Richard Martin Blog: Do Networks Cause Unemployment?

Wireless LAN market figures from research firm Infonetics could give a hint as to why, so far, the current economic recovery has been virtually jobless.

Infonetics expects the worldwide WLAN market to grow more than 17 percent in 2010, compared to 2009. Wireless LAN equipment revenue soared 12 percent from the third quarter of 2009 to the same period in 2010, as businesses return to spending as they dig out of the financial crisis.

At the same time, November’s dismal jobs report from the federal government dampened hopes for accelerated employment growth in the first half of 2011. According to Slate writer Annie Lowry, the numbers (which saw total U.S. unemployment creep back up to 9.8 percent) are even worse than they appear.

“Unemployment among college graduates, whose degrees often insulate them from jobs woes, hit its highest level in 40 years, at 5.1 percent," Lowery explained. “Moreover, the employment-to-population ratio – a broad measure of how economically productive the population is – fell back to its recession-era low."

For years, executives at networking companies, like Cisco’s John Chambers, have predicted that ubiquitous, high-speed networks would facilitate new forms of online collaboration and communication that would result in higher productivity. Higher productivity = more output per worker, and more output per worker translates into smaller payrolls for thousands of businesses. The current diverging lines of a growing economy and stagnant employment could illustrate the coming-true of all those promises about WebEx, Skype, telepresence and company Wikis: Equipped with these tools, companies can do more work, and generate more profit, with fewer people.

The real picture, of course, is less clear. One of the major results of online communication and collaboration tools is less business travel. Yet the airlines are showing their best results in years. The most recent round of earnings reports from U.S. airlines showed an increase of nearly 20 percent in combined revenues, on just a 2.5 percent rise in traffic demand. The spread of high-speed networks and powerful business applications is not hurting the airlines, yet.

Meanwhile, the tech sector, for the first time since the financial crisis began to hit in 2007, is hiring again. The U.S. will add almost 50,000 technology jobs this year, according to Moody's Analytics, while still climbing out of the crater of 307,000 jobs lost in the recession.

There’s no question that, to some degree, companies are learning to do with technology, particularly online applications running over ultra-broadband networks, what they once did by adding staff. "Especially in hard times, companies are trying to cut costs, Josh James, vice-president of research and industry analysis at high-tech trade group TechAmerica, told BusinessWeek, “and one way to do that is to implement technology solutions."

What that means is that the need for certain types of facilitation jobs – PBX managers, low-level lawyers, mid-level operations executives, air traffic controllers – is going to be much lower in the future. Overall, though, the spread of instantaneous remote collaboration via the public Internet and private networks is undoubtedly a blessing for the economy, and for society.

“Forms of social organization in which individuals are freer – and thus better able to realize their potential – and which provide more effective procedures and tools for intellectual cooperation constitute a 'competitive advantage' over companies in which people are oppressed (or their uniqueness stifled) and intellectual cooperation discouraged or little supported by tools," wrote French media scholar Pierre Lévy, the originator of the concept of “collective intelligence," in his 2002 book Cyberdémocratie. “In other words, the direction and outcome of today’s cultural evolution is enhanced collective intelligence (predicated on freedom)."