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Knowledge Work Has Had Its Day

Justin Fox is a Bloomberg View columnist. He was the editorial director of Harvard Business Review and wrote for Time, Fortune and American Banker. He is the author of “The Myth of the Rational Market.”
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What will we do to keep busy after the computers and robots have learned to do most work better than humans do?

Well, maybe we’ll talk to each other.

I’m pretty sure I first encountered the idea that the Information Age would elevate the value of person-to-person interaction in a long-ago essay by economist Paul Krugman. It was in a 1996 issue of the New York Times Magazine full of articles purporting to look back upon the 21st century. Wrote Krugman:

Some white-collar jobs migrated to low-wage countries; others were taken over by computers. The jobs that could not be shipped abroad or be handled by machines were those that required a human touch -- face-to-face interaction between people working directly with physical materials. 

That’s pretty good. So were Krugman’s predictions about the continued renaissance of big cities, roads filling with “hordes of share-a-ride minivans efficiently routed by computers” and pop stars making almost all their money from live appearances. Not looking so prescient, at least at the moment: artificial intelligence going “from defeat to defeat,” soaring resource prices rearranging the global economy and work for economists becoming scarce.

But back to interaction. In the early 2000s, several McKinsey consultants set out to sort all the occupational categories tracked by the Bureau of Labor Statistics (there are now about 850) into jobs that were heavy on interaction and those that were mostly about transactions or production. In their first report on the subject, published in 2005, they showed big gains in interactive work during the previous six years, smaller gains in transactional work and declines in production work. Now they’ve refined and updated their numbers as part of a giant new McKinsey Global Institute report, “Digital America: A tale of the haves and have-mores,” released Dec. 16. Here’s what’s been going on with those jobs:

Here’s another view of the same data, just showing the changes since 1999:

You may be wondering what exactly those categories mean. McKinsey’s description:

Production work refers to occupations that transform one resource into another, such as assembly work in the manufacturing sector. Transaction work refers to routine, mostly clerical tasks that follow well-defined rules, such as those performed by bank tellers. Interaction work refers to occupations that involve customer engagement, team discussions, and creative thinking. Occupations performing this kind of work fall into two categories: high-skill (such as doctors and scientists) and low-skill (such as retail salespersons and restaurant servers).

Sometimes these distinctions are easy to make, says Sree Ramaswamy, a McKinsey Global Institute senior fellow and co-author of the “Digital America” report. Often, though, it requires digging into the Occupational Information Network (O*NET) database to sort through the various tasks that make up a particular job, and even that can leave room for disagreement. Software developer was a tough call, for example, with McKinsey finally dropping it into the interaction bucket because so much coordination and collaboration with others is involved.

Still, other attempts to measure more or less the same phenomenon have arrived at similar results. Concluded Harvard education economist David Deming in a working paper that came out in August:

Nearly all job growth since 1980 has been in occupations that are relatively social skill-intensive. Jobs that require high levels of analytical and mathematical reasoning but low levels of social interaction have fared especially poorly.

Or here are economists Paul Beaudry and David A. Green of the University of British Columbia and Benjamin M. Sand of York University, writing in 2013:

[A]fter two decades of growth in the demand for occupations high in cognitive tasks, the US economy reversed and experienced a decline in the demand for such skills. The demand for cognitive tasks was to a large extent the motor of the US labor market prior to 2000. Once this motor reversed, the employment rate in the US economy started to contract.

In an era when science, technology, engineering and math (STEM) education is frequently proclaimed to be of paramount importance, this is an interesting development. It seems like it is just beginning to attract mainstream attention. Claire Cain Miller wrote about Deming’s research in the New York Times a couple of months ago, under the headline “Why What You Learned in Preschool Is Crucial at Work.” My former colleague Geoff Colvin, an editor at Fortune, cited Beaudry, Green and Sand in his book, “Humans Are Underrated,” which argues that the age of the “knowledge worker” is waning and that of the “relationship worker” is upon us.

These relationship workers aren’t restricted to “face-to-face interaction between people working directly with physical materials” as Krugman envisioned in 1996. Their interactions are often virtual, and for better-paying jobs the cognitive demands are often quite high. Still, what makes them valuable is increasingly capabilities that computers still seem far from mastering -- understanding social cues, building and motivating teams and the like. Talking to each other, basically.

  1. I am informed by my all-knowing editor that John Naisbitt predicted the rise of "high-tech, high-touch" work in his 1982 megabestseller "Megatrends," but

    • I've never read that book, although I did steal my dad's copy a few years ago and it's on my shelf at home.
    • Naisbitt apparently argued that high-touch jobs would be created as people became overwhelmed by technology and sought out human contact.  I'm not sure that really explains what's been happening.

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