The Eight-Hundred Pound Gorilla: chronic underemployment

In Making it in America, author Adam Davidson writes in this month’s The Atlantic about the problem of falling factory employment in the U.S.  The relationship to Robot Futures is crystal clear- Davidson describes Standard Motor Products as an exemplar microcosm, and in this world a concrete example takes shape in the from of an employee, Maddie, whose job is not yet replaced by a robot because the robot costs $100,000, and that is more than Maddie makes in two years. But as the cost of robotics falls, or if Maddie’s annual cost rises enough, then the cold logic of ROI flips around and one more position permanently disappears thanks to robotic automation.  Of course the logic is even more complex than this simplistic analysis- Standard’s customer base has gone from diversity to monoculture, and the new super-customers demand low margins and low cost parts- this puts further pressure on the company to reduce cost, and this will eventually spell further increases in machine productivity and reductions in labor costs.  When does this end?  I see no natural forces that help cushion the march toward ever-further underemployment of us humans.

8 thoughts on “The Eight-Hundred Pound Gorilla: chronic underemployment

  1. Pingback: The Great Underemployment Debate, Continued | robotfuturesbook

  2. William Zeitler

    ” I see no natural forces that help cushion the march toward ever-further underemployment of us humans.” There is one: robots may make the cars, but they don’t buy them. Henry Ford famously said that he wanted to price his cars so his own employees could purchase one. At a certain point so many wage earners (and spenders) will be reduced to subsistence that there won’t be enough folks with disposable income to buy the robot-made products.

  3. Arthur Boman

    Productivity of capital does not necessarily reduce employment. We used to put many people to work beating clothes against rocks to clean them. Now all those people have been REPLACED with washing machines, and put out of work. This did not increase unemployment. The industrial revolution did not increase unemployment either. Generally, productivity increases create higher production and the same employment, rather than the same production and lower employment. I have not heard a good case for why this should be different with employing robots to do work. One person guiding ten robots can do a lot of work. So what? One guy with a nail gun can do the roofing of ten guys with a hammer, but the invention of the nail gun did not create unemployment, just more roofs. Robots have to be designed, made, shipped, guided perhaps, managed, allocated, fixed, registered, and whatever. There should be a rigorous economic argument discussing changes in marginal product of capital and marginal product of labor before I am convinced that using robots will reduce employment. And finally, I don’t think the reduction in factory employment has caused our current level of unemployment. It was caused by a financial crisis, an inadequate macro response, and an ongoing balance-sheet recession.

    1. James

      While increased capital productivity does not necessarily reduce unemployment (and likely increases the average standard of living), there’s no guarantee that the displaced worker can find another job. If we have workers who are displaced, they will need to be retrained to be employed in a different sector. Automation primarily displaces low-skilled (and increasingly semi-skilled) workers; it has been a challenge as a society to provide the necessary education and training to convert the low-skilled displaced into medium- or high-skilled workers. The applies both to retraining existing workers, and also to providing initial training to the new generation.

  4. AnonyMole

    Mr. Boman, at some point “business as usual” fails for every aspect it is employed. It may be that the robotic replacement of easily automated tasks does not break the pattern, but at some point the robotisization of all work will. We’ll burn coal and oil in a business as usual mode until we can’t. We’ll over-fish all the oceans until we can’t. We’ll extract all the ground water for agriculture – until we can’t. I would bet our current crop of generations are nearing the peak of many trends of “business as usual” where we’ll soon find that although we’d like to continue – we just can’t.

    1. DLM

      I’ve been an engineer at a Fortune 500 company for 30 years, and have invested tens of millions of dollars of the company’s money on automation. One job may disappear with the purchase of a robot, but it is generally replaced by another job devoted to fixing and maintaining and ordering parts for the robot(s), and planning new robot work routines that will make them more efficient. A simple, menial job (one that a journalist can actually understand) is replaced by a diffuse network of repair-maintenance and process and software engineers who “optimize” the workings of a fleet of robots. What sort of job do you want: the one where you perform the robot function day after week after year, or the somewhat more educated job that allows you to think and plan and use your head? This is why John Ludd and his Luddites were wrong hundreds of years ago about automation killing jobs, and why the intellectual descendants of these Luddities can still get jobs writing for the New Republic: their analysis is simple enough for their followers to understand.

  5. Pingback: Chronic Underemployment Goes Mainstream! | robotfuturesbook

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