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Internet Innovation Changes the Oregon Economy
by Christian Kaylor
Published Nov-19-2012

Centuries ago, in Scotland, lived a boy so clever he invented a way to put himself out of a job. It was the early days of the industrial revolution. Engines, steam powered machines and boilers had just been invented. Children were hired in factories to work these machines by hand. They would pull levers repetitively to open and close valves in time with the movement of the pistons and cylinders on the factory floor.

A certain clever young boy, the story goes, worked in a factory pulling a lever over and over. One day he noticed something. The engine pistons rocked back and forth as the machine operated. He measured out a piece of string, attached one end to a moving piston rod and tied the other end to the lever he was hired to pull. Standing back, he watched as his simple invention replaced his effort.

Adam Smith tells this story early in his classic 18th century work, the first economic textbook, The Wealth of Nations. Smith marvels at the ingenuity of this child, "One of the greatest improvements that has been made upon this machine, since it was first invented, was in this manner the discovery of a boy who wanted to save his own labour." Smith tells this story to describe how even simple technological progress can improve business productivity by eliminating labor costs.

Adam Smith doesn't say what happened to the boy. Nor does he write about how the boy's co-workers reacted when they realized he had invented them out of their jobs. The story is used to illustrate the benefits of innovation in the economy, not wonder about the fate of those displaced by technological progress. Not every worker knows what it's like to invent his or her own unemployment. But over the centuries, from the industrial revolution to digital media, technological change has created new jobs while eliminating others.

Industries Forecast to Decline
Every other year, the Oregon Employment Department forecasts industry and occupational employment 10 years into the future. Our current forecast looks forward to the year 2020 based on the economy of 2010. Over that period of time every major industry is forecast to grow from the depths of the severe recession of late 2007 to mid-2009.

However, two key industries, construction and manufacturing, are not forecast to fully recover all the jobs they lost in the Great Recession. Today, manufacturing represents about 10 percent of all jobs in Oregon, down from 15 percent 20 years ago.

A few minor industries are forecast to continue to decline in this decade. Among them: the postal service, paper manufacturing, newspaper and book publishers, and telecommunications. Similarly, very little growth is projected for book and music stores. Though seemingly unrelated, these industries are declining in response to challenges created by the new ubiquity of wireless, digital media.

Occupations Forecast to Decline
Along with the weak recovery forecasted for the construction and manufacturing industries, most occupations in those businesses are not expected to recover all the jobs lost at the end of the last decade. For example, in 2008 there were 5,550 welders in Oregon. The forecast for 2020 predicts 5,215 welders. In 2008, there were 9,323 production assemblers. The forecast is for 7,703 in 2020. In fact, there are forecast to be a total of 122,556 people working in all production-related occupations in 2020, down 2 percent from 2008.

Though many manufacturing and construction jobs are expected to recover most, but not all, of the positions lost in the Great Recession, certain occupations are forecast to continue to shrink even as the Oregon economy recovers. The 2020 forecast predicts a 10 percent decline in the number of news reporters, a 20 percent decline in postal workers and a 3 percent decline in printing press operators.

The Internet Changes the Occupational Landscape
The Internet is the common force pressuring businesses in these diverse industries. Television and radio stations, along with newspapers and bookstores, are increasingly losing customers as consumers switch to portable digital media for news and entertainment. Though the trend toward digital telecommunication is strong, more traditional businesses may slim down but are unlikely to disappear.

As these individual businesses shrink or even shut down, displaced workers will be forced to retrain into new occupations. However, even in declining occupations, many workers will continue to hold jobs. Businesses in industries that are stagnant or declining will still need to hire and train new employees to replace workers who retire or change occupations.

Adapting Skills for the Future
No one knows for certain what the Oregon economy of 2020 will look like. Given current trends, it does seem likely that CD stores, post offices, newspapers and radio stations will be less common than they once were. It's more challenging to imagine what new types of businesses might develop to replace them.

Change is often difficult. We develop habits and skills over the years and are resistant to any new position that doesn't let us practice our strengths. But change is also inevitable. Oregon once had a thriving timber industry. Before that, thousands of Portland workers built ships to fight in World War II. Businesses and jobs disappeared, just as new and different businesses rose up.

It's not possible to predict exactly what changes will occur in the Oregon economy over the next decade. But as Oregonians, we can do our best to be ready. Our economy values the skills that each worker can bring to the job. But the most important skill a person can have is the ability to learn new skills when the job changes.