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Cliff Holste

Supply Chain Digest
Material Handling Editor

Logistics News - Sorting It Out

Cliff Holste is Supply Chain Digest's Material Handling Editor. With more than 30 years experience in designing and implementing material handling and order picking systems in distribution, Holste has worked with dozens of large and smaller companies to improve distribution performance.

November 29, 2017

Sorting It Out: Understanding Future Job Creation Issues – More Questions than Answers

Will Advances in Automation create enough New Jobs to Support a Stable Economy?


It’s interesting to note that despite losing millions of jobs to “labor saving machines” over the past 100 years or so, we actually have more total jobs today than we did when the construction, steel, auto, telephone, and food industries had a lot more workers and a lot less machines. Somehow, new jobs get created to replace the old ones – because someone has to build all those machines. However, the problem going forward is that the thousands of jobs created by providers of new age automation will not offset the millions of production and service jobs lost to that automation. For example:

Holste Says...

Instead of letting the inevitability of automation happen to us in a highly disruptive way, political and business leaders should take the time now to think about how we want the economy to work for all of the citizens of the automation age.

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  • Analysis, concepting, design and programming will be done by a few highly trained individuals, while manufacturing and assembly will be done by computers and robots.

  • Operating and servicing robotic systems and automated equipment will be performed by skilled technicians, while maintaining and repairing the robots will most likely be done by other robots.

  • Customer interface with automated systems (including the self check-out counter) will be through a combination of voice and touch screen technology as we have been experiencing for some time now. Human assistance will be limited and available on an as needed basis.

As noted above, automation isn't exactly a new phenomenon - businesses are constantly looking for ways to replace workers with machines that will lower cost, increase margin, and speed up delivery of products to consumers, i.e., we all love next day or even same day delivery. But, as has always been the case the development and deployment of new technology creates new jobs for some while eliminating existing jobs for others. For example:

Before there were backhoes and massive earth movers, there were men with shovels and wheelbarrows. A backhoe replaced a hundred men with shovels. But new businesses and factories sprang up to manufacture the backhoes, and those companies hired people - many of them former ditch diggers. All of these new businesses and factories tended to employ many of the workers displaced by machines. The growing economy generally absorbed every unemployed worker in the new businesses that were created by advances in technology.

Today, new jobs are still being created, but unfortunately, not at a rate fast enough to soak up the unemployed. In addition, federal and state taxing policies can cause companies to relocate to a more tax friendly state or worse yet to another country, further reducing U.S. employment opportunities.

Aside from all of the politics associated with job creation - the hard truth about the U.S. economy today and going forward is that businesses don’t need as many of us as workers, but, still need us as consumers. The economy in general depends on a healthy base of consumers spending their money.

Industry and economic experts agree that the industrialized world is entering a new age of advanced automation. Once autonomous robots start arriving in the job market in significant numbers (something that we are already beginning to see) they have the potential to dramatically change the economy. With consumer spending accounting for two-thirds of economic activity, anything that spooks consumers (who have jobs) into losing confidence in their future prospects, slows down spending and fuels the downward spiral.

The issues are profound. How do we prevent this downward spiral from happening? Can we reset the economy so that we enter the new era of automation smoothly? With machines doing most of the work, can we actually create a society that takes advantage of the leisure time that automation can provide such as a 20 hr. work week? Or, will the millions of people displaced by automation end up being homeless and destitute, living in government provided dormitories? And, if so, what will this do to the tax rate paid by those who have jobs. It appears that some European countries are already experiencing this situation, i.e., high unemployment and high taxes.

Final Thoughts

While the above business and social issues are complex they are just the tip of the iceberg. Who knows what impact Artificial Intelligence (AI) will have on society? Instead of letting the inevitability of automation happen to us in a highly disruptive way, political and business leaders should take the time now to think about how we want the economy to work for all of the citizens of the automation age. They must be focused on education and training strategies needed in this new age, as well as business friendly policies that create more job opportunities.

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