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Impact of Technological Change on the Labor Market

The global community is witnessing rapid development in technology. Currently, technological development is touching all the facets of human life. Even though technology improves efficiency and productivity, it also kills several jobs in the labor market. The automation and adoption of information technology often eliminate several careers from the labor market.  The first real example of the effects of technology in the labor market came from the development and adoption of computers.

Various workers in industries such as banking lost their jobs as one employee with a computer could effortlessly handle tasks that were previously done by twenty employees.  The innovation, therefore, increased efficiency but also led to massive loss of jobs. The same scenario has replayed itself in several industries due to the development and adoption of technological advancements in such sectors.  Currently, there is an increased push for the use of solar energy. The technology will render most electricians jobless as fewer people will be required to maintain the current electric cables. Employees working in warehouses and restaurants are also highly likely to lose their jobs due to automation. Therefore, technology causes redundancies, thus creating unemployment.

Automation and information technology will significantly change the level of demand for labor in the market. It will substantially reduce the level of demand for unskilled labor.  Automated machines will perform mundane, repetitive tasks often performed by unskilled workers such as packaging products in warehouses. Automation of such duties will significantly reduce the demand for such skills in the labor market.  On the other hand, it will increase the demand for skills, especially those present in technology-related fields.  This shift in demand will affect the country’s wage rate as low-skilled workers will receive lower wages while those with technology-related skills will get better pay due to their high demand.