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2003 Annual Report—Federal Reserve Bank of Dallas

A Better Way
Productivity and Reorganization in the American Economy

The Evolution of Work

Nature endowed human beings with numerous characteristics that can create economic value. Our arms, legs and backs can perform physical labor. Our hands and fingers can mold and manipulate objects. Our brains can reason, imagine and innovate. Our human spirit can entertain, comfort and inspire.



Workers once used muscle power to dig with picks and shovels. Over time, ever-larger digging and loading machines have allowed a single operator to do what once required legions of laborers.

As productivity reorganizes the economy, it changes how we use our innate skills and talents in the workplace. The progression flows mainly from technology and trade. Each generation of inventions and innovations produces tools to take on more of the tasks once done by human beings. Each expansion of trade opens the possibility of doing tasks more economically in countries paying lower wages.

Americans adjust by taking jobs that put our other talents to work. Over time, our work moves up a hierarchy of human talents, focusing on new tasks that require higher-order skills, ones that machinery or outsourcing can't do as well. By redefining the way we work, the economy creates a new and more productive mix of technology and human talents.

At the most primitive level of economic development, work involved sheer muscle power—digging, lifting, hauling and the like. Our forebears hunted, gathered and carved furrows for crops eventually harvested by hand. Armies of workers, hauling huge stones with only simple tools, built Egypt's pyramids. Some workers earned their living exploiting other talents, but muscle power dominated economic life until the Industrial Revolution. (See Exhibit 4.)

The new age brought machines stronger and more durable than muscle power, and they took on more of the physical work. People's niche became manual dexterity, the ability to control tools with motor skills. Human hands were needed to operate machinery. We worked with power drills and forklifts rather than picks and shovels. Millions of Americans took jobs on the nation's assembly lines, becoming cogs in the vast machinery that churned out steel, cars, processed food and much more.

New technology led to automation sophisticated enough to run the machines, reducing the number of workers on the factory floor. Many modern factories employ just a few highly trained technicians to maintain the computers that run nearly all phases of production.

People who once operated machinery found work that relied more on using their minds. At first, many jobs called for formulaic intelligence, applying rote standards in keeping ledgers, counting and other duties. The next step upward involved jobs that required analytical reasoning, the ability to solve problems. We took jobs as engineers, managers and programmers.

People skills and emotional intelligence will become increasingly important to work in the 21st century. Employment opportunities are growing for teachers as well as nurses, sales representatives, lawyers, counselors and recreation workers.

In our time, computers are taking on many of the mental tasks that not long ago only humans could do. At first, the machines could handle only the relatively simple tasks of formulaic intelligence, proving faster and more accurate in calculating than the human brain. Increasingly powerful computers, capable of running huge programs, now perform more of our analytical tasks. Advances in artificial intelligence enable computers to fly planes, answer phone calls and track buying patterns. An IBM computer even beat world chess champion Garry Kasparov in 1997.

In today's world, companies and workers face the challenge of ascending the hierarchy of human talents. Workers are increasingly using those traits that make us truly human. Some jobs require imagination and creativity, including the ability to design, innovate and entertain. Other jobs rely on such social skills as conflict resolution, cooperation and even humor. Work is more likely to put a premium on the ability to inspire and motivate, a capacity social scientists call emotional intelligence.

Many jobs requiring muscle power, manual dexterity and formulaic intelligence are increasingly performed by workers in other countries. As the Internet speeds communications, companies are hiring more foreigners with analytical skills. Not all old-line jobs have left the United States, but more of us are earning our paychecks at the upper echelon of the hierarchy of human talents.

Over the past decade, an era of rapid technological change and globalization, big employment gains came in occupations that rely on people skills and emotional intelligence. We added 512,000 registered nurses and 248,000 people in financial-services sales. Others in growing occupations include lawyers, educational and vocational counselors, and recreation workers.

The past decade also saw gains in jobs that involve imagination and creativity—designers, architects, photographers, actors and directors. The hairstylists and cosmetologists category rose by 146,000 jobs. Many occupations that use analytic reasoning have continued to grow, too, but computer operators and others are beginning to see their numbers fall.

The occupations in eclipse are generally those that involve muscle power, manual dexterity and formulaic intelligence. The number of secretaries and typists, for example, has fallen by 1.3 million since 1992, as more computers, printers, voice mail and other office machines have entered the workplace. The ranks of sewing machine operators have declined by 347,000, those of farmers by 182,000.

The United States will continue to move up the hierarchy of human talents as it becomes more productive. Fewer jobs at relatively lower pay will be available for those who offer employers only muscle power, manual dexterity or formulaic intelligence. Americans who want to prepare for the better jobs of the future will concentrate on developing their creativity, imagination, people skills and emotional intelligence.

		Employment Gains ('92–'02)	Percent Change
Exhibit 4
Hierarchy of Human Talents
The work we do has evolved in response to economic progress. Advances in technology create tools capable of doing tasks better or cheaper than human beings. As machines make some talents obsolete, people move on to jobs that use others. In this way, workers move upward over time to jobs demanding more sophisticated talents. In the past decade, the United States saw employment declines in jobs requiring muscle power, manual dexterity and formulaic intelligence. The nation has added jobs that use analytic reasoning, imagination and creativity, and people skills.
	People Skills/ Emotional Intelligence
	Registered nurses Financial-services sales Lawyers Educational and vocational counselors Recreation workers	+512,000 +248,000 +182,000 +48,000 +35,000	+28 +78 +24 +21 +37
	Imagination/ Creativity
	Designers Hairstylists and cosmetologists Architects Actors and directors Photographers	+230,000 +146,000 +60,000 +59,000 +49,000	+43 +19 +44 +61 +38
	Analytic Reasoning
	Legal assistants Electronic engineers Medical scientists Metallurgical engineers Computer operators	+159,000 +147,000 +22,000 –2,000 –367,000	+66 +28 +33 –8 –55
	Formulaic Intelligence
	Cost and rate clerks Health records technicians Telephone operators Bookkeepers Secretaries and typists	–16,000 –36,000 –98,000 –247,000 –1,305,000	–24 –63 –45 –13 –30
	Manual Dexterity
	Tool and die makers Lathe operators Typesetters Butchers Sewing machine operators	–30,000 –30,000 –34,000 –67,000 –347,000	–23 –49 –62 –23 –50
	Muscle Power
	Garbage collectors Stevedores Fishing workers Timber cutters Farmworkers	–2,000 –3,000 –14,000 –25,000 –182,000	–4 –17 –27 –32 –20