial industry profits are at an all-time high. Even more amazing is the face that there are fewer people employed in intermediation and brokerage now than there were in late 2008, when the financial industry was losing almost $100 billion in a quarter.
The story quotes bank analyst Richard Bove that “The desire is to drive the cost of executing a trade to its lowest point — this means automating the system and getting rid of the traders… All they do today is hit buttons on computer screens. Twenty-five years ago they would be calling their buddies at different firms. It was a highly labor intensive effort.”
This continues a pattern we’re seeing in other industries. The Wall St. Journal reported in 2011 that employment throughout the US wireless industry was falling even as revenues rose, thanks at least in part to “gains in productivity and the fact that more customers were going online to choose their phone and pay their bills, reducing the need for more call-center workers and salespeople.”
And as I posted before, this has long been the pattern in US manufacturing.
It’s true that some industries, most notably health care, are growing and adding lots of jobs as they do so. But I strongly suspect that this is because a lot of the work of health care delivery — especially the physical stuff – hasn’t been automated yet.
In some cases, automation seems a long way off; I do NOT want a robot dentist yet. But Dr. Watson and other instances of health care automation are coming, some pretty so0n. As they do, won’t more and more industries come to have output vs. employment graphs that look like those above?
I honestly don’t know why this won’t happen. Do you?