Employment vs. Robots - It's Not as Straightforward as You Think

When the story broke early this week that McDonald's was planning on more automation in their restaurants nationwide, the inevitable response was "when people are demanding $15 an hour to flip burgers, what do they expect McDonald's to do?"  The story was reported almost exclusively as robots, but the story concerned self-service kiosks where customers could order and pay for their meals.  While it certainly looks like it will replace some of the kids taking orders at the front counter, it's not the hamburger making robots reported on here since 2012.  These Mickey Ds' will still need workers to deliver the food to the tables, but that's already happening in China, where supposedly every one goes for the low-wage workers.  It's only a matter of time before the robots will do the cooking in McDonald's, as they do in that restaurant in China.

Pretty straightforward, right?  Robots displace workers.  I bet if you plotted the number of robots vs the number of workers, you'd see the curves going in opposite directions; the more robots, the fewer workers.  Machine Design has done the work for us, and this is the plot you get for Robot Shipments vs. Non-farm employment for the last 20 years, (well, 1996-2014).  

Wait... whut?   Although it's a busy plot, the most important parts are the two lines: linearized (smoothed) trends in both US nonfarm employment  (orange) and robot shipments (green).  They're not crossing at all; in fact, they're almost parallel, with a weak tendency to converge.  As employment goes up, robot sales go up.  The irregular red curve and the gray bars represent the raw data series, without smoothing.  When looked at that way, there only seems to be only one period when employment behaved the way we thought, robot sales went up as jobs went down, (2003) but the rest of the time, robot sales go up as employment goes up. 

So what's going on here?

“The real threat to jobs is the inability to remain competitive.” Jeff Burnstein, President of the Association for Advancing Automation (A3) explains, “If you can’t compete, you only have a few choices—you send it overseas, you shut down, or layoff.” Automation can keep jobs from ever moving overseas, and often, new technology wins new business, too. 

In the McDonald's, they have to stay competitive, and since the other options aren't available, they have to automate.  Not only can automation streamline production to help companies stay in business and even expand, but for manufacturers it can bring new talent to the table as well.  Robot designers are concentrating on developing user-friendly robots that are less hazardous to work around, and that can help the human operators with, for example, lifting heavy or fragile (or both) parts.  The buzzword is collaborative robots, which we reported on a year ago. 

According to Deloitte—the audit, consulting, and financial advisory company—there will be 3.5 million available manufacturing jobs from 2015 to 2025, and about 2 million of them will go unfilled due to a skills gap.  In 2011, 600,000 jobs went unfilled due to the skills gap.  Faced with a shortfall of almost 60% of the amount of workers they need, manufacturers will have to automate.  They need to use robots and automation to survive. 

The Machine Design article continues:

Much of our [the US'] competitive advantage comes from the technicians and engineers who have years of experience. However, economicmodeling.com wrote in 2014: “Yet if demand for workers [engineers] continues and if a good-sized segment of that workforce is poised to retire, skills gaps are likely to become a real issue—especially at senior- or management-level positions that are hard to recruit for.” If engineers are retiring faster than students are entering the field, and potentially missing the opportunity to learn from them, we might lose valuable knowledge as time progresses.

The issue then becomes that if we need robotics and automation to make up for the lack of skilled workers, and the most skilled workers are retiring, then who programs the robotics and automation? 

To me that says the real issue that infographic relays is that there is a burning shortage of skilled workers.  It seems that probably that means we have too many unskilled workers.

If our world’s population continues to grow, and overall world jobs shrink, how much longer can reshoring sustain a world economy? Manufacturing can reshore by replacing 10,000 workers overseas with 1,500 workers in the U.S., but this seems to all lean toward one direction—the end of unskilled labor while the unskilled laborer workforce grows worldwide.

The unskilled worker is where we started, and that's where the coming crunch is going to be.  The next wave of manufacturing revolution that's growing now has the potential to remove many of the outsourced jobs in the third world.

A study conducted by the International Labour Organization (ILO) found that 88% of Cambodia’s textile, clothing, and footwear workers were at a high risk of being replaced with automated machinery. In addition, some countries, like Cambodia, will feel a stronger impact where textile, clothing, and footwear production dominates an undiversified manufacturing sector and makes up around 60% of manufacturing employment.

In the end, we see a picture that's more complex than the first impression.  For the skilled worker and the fast learner, there's no reason to fear anything we see coming.  That robot is more likely to help you in your job than replace you.  For the unskilled worker who can't - or won't - learn the necessary skills, the future does look bleaker.  Just as the industrialized world started depending on them for "cheap labor", the industrialized world started to figure out how to get by with its own labor costs.    It's easy to say we need to convey more skills, but there are always some people on the margin.  These are the people that are most likely to be replaced by some sort of technology.

William Bossert, legendary Harvard professor, summed it up by saying, “If you’re afraid that you might be replaced by a computer, you probably can be—and probably should be.” While it may not be comforting, it could be a wakeup call for continued education.