From stone tools to smartphones, technology has always changed the way we work.
When Jack Bogle joined Wellington Management in 1951, Wall Street brokers phoned the accounting department twice a day to quote the prices of the Wellington™ Fund’s stocks and bonds. Accountants recorded the data in a leather-bound ledger and used 10-key adding machines to calculate the fund’s net asset value (NAV). Jack Bogle occasionally pitched in, double-checking the math with his slide rule.
When Glenn Booraem, head of our Investment Stewardship group, joined Vanguard in 1989, mainframe computers had replaced the leather-bound ledgers and slide rules, but much of the work remained routine.
“At 4:15, someone would ring a bell,” Booraem recalls, “and we’d grab our pricing report from a stack of dot matrix printouts.” The accountants checked for missing prices and calculation errors. They pulled data from 5 reports to calculate a fund’s net cash holdings, scratching out the math with a mechanical pencil. At 5:30, they keyed the NAVs of 45 Vanguard funds into a Nasdaq terminal for distribution to the Associated Press.
Tasks vanish, jobs remain
Within a few years, technology eliminated data retrieval and entry. Booraem stashed his mechanical pencil behind a pocket protector and developed a computer program to calculate a fund’s net cash position. The dot matrix pricing reports and the Nasdaq terminal disappeared, replaced by data feeds. But accountants didn’t disappear. They focused on more challenging problems. They became more productive.
“Today, there’s almost no manual entry,” Booraem says. “That’s how you get from 45 accountants for 45 funds to 45 accountants for 500 funds.” Accountants spend their time on “deeper analysis”—developing controls to prevent errors, investigating exceptions, and solving new problems created by the evolution of the capital markets and asset classes.
In the next decade, technology will continue to reshape every job. But the pace of change will be faster. Robotics, big data, and artificial intelligence raise alarms that technology will no longer simply complement our labor; high-tech tools will replace it. An Oxford University study estimates that 47% of U.S. employment will be at risk of automation.
In our research, The Future of Work, we look at the data that inform apocalyptic projections of mass unemployment. We reach a different conclusion: Jobs don’t disappear; they evolve.
Less rote, more human
We used a Department of Labor database to analyze jobs as the sum of their tasks. Since 2000, the mix of tasks that make up every job has changed. Some tasks in some jobs have disappeared, but today unemployment is flirting with historical lows. There are about 11 million more jobs now than in 2007, just before the global financial crisis.
The mix of tasks has shifted from basic and repetitive activities such as “recording information” and “controlling machines and processes” to what we call “uniquely human” tasks such as “resolving conflicts and negotiating with others” and “thinking creatively.”
Sources: Vanguard calculations, using data from U.S. Department of Labor O*NET OnLine (2000–2015).
The image above displays the percentage change in the tasks of select jobs from 2000 to 2015. At the right are photographers. Their mix of tasks has changed by 88%. Rather than “performing general physical activities” to expose negatives and develop prints in a darkroom, photographers spend more time “thinking creatively” and “establishing and maintaining interpersonal relationships” with collaborators and clients. At the left of the chart is the job that’s changed least: Economist. No further commentary is required.
A paradox: More automation, rising labor shortages
A bigger concern than a future without work might be a future without workers. Even as some industries struggle with labor shortages, the percentage of working-age Americans in the labor force has declined. The working population may not be ready to perform the uniquely human tasks increasingly driving economic growth.
The answer to this challenge isn’t obvious, but we’ve successfully grappled with it throughout economic history. Once again, we’ll need to adapt to work that demands more of us as humans and less of us as machines.
Our research gives you 3 places to start:
- A look at the kinds of jobs most susceptible to automation. We based our conclusions on the number of critically important tasks in each occupation and the importance of the occupation’s “uniquely human” tasks. The higher the numbers in each category, the lower a job’s susceptibility to automation. How do our findings correspond with your expectations for the job market?
- Perspectives on career planning informed by research on investment planning. The 2 fields share more similarities than differences. Just as Vanguard investment research has taught people how to combine different assets such as stocks, bonds, and cash to meet their financial goals, career planning is an exercise in combining different skills and competencies to thrive in the future of work.
- Tips on retirement planning in a gig economy. In addition to changes in the tasks that make up our jobs, we’re also trying to make sense of new ways of working such as the “gig economy”—full- or part-time work facilitated by digital platforms like Lyft and Etsy—or any number of services that coordinate freelance assignments. This kind of work may open up new retirement-savings options.
Please remember that all investments involve some risk. Be aware that fluctuations in the financial markets and other factors may cause declines in the value of your account.
There is no guarantee that any particular asset allocation or mix of funds will meet your investment objectives or provide you with a given level of income.