Why ‘job creation’ is the wrong benchmark for economic stability

Originally published
August 18, 2022
Nick Smoot
I’m not going to pull any punches — too many cities think of job creation or the number of new jobs added this month as a reliable indicator of long-term economic viability and success. These people are wrong.

Will there continue to be high-paying jobs in our country? Yes.

Will there continue to be high-paying jobs in abundance? No.

There are currently thousands of companies raising tens of millions of dollars to destroy your job. Breakthroughs in software, robots, and medical technology will create a brave new world that we couldn’t have imagined even 15 years ago. As you think about this reality, ask yourself, “Why is my city celebrating the relocation of a factory that is semi-automated already and will soon be fully automated?” Do you believe your son or daughter will be working at that factory? Or will it simply house machines that are building more machines?

At first, the idea that nearly 47 percent of jobs we know today will be gone within the next two decades — according to a 2013 Oxford study — is a hard pill to swallow. But I’d like to offer a different perspective. To me, this shift in our economy offers two reasons for hope:

  1. Many of the jobs that will be replaced are dangerous or boring. So, hell, let the robots have them.
  2. If 47 percent of jobs are going away, companies are going to need people who can figure out how to automate many of those tasks. That is an opportunity.

Shifting landscape or quicksand?

With this new perspective, let’s take a step back and ponder what a city that wants to stay economically viable and prosperous should focus on, if not “job creation.”

To do this, we must first look at how we came to hold the belief that jobs — repetitive tasks — were the safe road to economic stability. The short answer is that humans had the ability to do something that was deemed necessary, whether that was to assemble widgets, ship products, review spread sheets, analyze numbers, steer cars, or extract minerals. Now, however, for the first time ever, companies have tools that are allowing them to replace humans in these positions. As an added bonus, these new tools never take vacation or need a sick day.

At the same time, mega corporations are continuing to grow more powerful. Facebook and Google take 20 percent of every advertising dollar spent. Amazon and Walmart have a combined market cap of nearly $700 billion. If these power players are slowly optimizing jobs for machines, what do they need from you and me beyond our buying their (soft)ware?

The answer is simple: They need innovation, breakthroughs, patents… They need you to use your brain to create things only you can think of. The future of economic viability lies in measuring intellectual property created, investment capital deployed, and acquisitions made — not in job creation. For this to be a long-term plan, the city or state where you live should pick one or two verticals to obsess over while finding a way to engage all of its residents in the process. Think of your entire city as an incubator for a specific vertical. And remember that the large and increasingly slow corporations need you like never before.

If you build it

These new measuring sticks of economic stability — startups, IP creation, and investment — may seem riskier, but are they?

With large corporations merging, amassing ever greater mountains of capital, and spending boatloads on research and development, we should be figuring out how to align whole cities, colleges, and K-12 programs with their trajectory.

Let’s pretend for a moment that you live in a city of 50,000 people. And let’s say you found a way to get every resident obsessed with robots. Seventh-grade students submit projects to their science fair with designs for a robot that will make your bed or do the dishes. At the local coffee shop, it is common to overhear a conversation about the laws surrounding “final-mile” delivery for autonomous robots.”

Over time, this city becomes obsessed with the future of robots and what they can do for the world around them. New patents are being granted, local angel investors are investing in startups, colleges are opening new programs specializing in robotics motion control, and corporations that care about robotics are creeping around the city looking for acquisition targets. This isn’t just what a city will look like in 20 years — this is an actual town in Idaho.

Coeur d’Alene, Idaho has not only seen over $40 million invested in robotics startups in the last few years, it is also the home of a robotics company that’s making consumer drones that can fly up to 60 miles per hour, another company using robots to print light, and even a third that is using robots to print continuous strands of fiber into structures like airfoils. Did I mention this was also the first city in the “universe” to pass laws giving robots rights similar to humans on public property?

All of this has created a climate where it’s common to see teams from Fortune 50 companies collaborating with startups in the beautiful lake town during one of its many events, like Think Big Festival: Robotics and AI, which I help run.

The name of the game

Mega corporations are buying other mega corporations, and verticals continue to be ruled by a small handful of players. When a company like Amazon is spending $16.1 billion on research and development in a year, you should ask yourself how you can secure a slice of that for your city.

Capitalism of the future will feature a few key players who are kings and queens of their own mountains. Either you can try to dethrone them with political action and boycots or you can find ways to make them pay you a premium for talent and innovation. Either way, the game has changed, and we must all adjust.

Nick Smoot has founded and sold three tech companies. Now as the founder of Innovation Collective, a full-stack economic transformation firm, and Mountain Man Ventures, an investment fund focused on companies in “non-traditional” innovation markets, he is focused on redefining how cities participate in the future of work.

Originally published
September 29, 2017