One of the greatest debates now raging in business is whether or not automation and robotics in the workplace will eliminate the jobs of human workers. Will millions be thrown out on the streets to fend for themselves or will we be freed from menial tasks to pursue higher callings?
The Conventional Wisdom in Manufacturing
The conventional wisdom in manufacturing is that robots will replace jobs in manufacturing but will create more jobs building, programming, and servicing those robots. Unfortunately, this seems to defy economics. If the total cost of robots is more than the total cost of human labor, why would businesses make the changeover? Think of roadbuilding seventy years ago. Armies of men with picks and shovels dug up the roadbed. They have since been replaced with bulldozers and dump trucks, each operated by just one man but doing the work of many.
Consider also that the total cost of employing a worker is not only a salary but includes benefits, workplace safety regulation compliance, liability protection, and other costs not shared by robots. The more it costs to employ a human, and the more of these costs automation can eliminate, the faster automation will be adopted.
Capital and Outsourcing
Capital, like water, finds its own lowest level (or cost). Outsourcing manufacturers have been chasing low-cost labor around the world, first to Mexico, then China. Now places like Vietnam are winning the race to the bottom. Even China is feeling economic pressure to reduce its dependence on human labor. The Pearl River Delta manufacturing area in Guangdong is adopting policies intended to spur robotics company startups and encourage installation of robots in assembly lines. For example, the Shenzhen Evenwin Precision Technology Company has announced that a total of 1,000 robots would be introduced at one of their factories, with the aim of reducing the current workforce of 1,800 to only about 200. Terry Gou of Foxconn, Apple’s manufacturing arm in China, has proclaimed Foxconn would replace human workers with a million robots in three years. But that was three years ago. He has commented on his dissatisfaction with the robot’s results so far (they had to hire 100,000 workers to satisfy the demand for the latest iPhone) but it hasn’t stopped the program.
So, Will Robots Really Take Over?
The Pew Research Center recently surveyed 1800 experts on whether robots will take over more jobs than they create by 2025. Roughly half fell into the optimistic bucket, thinking that robots will create more jobs, including new ones not yet known who would have known “search engine optimization” would be a career 20 years ago? Jobs requiring human traits such as creativity, problem-solving, or empathy will thrive. Combining humans and machines in new ways will be the hot new opportunity. Cheap technology will be accessible to all and learning will lift individuals to higher standards of living. There will be a return to small-scale craftsmanship.
The other half feared an increasingly dystopian world with large-scale unemployment due to rising automation and an education system that did not prepare workers to pivot to new vocations. In this version of the future, the world has finite resources and they are running out. We will not be able to consume and grow indefinitely out of the economic hole.
Work done by Jared Bernstein and the Center on Budget and Policy Priorities shows that from the Great Depression of the 1930’s until 2000, labor productivity and private employment grew in parallel. Technological progress helped make human workers more valuable. Since 2000, productivity has continued to grow while private employment has remained roughly flat, implying technology now displaces humans. There is no growth in one area of the economy to absorb the workers displaced in another sector. This scenario dovetails into larger public policy debates about income inequality and living wage definitions. If no one is working, who will buy what the robots make?
What the Future Holds
So in the future, if you paid attention in school, you will be employed and well off. You will eat artisanal cheeses and breads made at small shops near your home or dine on farm-to-table foods at a local restaurant. You wear hand-made clothes. You increase your skills by taking multi-media classes on the internet. You live in a custom-built home filled with hand-crafted hardwood furniture. You ride your autonomous vehicle to work where you write code for robots, a Joe Lunchbucket for the 21st
century. Your spouse works at an advertising agency.
OR…you are poor and unemployed. You wear shoes and clothes made of synthetic materials at “lights out” automated factories requiring only minimal human oversight. They are shipped to you in driverless trucks. You eat GMO foods designed to grow in areas of extreme climate and little water. The government taxes the well off and pays you a stipend each month, all of which you spend on necessities. Like millions of others, you live in a small, plain rented apartment with a few pieces of furniture prefabricated by a 3-D printer.
Regardless of the direction the world takes, the general consensus is that the changes are inevitable and will come more quickly than ever before in history. Stay nimble.