Expectations for the technology revolution were high back in the year 2000 and included jobs, prosperity and innovation. Although innovation has been realized, the tech industry has created surprisingly few jobs as automation and off-shoring have exacerbated unemployment.
The digital and technology revolution has powered up internet searches, social media, smartphone apps and eCommerce over the past decade to the delight of Google, Twitter, Facebook and Apple, to name but a few. But although the digital world has expanded, the exploding tech industry has not met expectations in the real world and has created surprisingly few jobs.
The giants Google and Facebook had only 74,505 employees between them at the end of 2015, which is much less than Microsoft by about one-third, according to the Wall Street Journal.
For a clearer perspective, Facebook acquired Instagram in 2012 for $1 billion and, at that time, it had 13 employees. Compounding the lack of employment has been off-shoring of hardware manufacturing, which caused hiring in the chip sector to dive. Other dynamics also fizzled as the number of technology startups slowed, productivity growth rates decreased, and wages slowed. Automation replaced many low- and middle-income jobs causing greater income inequality.
This state of affairs is not what politicians, economists and entrepreneurs had predicted from science and technology innovation. In his final State of the Union address in 2000, President Bill Clinton said “America will lead the world toward shared peace and prosperity and the far frontiers of science and technology.”
According to The Wall Street Journal, the gap created by the tech boom and the resulting discontent among the U.S. were the reasons for the rise of the political outsiders Donald Trump and Bernie Sanders.
Many are also angered by the extent of imports from China and what some consider a failure in guidance by the Federal Reserve. Americans expectations of economic gain from a burgeoning tech industry have been met with disappointment and a widening gap between the rich and the poor.
According to Erik Brynjolfsson, a Massachusetts Institute of Technology economist: “There is a growing sense of frustration that people haven’t seen the progress that their parents and grandparents did…That frustration spills into the political arena.”