The Association for Advancing Automation has released a new white paper entitled “Robots Fuel the Next Wave of US Productivity and Job Growth.” This paper demonstrates the reality that thousands refuse to believe: robots are job savers and creators.
According to the National Association of Manufacturers, the manufacturing industry supports just under 18 million jobs in the US, but one-in-six private-sector jobs and more than 12 million Americans are employed in manufacturing.
That is significant, but it represents only about nine percent of the workforce.
Has this relative decline in manufacturing employment been caused by automation?
The paper above suggests that the answer is no, with industrial robot shipments closely tracking increases in labor productivity and employment. Just as importantly, robotics are key to the reassuring trend.
In June 1979, around 19.5 million workers were employed in the manufacturing industry in the US. By December 2009, that number was 11.5 million – a drop of 8 million workers over 30 years.
Between August 2000 and 2004, more than 51,000 manufacturing plants closed between 1998 and 2008.
Why? Low offshore wages, which in 2005 were five times better in China than in the US when adjusted for productivity.
Today, the advantage will be one half that and falling. Part of the reason is an increase in labor rates in Asia, but it’s also about significantly increased productivity due to automation in the US.
I visited factories large and small around the world and in every case users of advanced robotics report that the end result was higher productivity, higher profitability and the reallocation of existing staff into more rewarding, more interesting and usually better paying work.
This, of course puts pressure on the workforce to educate themselves better in order to qualify for these higher-skill, higher-pay jobs. Fortunately, over the last 70 years the number of workers with high school or college education has skyrocketed. Additionally, the number of unskilled workers has dropped to an all-time low.
Most of those college-level jobs, however, are appearing in the service sector.
The combination of the mass perception of manufacturing as a dead-end career, along with strong wages and benefits from alternative sectors like computer software, make for a looming manufacturing skills shortage.
But don’t believe it. In the medium to long term, the same automation that revolutionizes manufacturing will ripple through the service industry as well.
So far, services from legal and accounting to bartending have been largely immune from automation, but this is rapidly changing. The near future will likely see downward pressure on wages in the service sector, as well as automation taking over.
This is not a bad thing.
While downward wage pressure and high productivity RSP for goods deflation, the reality is that more high-quality, low-cost consumer goods are the ticket to prosperity.
So what will people do?
Mainly, the things that people are good at. Where people will always exceed machines. Social work, entertainment, recreation, arts and sciences as well as the peer-out-of-the-box engineering that engineers do every day.
Any amount of wealth in society will increase dramatically as well. The only real question then, is how that wealth is distributed. If enough is distributed evenly enough, then the short-term job losses caused by automation will be inconsequential. If the wealth accumulates at the very top, it’s a prescription for social unrest, which is the ultimate productivity killer.
So let’s stop talking about automation robotics as “job killers” and move the discourse toward economics and politics.
Robots will never decide what people earn or how resources are distributed in society. But they will create more resources to distribute, so let’s stop bashing automation and embrace individuals and companies smart enough to use it.
To read the whitepaper for yourself, visit www.a3automate.org.