The Coming Shock That Will Transform the U.S. Economy
The “China shock” was one of the most significant economic events of the last two decades in America. Most of the shock is now over — Chinese imports are competitive with much of the output of U.S. manufacturing, and China has already displaced many U.S. jobs — but there is a new and possibly larger shock on the horizon. Call it “the teleshock.”
The teleshock, or the rise in telecommuting, received a major impetus from the pandemic, when so many Americans were forced to work from home. As it turns out, many prefer this new arrangement. In any case, a fair amount of “work from a distance” is likely to persist, most of all in the technology industry, where the fundamental products are digital. Microsoft, for example, has announced that work from a distance will continue indefinitely.
Employers are only beginning to adjust to these new circumstances, however, so the full consequences of the teleshock are not yet clear. The key development will be this: To the extent that the work can be done online, companies can hire the best workers from around the world. This has long been the case in computer programming, where it is standard practice to hire talent from India. Similar trends will come to many more sectors, revolutionizing labor markets. A given job could go to someone from Nigeria, Sweden, the Philippines, Pakistan or many other locales.
Among the big losers will be the American upper middle class, especially those with jobs connected to information technology and those who can work from home. They will face much more competition in the labor market than before. They may have some natural advantages of education and cultural fluency, but they are not in general smarter or harder-working than much of the rest of the world.
In other words: If you have had a relatively comfortable job during the pandemic, it might now be time to worry.