Economic Recovery Spells More Automation, Less Jobs in Manufacturing

The question of whether productivity improvements driven by automation technology kill or create jobs has been argued over for centuries, and the debate is still going strong.

Even President Obama weighed in recently: “There are some structural issues with our economy where a lot of businesses have learned to become much more efficient with a lot fewer workers,” he told Today.

True. And since the economic recovery began, spending on equipment and software has surged 31 percent while private-sector jobs have grown just 1.4 percent over the same span, this according to The Wall Street Journal.

“In no other U.S. recovery since World War II have companies been simultaneously faster to boost spending on machines and software, while slower to add people to run them,” says Timothy Aeppel of The Journal.

The recent decline of American manufacturing jobs doesn’t seem to have impacted productivity. “Manufacturing output and productivity in the U.S. are both at all-time highs – we’re able to produce more and more output with fewer and fewer workers,” says Mark Perry, Professor of Economics and Finance at the University of Michigan. “Although some manufacturing jobs are gone forever, we’re much better off as a country to be able to get increases in manufacturing output with fewer workers.”

So is there a correlation between productivity, automation and human jobs? Some, like Howard Wial of the New Republic, believe there’s a weak link between productivity gains and manufacturing job losses over longer periods of time. He points out that only 0.2% of manufacturing jobs were lost between 1989 and 2000, a period in which manufacturing productivity rose by 3.9% per year.

Wial argues that there’s been insufficient productivity growth in U.S. manufacturing and that as a result there’s been a heavy loss of jobs. “If U.S. manufacturing productivity had grown more rapidly, American manufactured goods would have been more competitive with those of other countries. As a result, the U.S. would have lost fewer manufacturing jobs.”

Where do we go from here? Traditional manufacturing jobs in the U.S. are all but gone perhaps. Now we need to focus on making sure universities and community colleges are providing training for the jobs that will be available in the future. Perhaps building the next-generation machines that do their (and our job) so well?

Photo Credit: Steve Jurvetson on Flickr (CC BY 2.0)

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