You’d think the same headline would be the prominent theme of every year since the 1800s. After all, we’ve seen a decline in the need from everything from lamplighters once electricity was invented to farm workers once farming equipment, tractors and trucks came along. However, for various reasons throughout 2012, there’s been a steady debate brewing over modern day robotics and algos overtaking jobs that were once unthinkable.
Where Employing Humans Makes No Sense
There are a lot of parts of the economy where humans continue to perform functions that can and should be performed completely by automated means. By continuing to employ humans, it’s just an unnecessary cost on society and frankly, prevents people from being freed up to do something that adds more to US productivity, output, and possibly, their own career/income. Here are some examples:
- Toll Takers – I don’t know what they call it where you live but in the Northeast, we have an “EZ-Pass system which allows your car to drive straight through an overpass that detects your car’s pass. Usually, there are a couple EZ-Pass only lanes and then there are a few human operated lanes. It continues to confound me why they still exist. And what is even more perplexing is why Americans still voluntarily sit on each toll line 5 minutes or more instead of flying through an automated lane. I could see an international traveler or very infrequent driver that doesn’t bother, but for 99% of drivers, why would you wait? Aside from that, the people performing these jobs aren’t really using their potential, at all. They stand in a booth all day taking a ticket and handing out change. They are often subject to insults and rude behavior, but more importantly, they are subject to hazardous fumes for a lifetime that must surely result in a higher prevalence of health issues later in life, and they are paid above-market rates for completely non-skilled labor due to their labor arrangement. They don’t really help with anything else outside of toll-taking. For instance, years ago, my car broke down going into the toll booth. What great timing! My car was stuck right at the damn entrance to the booth and I looked at the guy and shrugged, like “what now”? I said, “you wanna help me push this up a bit so people can get through?” He said no since if he hurt himself outside the booth, he wouldn’t be covered under the rules. So, I was on my own. I started pushing the car myself which was ridiculous since it was 2000 pounds and there was nobody to steer it. I wasn’t having much luck, but fortunately, a guy stuck behind me got out of his car to help me push. In essence, it makes no sense that these jobs still exist in the numbers they do. States should do more for force (or entice via incentives like a 10% discount) drivers to switch completely to EZ-pass type systems.
- Gas Station Attendants – This is one of the more moronic relics of pre-automation that exist today. See, not only is it faster to pump your own gas rather than wait for the attendant to go between cars, but it’s cheaper too. People without critical thinking skills like to cite New Jersey’s mandatory attendants and low gas prices as refuting this fact. If someone could please explain to me how employing additional headcount for lower output/throughput somehow decreases costs, they deserve a Nobel Prize. No, what they fail to consider is that New Jersey simply imposes lower gas taxes than other states (and they sure as hell make up for it in property taxes at the highest in the nation), thus giving a false impression that it’s cheap gas with attendants. No, the gas input costs roughly the same as any other state (they do have the benefit of local refineries), but my adding gas pumping drones, it’s obviously adding a few cents per gallon that most drivers would gladly forgo. The other downside is that these gas stations can’t be open at all hours. When I’ve driving home real late and need gas, I like to be able to look at my Gas Buddy app and find the closest place and know it will be open at any hour since it’s an automated pump. Many manned stations in Jersey have to close early. But what about all those jobs that would be lost? Well, every other state gets by. Are these jobs worth saving? Perhaps these attendants would be better off in a different job anyway – again, not being subject to hazardous liquids and fumes every day, making minimum wage, and never advancing. It’s state welfare at the expense of taxpayers plain and simple.
Where Robots and Algos will Continue to Displace Humans
With the internet alone, we’ve already started to see a decline in the need for roles once fulfilled solely by humans. Travel agents for instance are not needed nearly as much as they once were. You can easily research destinations and the best deals for flights and hotels on your own. In some cases, they can get you a discount you may not be able to secure on your own, so some people still use them, but their numbers are dwindling. A lot of manufacturing roles have continued to be displaced over the years. Everything from auto manufacturing to warehousing has seen its share of worker displacement and this trend will continue. Usually it’s a simple calculus of the cost and efficiency of human capital versus machine capital. Can a robot do it more quickly and with fewer errors? Can a robot displace enough humans to offset the upfront capital expense and continued maintenance? When the answer is yes, businesses make the shift. Often times, a stimulus program or government tax incentive includes special capital depreciation rules, tax credits, and other business expansion incentives. Robots and automation are often the result. In a way, the government is incentivizing this shift.
