by Gary Mintchell | Aug 14, 2014 | Automation, Commentary, News
Why always “Automation OR Jobs?” Never “both…and.” Or, is there really a correlation?
The PewResearch Internet Project has recently released a report of a “research” project regarding people’s opinions about whether automation is a job-creating or job-depleting phenomenon.
The reason I use the quote marks around research is that it is not the type of research I learned in grad school. It’s the modern “let’s do a quick Internet survey on a provocative topic that will get lots of page views” type of thing. We did these all the time when I worked in the trade press. You send out a request to a select group of people to respond to a SurveyMonkey or equivalent Web instrument. Tabulate the results a week later. Voila, a research report.
I know that not all the opinions relate to manufacturing. But we seem to take the brunt of the comments on the topic of jobs and automation.
Opinion survey of 1,900
Writers Aaron Smith and Janna Anderson, discussing, “AI, Robotics, and the Future of Jobs,” said: The vast majority of respondents to the 2014 Future of the Internet canvassing anticipate that robotics and artificial intelligence will permeate wide segments of daily life by 2025, with huge implications for a range of industries such as health care, transport and logistics, customer service, and home maintenance. But even as they are largely consistent in their predictions for the evolution of technology itself, they are deeply divided on how advances in AI and robotics will impact the economic and employment picture over the next decade.
Some 1,896 experts responded to the following question:
The economic impact of robotic advances and AI—Self-driving cars, intelligent digital agents that can act for you, and robots are advancing rapidly. Will networked, automated, artificial intelligence (AI) applications and robotic devices have displaced more jobs than they have created by 2025?
Half of these experts (48%) envision a future in which robots and digital agents have displaced significant numbers of both blue- and white-collar workers—with many expressing concern that this will lead to vast increases in income inequality, masses of people who are effectively unemployable, and breakdowns in the social order.
The other half of the experts who responded to this survey (52%) expect that technology will not displace more jobs than it creates by 2025. To be sure, this group anticipates that many jobs currently performed by humans will be substantially taken over by robots or digital agents by 2025. But they have faith that human ingenuity will create new jobs, industries, and ways to make a living, just as it has been doing since the dawn of the Industrial Revolution.
OK, you survey a large group, 1,900, and are surprised that the results approximate 50-50. That sounds consistent with about any large opinion poll on a controversial subject.
He said, she said
Still, the thoughts provoke some further discussion.
Bill Snyder, writing in ComputerWorld, “Is the Robot Revolution Going to Put Us Out of Work?”, says, “I do worry about how our economy will manage to absorb the millions of workers whose jobs are being automated out of existence.” Wait a minute! He threw that sentence in without any substantiation whatsoever.
He proceeds in the modern journalistic style to draw from the PewResearch report a few “he said, she said” quotes that amounted to nothing new. Oh, if only people writing in these major publications knew anything about automation and manufacturing—and thinking.
Then I saw this article, “The New Luddites: What if Technological Innovation Is a Job-Killer After All?” in Slate by Will Oremus. This article also drew on the Pew Research report. It was more thoughtful than the ComputerWorld piece, but still pretty shallow in understanding about what really happens in the real world. And still a “he said, she said” style of journalism that adds nothing to the conversation.
I find that these people who are all far smarter than I look at macro numbers and charts and read each other—kind of like the A students they probably were, come to interesting conclusions. But almost none seem to reflect the understanding that comes from years of working in a factory or production plant. From actually implementing automation. I was a B student. I always asked why and never tried to just regurgitate what others said. (Got me into trouble in a philosophy course once—that’s when I learned to keep my mouth shut in class.) I also worked with people far smarter than I who knew about implementing automation and what its effects were.
Thinking beyond the headline
Let me throw out some ideas for (I hope) a discussion.
- Automation is not a zero-sum game
- A near-future decrease in working-age population with near-term increase in home health care needs may require automation
- Innovation does drive job creation, but look beyond automation to new products and services
I think often about these macro economic factors. What do you think about their impact?
- The post WWII boom in manufacturing, jobs and wages was probably an anomaly in the long-term
- Women entered the workforce en masse in the 1970s effectively doubling the workforce with no balancing job creation driving the unemployment rate up
- Worker shortage and production required to supply all the consumer goods and aircraft drove wages up in the 50s and 60s—seldom seen before and not likely to be seen again?
- The “MBA mentality” that began in the 1980s had the effect of enhancing the wage disparity from lowest to highest in the organization—compare the US to just about any other modern economy—the people at the very top are usually reluctant to share the wealth
- Much of the automation made the workplace safer—many jobs lost were dirty, dangerous, back-breaking, mind-numbingly repetitious
- Because of all types of automation, modern manufacturing plants and process plants are far less dangerous and more attractive places to work
- Jobs come from designers developing new products that serve a real need that people are willing to buy (duh)
- Jobs come from companies who research and develop the technologies that create the modern manufacturing plants and advanced products of today and tomorrow
(note: I’ll return to what I call the “MBA mentality” in future posts. Let’s just say that I remember the first MBA/Finance who came to the manufacturing company where I worked who thought he should run things, not just be a bean counter. Out the door were considerations of customers and products. It was all about numbers on a spreadsheet.)
I have written about this many times; here are a few links:
Promote Fair Competition
Automation vs Jobs (podcast)
Manufacturing Jobs Are Available, But…
Automation Technology Impacts Jobs in China, Too
Jobs in Manufacturing
by Gary Mintchell | Apr 9, 2014 | News
We have all written and spoken about the coming expertise crisis in manufacturing employment (factory and process) that will be caused by the retirement of the current population of engineers, operators and maintenance technicians. Some of this attrition has already begun.
