As Robot Sales Increase, So Will Jobs for Humans

Referring to the fact that productivity growth slowed in the 1970s and 1980s even while information technology developed rapidly, economist Robert Solow once quipped: "You can see the impact of IT everywhere but in the productivity statistics.” Today, one can see the so-called job-destroying impact of robotics everywhere but the employment statistics.

Last month, the U.S. economy created over 220,000 net jobs. On average, it has created 174,000 jobs a month this year, relatively tepid but nonetheless steady job growth (just below last year’s 187,000 jobs a month). With a 4.1 percent jobless rate, and more Americans re-entering the workforce, the economy seems to be at or near full employment.

But it is hard to square the generally positive employment situation with the fear that increased deployment of robotics and other tools of automation will lead to mass unemployment and a large jobless class. Even as the economy continues to generate jobs, the automation market is setting new records. For the first three quarters of 2017, more robots were sold in North America than any other similar period. It represents a 14 percent increase over the first nine months of 2016.

The increase is spread across sectors, with the metals industry seeing an increase of 54 percent in robot purchases, automotive components 42 percent, and food and consumer goods 21 percent. Motion control shipments increased by 10 percent, and machine vision systems and components by 14 percent – also records for the first three quarters of a year.

When one puts the robotics sales and employment statistics side by side, it lends powerful credence to the notion that the very automation that eliminates some jobs stimulates the creation of others, partly by fueling enhanced productivity. What we are seeing is not so much job reduction as job churn. As new technologies eliminate some jobs, they create opportunities for others to be created.

Bringing down costs makes it possible for businesses to create more jobs, to take advantage of new potential opportunities. Rather than reduce the number of jobs in bank branches, for example, the creation of automated teller machines has increased them, by making it possible to open more branches in less-populated areas, with smaller average payrolls.

Bringing down costs brings down prices, freeing up cash that consumers can spend on other goods and services. How we earn our money depends largely on how we spend it. A Deloitte study found that new technologies eliminated 800,000 low-skilled jobs in the United Kingdom. But they also led to the creation of more than four times that many jobs – 3.5 million jobs that paid on average nearly $13,000 more per year than the ones that were shed.

New technologies can make possible the birth and growth of entirely new industries. Twenty-five years ago, few of us had even heard of a search engine. Now, 60,000 people work for Google alone. Amazon has eliminated jobs in many bookstores and other retail outlets, Expedia has eliminated jobs in many travel agencies, and Netflix has eliminated jobs in video stores. Meanwhile, the same technologies that shed those jobs have created others – for apps developers, web designers and software engineers.

Rather than replace human beings, new technologies augment them – taking care of some of our needs more efficiently, thus giving us the opportunity to pursue others. In 1900, about 1 in every 20 Americans in the workforce was employed by a railroad. The invention of the automobile and the airplane freed-up a lot of labor – freeing us to pursue new wants and needs. Now, a far smaller proportion of the population works for a railroad, but a far larger proportion are engineers, scientists and physicians.

Calculators did not eliminate jobs for bookkeepers. Word processors did not eliminate jobs for secretaries (although we now call them assistants.) As the employment and robotics sales for the first nine months of 2017 indicate, we can create jobs even as we make it possible to shed others. A dynamic economy can walk and chew gum at the same time.