Why are Real Wages for HR Jobs in Decline?

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Can you be replaced by an algorithm that feeds on big data? (Image: Pixabay)

Which HR specialty will maximize your paycheck while limiting your exposure to redundancy in today’s on-demand economy?

Computers excel at defined tasks. Tasks accomplished through explicit rules, no matter how complex, can be completed by software. This is why tactical jobs’ wages against inflation have decreased since the 1970s. Most middle management jobs are tactical and continue to be eliminated by algorithms feeding on Big Data.

Just as previous humanoids have become extinct to make way for modern man, the middle-level manager is a concept of the past. (Image: Pixabay)
Just as previous humanoids have become extinct to make way for modern man, the middle-level manager is a concept of the past. (Image: Pixabay)

Looking at transactional jobs as historical examples, consider the 1960s workplace and how voicemail and email has eroded the secretarial professions.

Middle-level managers reached pinnacle earning in the pre-computer age. Their function was not to generate strategy but in directing flows of information between worker bees and executives.

These jobs still exist, but with shrinking numbers and declining real wages. Jobs that cannot be done via explicit rules – manual labor and strategy creation – are safe from elimination and explain much of income inequality.

Many HR specialties are both middle management and tactical. They include recruitment, ER, compensation, benefits, training and HRIS. These functions remain vital, and as more intelligence is programmed into software, their value added will even increase. However, as technology requires fewer workers to accomplish more with less training, HR tactical specialists will continue to see their real wages decrease.

Even before the financial crisis of 2008, real wages for US workers were trending downward. (Image: Public Domain via Wikipedia)
Even before the financial crisis of 2008, real wages for US workers were trending downward. (Image: Wall Street Journal)

Technology decimates lawyers’ billable hours so why would HR specialists be any safer?

When technology hit the US agriculture sector, the new motto was, never have so few fed so many, as the number of farming professionals decreased while crop yields increased.

As technology becomes more powerful, mobile and cheaper, which HR specialties will keep you relevant in the marketplace? We’ll explore the answer in our next post.

The Least You Need to Know.

  • The intersection of algorithms and big data is automating many middle level management functions. This pushes wages down.
  • This automation means fewer middle level managers are needed; most traditional HR jobs are middle level management jobs.
  • Machine to Machine Learning (M2M) and Master Algorithms will exacerbate this phenomenon.

Vincent Suppa works with startups and investors and teaches graduate courses at New York University. His email is suppa@suppa.org.

© Vincent Suppa 2015