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Automation Technology’s Impact on Jobs

February 28, 2017 No Comments

Featured article by Jennifer Livingston, Independent Technology Author

Many people assume that technical progress is responsible for reduction in the American workforce and will create even greater unemployment. It’s not just happening in America. In other developing countries, they have also seen how factories are hiring fewer workers. Robotics is expected to be an $80 billion industry in the next five years.

Mass Production

The goal of introducing any technology to the workplace has the goal of improving efficiency, and therefore production. Productivity is the standard measure for the success, and value, of business operations. Improved efficiency allows companies to produce at lower costs. It creates more profit for companies, more jobs, and therefore raises incomes and the standard of living.

Civilization was made possible by agricultural excess, which sprang from new techniques for irrigation, planting, and fertilizing. Today, after centuries of technology upgrades, we measure any population’s productivity by its gross domestic product (GDP). History shows that as technology thrives, so does GDP. According to the World Bank, the US GDP grew from $543 billion in 1960 to $18 trillion today – and that’s adjusted for inflation.

Wages and Earnings

Buying power is dependent on earnings. Many people are concerned that automation will reduce their earning potential. In the 19th century, railways dramatically improved shipping logistics, and while that nearly put horse-drawn freight out of business, it continued into the automotive age. More recently, trucking overshadowed rail transport, and there is an increasing demand for more truck drivers, insurers, mechanics, and so forth. Where there is thriving industry, there is earning potential.

The industrial revolution and large-scale manufacturing led to a huge increase in the demand for menial and semi-skilled assembly jobs. That’s the one industry where one would expect wages to plummet as humans are out-performed by machines, but that hasn’t been the case, either. Wage growth over the last 50 years averages 6.29 percent annually, while the inflation rate averages about 3.74 percent.

Neither is automation a foreseeable threat for many vocations. The Roomba didn’t replace vacuum cleaners, and tile cleaning robots are unlikely to replace humans.

Instead, wages are as competitive as prices. They must align with the marketplace and the cost of living.

Employment Opportunity

The fear that jobs will displaced and the numbers of unemployed will skyrocket doesn’t seem to be supported by history, either. Job opportunities change with technology. Before the Industrial Revolution, 90 percent of people worked in agriculture producing food. Now it’s closer to two percent. Those farming jobs evaporated when farming machinery was developed. And those workers trickled into the factories where the farm machinery was produced.

That holds true for most industries. Unemployment rates fluctuate, but have never been socially crippling outside of the Great Depression. Wider adoption of technology requires a wider supplier base. It is not unreasonable to compare modern robots to tractors. As they become more prevalent, more people will be required to build the components, and assemble, sell, and deliver the robots. The robot industry will call for more engineers, programmers, and technicians.

Installing, monitoring, and maintaining automated equipment will require additional personnel, not to mention tools and electronic equipment that will also have to be produced. A shift in technology will simply require new skills and functions. Supply and demand affecting wages and prices will ensure that those new jobs get filled. Supply chains are typically composed of smaller companies, creating an expanding need for local workers. There are still thousands of small service companies where automation may never be an effective part of the business model, such as cabinet refacing companies.

AI and machine learning are all around us now, from search engines to driverless cars. And while increasingly sophisticated automation will eliminate more jobs, additional jobs will open up to build, deliver, and support the machines. Productivity will continue to improve. If history shows us anything, it’s that increasing productivity creates a better standard of living.

 

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