I spotted this chart on the Business Insider Web site. It look at the shift in population trends in the US. Note that this information emphasizes the decline of people in the prime employment age bracket. The 55+ age bracket has grown significantly over the past six years. People in this age bracket are increasingly opting for part-time or no work.
I think this explains much about the current state of employment elasticity.
Changing Demographics
From BI:
The above table comes from Bill McBride at Calculated risk, and it shows the changes to the populations of various age groups over the last six years.
There’s been a lot of talk about the declining Labor Force Participation Rate, and how much has to do with the weak economy and how much has to do with demographics. But you just can’t ignore the chart above, which shows there’s been a massive surge in the 55+ cohort, and a DECLINE in the prime working age cohort.
The key thing, as Bill notes, is that while it’s true that the Labor Force Participation Rate for the 55+ cohort has gone up in recent years, overall it’s relatively low, so the shift in people from prime to 55+ represents a drag on total workforce participation.
This isn’t the end of the story, by any means. But these are the basics: There’s been a big change in U.S. demographics in just the last few years, and you can’t begin to talk about the job market or anything else without seeing the above numbers.
by Gary Mintchell | Dec 30, 2013 | Commentary, News, Operations Management
Once again there appeared a newspaper article about manufacturing output resurgence without an accompanying increase in manufacturing employment.
When was it that journalists stopped being overtly opinionated or merely reporters and started trying to write about things of which they have no knowledge but in which they decide to slip in opinions through the back door, as it were?
Granted, the writer wasn’t overtly talking about “Lean Manufacturing” as in derivatives of the Toyota Production System. The article only through out a sentence of opinion presented as fact that manufacturers were “lean,” as if that were bad.
My first nine years in manufacturing were spent in a great learning environment. I learned many manufacturing techniques. I tried to be “just in time” long before the term was popular (we called it maximizing inventory turns). We did many Lean manufacturing things before there was an official Lean.
Drive for productivity
The discipline of effective cost control was drilled into me early on, and it remains. (I cringe at the lack of cost control in my church today, to be honest.) But we never just looked at cutting jobs just to cut jobs.
The mantra was, “If you cut a dollar of material, we save that on every product. If you reduce labor content by an hour, we really don’t know that the company saved anything in the big scheme of things.” You look at details and think in the big picture.
Lean misunderstood
The first principle is that Lean manufacturing does not mean getting rid of people. The first principle is respect for people. If I could get journalists to try to understand anything when writing about manufacturing, that would be the one thing.
The next principle is that productivity drives the country’s growth in wealth. Productivity is producing more efficiently and effectively. Granted that there are short-sighted executives who think they can cut to prosperity. They ignore facts that that never happens. There exist many mature managers (I have personally visited with quite a few) who are doing the right things right.
Growth in employment comes from doing more things, not in just adding people to do the same things. One of the problems with manufacturing employment in the US has been knee-jerk sending jobs offshore. But that fad is over. Executives now see all the costs this strategy and have brought many jobs back.
However, we have also discovered that it makes a lot of sense to manufacture products geographically closer to the market. This creates a huge dispersion of jobs, which will in turn lead to growing global middle class. This in turn will be a stabilizing force for global politics. There is much reason for optimism for the future.
Solutions
That writer could add to overall employment by taking those writing skills, develop a focal point, and start a small Web-based media site to cover a topic. Then hire a few people.
Growth in manufacturing jobs occurs mostly when someone develops a new product that meets a social need and then builds a plant to produce that product. She or he will hire engineers, operators, maintenance people, accountants, and so on.
We need more Elan Musks!
by Gary Mintchell | Sep 10, 2013 | Commentary, News
Andrew McAfee’s latest blog post takes another dive into economy statistics. He calls it “No News” which is both good news and bad news.
It’s the same story. The overall economy is growing modestly. Profits are climbing—even in manufacturing. But employment continues to lag. In fact as shown in the graph accompanying this article, not only is employment not growing at the same pace as the economy, people seem to be leaving the workforce.
McAfee asks why? What is going on?
I posit a number of things that I have not seen any analysts address.
First, we only make things when people want things. Or at least when marketing convinces people that they want or need something. Some markets seem to be saturated. PCs have probably hit saturation. Autos hit the wall, maybe expanded a little, but with cars lasting longer than they used to, we just don’t need as many new cars—at least in America.
So, perhaps demand for manufactured goods is one thing. Perhaps the products in demand are not as expensive to manufacture as automobiles—the driver of economic prosperity for many years.
Second, we have had a history of atrocious management in manufacturing companies. Consider these points:
- Hiring people to mask problems, only to lay off the people when the problem is uncovered
- Sending jobs to places chasing cheap labor only to discover that logistics, quality, inventory costs, loss of intellectual property, and more were the unhappy result
- Failing to develop and produce quality products that people want—opening the door to international competition that creates jobs elsewhere. At least for a while.
Third, perhaps there is an underground economy.
- Maybe many have re-discovered the one-income household such as we had prior to the 1980s
- Maybe we have an “e-economy”—eBay, eTrade—people making money in nontraditional jobs, perhaps even out of the radar reach of the IRS
Back to manufacturing employment. It is just economic good sense to have the right number of workers. Even when holding to the basic principle of Lean—respect for people—it is bad management to cover problems simply by adding workers. The inefficiencies will eventually be discovered by competitors.
Job growth comes from growth in manufacturing itself. That means product-oriented companies—rather than finance-driven companies—that continue to innovate with new products and new methods of manufacture that in turn create new jobs.
That this does not happen is a function of senior management with short-sighted vision who have created cultures of fear and uncertainty rather than creativity and fun.
Why always “Automation OR Jobs?” Never “both…and.” Or, is there really a correlation?
