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The big data revolution's 'lovely' and 'lousy' jobs

The Internet is old hat. We're all getting used to social media, too, and every CEO, along with all the world's would-be revolutionaries, is on Twitter. Mobile is now taken for granted as part of the world's hardware. But don't get complacent. A new wave of the tech revolution is cresting and will again change the way we work and live.

The latest transformation is "big data" – which refers to the vast amount of digital data we now create and have an increasing ability to store and manipulate. The McKinsey Global Institute published a 143-page report last year on big data, touting it as "the next frontier for innovation, competition and productivity."

To understand how much data are now at our fingertips, consider a few striking facts from the report. One is that it costs less than $600 to buy a disk drive with the capacity to store all of the world's music. Another is that in 2010, people around the world collectively stored more than six exabytes of new data on devices such as PCs and notebook computers; each exabyte contains more than 4,000 times the information stored in the U.S. Library of Congress.

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McKinsey believes the transformative power of all this data will amount to a fifth wave in the tech revolution, building on the first four: the mainframe era; the PC era; the Internet and Web 1.0 era; and, most recently, the mobile and Web 2.0 era.

As with the first four stages, McKinsey predicts big data will lead to a surge in productivity. In the U.S. retail sector alone, for example, the consultants calculate that big data could increase a retailer's operating profit margin by more than 60 per cent. Those improvements are an almost unalloyed good for the consumer – who doesn't like Amazon's recommendations or Wal-Mart's low prices, both facilitated by pioneering use of big data?

But big data is likely to have a mixed impact on workers. David Autor, an economist at the Massachusetts Institute of Technology, has done groundbreaking research on the "polarizing" effect of technology on the labour market: His bottom line is that it has been good for people at the top and has not had much of an effect on people doing hands-on jobs at the bottom. But it has hollowed out what used to be the middle.

Studying the same phenomenon in the United Kingdom, economists Maarten Goos and Alan Manning have come up with an evocative term for what is happening – the division of work into "lousy and lovely jobs."

The lovely jobs are why we should all enroll our children immediately in statistics courses. Big data can only be unlocked by shamans with tremendous mathematical aptitude and training. McKinsey estimates that by 2018 in the United States alone, there will be a shortfall of between 140,000 and 190,000 graduates with "deep analytical talent." If you are one of them, you will surely have a "lovely" well-paying job.

The tech revolution has eroded what used to be the middle class by replacing a lot of white-collar and relatively well-paid blue-collar jobs – a travel agent, for example, or many factory positions – with computers and robots. What's left are the "lousy" jobs – washing floors or wiping tables.

This trend will surely be exacerbated by big data. Some of those improved margins in the retail sector, for example, will come from what McKinsey delicately terms "the optimization of labour inputs." That's another way of saying that if you use big data to more precisely track your sales, you need fewer salespeople.

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The division of the world into lovely and lousy jobs is a pressing political problem. Big data will make it worse. The good news is that it might also offer a partial solution. McKinsey argues that big data could make both health care and the provision of government services cheaper and more effective. As an example, it points to the German Federal Labour Agency, a vast bureaucracy with 120,000 employees. Big data techniques helped it to save around €10-billion ($13-billion) in recent years.

Inevitably, this latest tech wave, like its four predecessors, will transform our lives as consumers and as workers. So far, the technology revolution has lagged in its impact on us as citizens. If our governments can begin to close that gap, then, as societies, we might just have a chance to bridge the growing divide between lousy and lovely jobs.

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