Why Robots Could be a Positive for US Employment
You might question how displacement of US jobs could possibly be a positive. Well, for the same reason every other low-skill job that was displaced in the past has ended up being a new positive for the country. It is alarming that worker displacement is moving further and further up the continuum in terms of worker skills (i.e. experienced, skilled plant technicians and traders with decades of experience are being displaced), but the net effect is a positive. A primary theme we’re just starting to hear more about this past year is “in-sourcing”. Many companies are starting to shift manufacturing back from China into the US. Why? Well, as robotics can replace the tedious manual work a dozen Chinese migrants were performing in a factory thousands of miles away, now they can enjoy the same cost structure (high up front but lower NPV), a much reduced cycle time, supply chain optimization (avoiding the BS at the ports from striking longshoremen underway again), being closer to the customer (high paying US consumers), lower total landed cost (due to lower distribution and logistics costs), and the ability to shift product lines and new launches more quickly than competitors that continue to rely on offshoring. Often times, the quality is much higher as well.
How could that possibly help US jobs? Well, even though it requires “less” people to run a highly automated facility, it’s still NEW US jobs. And often high paying jobs to boot. I worked in manufacturing for years. I saw my share of shifting from purely manual tasks to automated tasks, but along the way, I learned new skills – everything from a new computer language and programming logic to preparing myself for a job outside the firm in an automated biotech bulk plant or sterile fill facility, since the old days of turning valves manually and loading vials and stoppers under a sterile laminar flow hood are coming to an end. Even though a new facility may be highly robotic, hundreds of jobs are still created for even a basic plant. There are the people who set up and break down a production run, machinists, mechanics, quality control, supervisors, managers, distribution & shipping roles, clerks, software engineers, lawyers, HR and more. If you’re going to have the machines, you need to run them, and then those people need all the infrastructure to support them. These people in turn, frequent local vendors ranging from sheet metal designers to restaurants and gas stations. Bring back a few thousand plants like this due to more efficient robotics and automation and the prosperity spreads. This is not pie in the sky. This is already happening. The better our robotics get, the more jobs come back.
Self-Driving Cars and 3D Printing
I know, you probably think these themes are just gimmicks from Google’s car experience and that printing Lego pieces from a 3D printing device will never have any real-world application. Well, then you’re just as wrong as I was when I thought people would never use their phones as MP3 players, cameras and GPS (while I stubbornly held onto my stock in Garmin). When asked about the deal is with Google’s focus on self-driving cars as a search company, the answer was just an anecdote, but opened my eyes. Google replied that self-driving cars would save millions per year just for their facilities. How? Well, an employee gets dropped off at the front door and walks into work. The car then drives away and parks itself in a cheap lot somewhere a mile away. This would save time for employees and tons of capital costs on garages and parking lots near the campus. This got me thinking about all the applications in cities, how much more efficient traffic flows would be, and more. It would save the economy at large Billions per year. Sure, some limo drivers, bus drivers and truck drivers may lose some jobs. But the net effect to society would be tremendous. 3D printing likewise, could cost manufacturing and retail jobs. After all, perhaps instead of going down to Toys R Us and buying the latest Lego set, you just download a plan from Lego directly (I’m sure pirating would play some role as well) and print your kid a Lego set at home. But imagine all the efficiency that was just gained in that transaction! A saved trip, fewer checkout clerks at stores, lower inventory costs, etc. Outcome is the same – kid has their Lego set. And someday as materials and technology improves, you’ll be able to 3D print virtually anything that isn’t perishable. Well, they’re working on printed replacement organs and food already, but first things first.
The future is here, and if you’re not thinking big, and looking ahead, you’ll be left behind. And if you do feel your job is at risk, or could be in the future, what are you doing about it? You should definitely have a pulse check with free weekly emails on high paying job openings in your area through TheLadders. It’s simple and free to sign up and you can sit back and get recently posted jobs based on your industry, location and salary requirements. (It’s awesome, I use TheLadders to keep an eye on my industry).
What Are Your Thoughts on Robots and Technology Replacing Humans?
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