Technology and jobs are two topics that go together.
What is the impact of technology going to be on jobs? Many feel that the future is like the past: that we will create more jobs due to technology than we destroy.
This is a statement by the technology maximalists. These people believe that the future will, indeed, equal the past. The problem with this is that it might not be true. When we look at the US labor participation rate, we see the high was hit in Feb, 2000. Hence, we are on a downward trek the past 22 years. For this reason, it is my presumption that job losses due to technological advancement are already taking place.
As we can see from the linked chart, in Fed 2020, we were at 63.4% participation. Now, as of the end of 2021, we see the number at 61.9%. In other words, we are still not back to pre-COVID levels.
It is a situation that will come as no shock to readers of this blog. We often discuss the disruption in employment that is taking place. Employees are moving around for better conditions while companies are compensating through the addition of technology. This is going to take a while to run its course but there is one thing for certain: we are not returning to how things were in early 2020.
Hiring People Is Becoming Passe
In the past, when the economy improved and companies were in need of more workers, they simply went out to hire more people. This is how things were for hundreds of years. Have a job to fill, get more people to do it.
We are dealing with a completely different world these days. What if, instead of putting up an ad to hire more workers, a robot was hired instead? Do you think this a realistic option?
In some instances, this is exactly what is taking place.
Polar Manufacturing It has been manufacturing metal hinges, locks and brackets in southern Chicago for more than 100 years. Some of the company’s metal presses – large machines standing on one worker – date back to the 1950s. Last year, Polar hired its first robot worker to meet growing demand amid labor shortages.
This is something we see across the world. Companies are now turning to automation to meet "labor shortages".
In this instance, it turned to Formic.
Jose Figueroa, who runs Polar’s production line, says the cost of a robot rented from a company called Formic is equivalent to $ 8 per hour compared to the minimum wage of $ 15 per person. Figueroa says the robot’s deployment has allowed a human worker to do different things and increase productivity.
The company did have to pay for the robot but, as we can see, there is a cost savings for every hour that it is running. This will help to create a return on only a few years.
It was important that Polar first had to pay $ 100,000 to buy the robot and then spend more money to program it. Figueroa says he would like to see 25 robots on the line in five years. He does not plan to replace any of the company’s 70 employees, but says Polar may not need to hire new employees.
The last part is crucial. While this is not going to replace any workers, it will probably eliminate the need to add more workers in the future. This means any expansion is going to occur without an increase in human workers.
Of course, as we can see, the growth will come in the number of robots employed.
Labor Shortage To Human Excess
The challenge with the trend is where does it stop? While companies are crying about a "labor shortage", it appears this is simply due to the fact they are unwilling to increase pay to the point where the shortage is eliminated. The equilibrium of the labor market is always in play. Right now, companies are still trying to get away on the cheap, something they did for near 50 years.
As mentioned earlier, we are seeing a paradigm shift in the labor market. Each side is exercising new powers, which is causing great upheaval.
Corporations are turning to technology, something that is not going to stop. In this instance, with Polar, there might not be jobs lost. However, that is not going to be the case across the board. At present, the focus might be on the shortage yet there will come a time when the line is crossed. Once that happens, shortage becomes excess.
Let us use autonomous trucking. It is well known there is a shortage in drivers. This is simply not a field people are going into. For this reason, billions are being spent trying to get autonomous trucking going. There are many believe this will be achieved in the next few years.
Once we are at that point, it is only a question of how quickly can the new trucks be produced. Scaling of production will take place, putting more of these trucks on the road. The question arises, however, what happens when they make up for the shortfall? Do they stop manufacturing more autonomous trucks?
Of course not. The focus will then turn to the existing fleet where humans are involved. This is the excess that companies will seek to eliminate.
How many other industries will see a similar path? What is the number of jobs at risk from this?
And what does this mean for those seeking future employment when the firms will no longer be hiring since they reached their "human limit". Any expansion, at that point, means adding in more robots.
Also, we have to keep in mind this is a 2022 story, using present day technology. Perhaps we could see a time when the cost of renting a robot might only be $3 or $4 per hour. Couple this with the fact it does not require a benefit package or any time off and you can see how much this will alter things.
It is becoming evident that the hiring of robots is preferred to employees. After all, it does help the bottom line.
If you found this article informative, please give an upvote and rehive.
gif by 
logo by 