Friday, December 2, 2016

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, 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.


  1. a wakeup call for continued education

    As long as it's an education geared towards getting a useful job, and not bull$hit degrees in "18th Century Women's Poetry" or other equally useless degrees....

  2. I will make time to go over the data more slowly.
    My work experience was that whatever job you are doing, something will change and you better be able to change with it.
    I also suspect that if you have not been laid off yet, it is either because you had enough foresight to leave your employer, or you just have not worked long enough yet.

  3. There is something not quite right or honest about a report that claims 600,000 jobs in manufacturing are going unfilled because there aren't enough skilled applicants. I don't believe it. What I do believe is that industry wants what they want and will say whatever they have to say to get it. I worked in IT most of my working life. So many of those jobs are outsourced and filled by H1B's. Why? Certainly not because there weren't enough skilled American workers. In a nutshell the reason is that an Indian or Korean IT worker will gladly work 80-100 hours a month for $45k and never complain and never look for a different job. I worked with many foreign workers and some were really good, some were so-so and many were not so good. But 100% of them worked long hours with zero complaints because they were afraid to lose their job and be sent back to India.

    My father in law worked for a company as a designer for HVAC systems his entire life and he was an H1B employee for 40+ years. Do you believe for a second that there aren't qualified American HVAC designers who could have done the job? His company had him by the gonads and he worked his tail off for them. But somewhere an American didn't get that job. Does this make any sense at all? We are our own worse enemies.

  4. Per local Home Depot manager:

    "We have thousands of applicants - that cannot pass a drug test"

    1. The other side of that problem is that if you the applicant can pass the drug test, and shows up on time for about six months without excessive days missing, they'll be a department manager and running the place.

    2. Then take applicants that can't pass a drug test. Sheesh. I smoked pot and experimented with other drugs when I was younger. It had no effect on my ability to work as a computer hardware technician. There is always more trouble with alcoholics.

  5. I believe there is a serious shortage of qualified workers in quite a few fields- CNC machi ists are hard to find A friend owns a software design company-mostly does stuff for medical field- he has a hard time finding qualified workers.
    Heck I have a hard time finding laborers that can read a freakin tape measure.
    One of our daughters works in manufacturing and is shift supervisor/ foreman-(or forewoman in this case)-she tells horror stories about the stupid sh*t workers do,and how hard it is to find qualified help. She and her boss even set the machines up and people still screw up.
    It's the get a trophy just for showing up idiocy that created this mess.

    1. I know an electrician who runs a company here in town. He has such a desperate time getting people to work for him that he will pay full tuition to the junior college for people willing to become entry-level electricians for him (journeymen? not real familiar with the terms). Mike Rowe has written tons on this lack of respect for trades.

      In the early '80s, I briefly spent time running a quality control department. I had to give inspectors interview questions where they read a ruler.

    2. Your electrician acquaintance might be different, but I attempted to take a local businessman up on such an offer (welding). They don't just want someone who will learn the job and do the job. They want someone YOUNG to do the job with a beholden attitude for the "free" education who will do it for fairly low pay compared to someone who trained on their own dime.

      It was frustrating because, for me at my late-40's age, this would be a hobby job. Hobbys are fun and getting paid at all is a bonus, so us dilettante third career types should be a great fit... but we're old and we know how the world works; meaning we can't be taken advantage of by lots of the places making the "education for free" offer.

      Mr Rowe's foundation disqualified me on the basis of prior education.

      So I am both too educated and too old for the unfilled positions?

      Something else that gets missed here is these jobs are skilled positions, meaning you need a developed skill to perform them. I know several people who've got the requisite skills, but lack the certifications to prove it. Job experience does not matter if you never got certified, and they were working full time getting that experience so didn't have time to spare getting the piece of paper from some community college to prove they could do what they'd been doing for 20+ years.

    3. If I can focus on just this part" "Something else that gets missed here is these jobs are skilled positions, meaning you need a developed skill to perform them. I know several people who've got the requisite skills, but lack the certifications to prove it. Job experience does not matter if you never got certified, and they were working full time getting that experience so didn't have time to spare getting the piece of paper from some community college to prove they could do what they'd been doing for 20+ years."

      This is a common problem - I've had it myself. What it really comes down to is that hiring someone is a very expensive process, but getting rid of them is even more so. To borrow a saying from the electronics business, no one ever got fired for hiring the degreed guy, but they have been fired for "taking the risk" on the non-degreed guy. In the case of the degreed guy who doesn't work out, the defense is always, "all his background looked good". In the case of the guy without the paper, that defense isn't there. Put another way, it's a problem with the HR folks - the hiring process.

      Every place I've worked had non-degreed engineers who did everything the guys with degrees from the big name schools did, sometimes better, but they become almost enslaved to that job because the chance of getting hired somewhere else without that piece of paper is much lower than the degreed engineers' chances.

      Again, the problem is government regulation. When they make it so hard to hire and fire people, they make it harder for people to get jobs. At Major Avionics Corporation, the factory no longer hires entry level workers. They hire temporary contractors and see if they work out after six months. If they have good attitude and attendance, they'll get an offer. That's because of the rules on employment and unemployment compensation.

  6. The solution is obvious - employers will have to train workers, like they used to do.

    My wife at age 19, with one year of community college and a mediocre command of English, got a job in a trainee position at Tektronix. Twenty years later she was probably the most skilled Oracle database programmer in the state, with at one time as many as 50 well-paid subcontractors working for her. My own experiences can be found here:

    As to the untrainable, there is some evidence that is not a valid concern. John Taylor Gatto writes (in his "Underground History") that dumbness had to be invented; it's not real. The government schools are still stuck in the 19th century paradigm of cranking out vast numbers of low-skilled workers, so they are no help, and really ought to be burned to the ground. The other problem with government is regulation and worker "protection". If you make it difficult to fire people, the risks of hiring are high and no company will want to expend training resources for people who likely are not going to be productive.

    Short of fixing this problem at its source, the best Indians and Chinese will have to be brought in to do these jobs.

    1. You'll get no argument here on burning the public school system to the ground. As Kevin at the Smallest Minority says, "I say we take off and nuke the site from orbit. It's the only way to be sure".

      Before that, people need to know they shouldn't be going to college for the sake of going to college. They should be trying to build a portfolio of marketable skills. Whether that's done in a school setting or on the job really shouldn't matter. There's just an extremely small number of jobs where any degree in "aggrieved minority studies" is marketable knowledge. If someone goes to college for a degree in something like that knowing full well it doesn't prepare them for anything (other than being the butt of jokes), and they're happy with a life of poverty to pay for their education, well, it's their life. Don't expect everyone else to pay for it.

      Unfortunately, that's a whole lot of modern culture and belief systems that need to be burned to the ground as well.

  7. turning wrenches,fixing machines, skill's learned OJT. If I could I would repair automated machines in places around the world that use Lights out manufacturing. Or fix washing machines for sultans. Hell find a good boiler shop and stay there. If your good and want to earn what's 80 K a year in your pocket. I say to my grand-kids people will always need plumbers and boiler techs.

    1. How about be a Lineman and double what you put in your pocket;)