Monday, July 11, 2011

Yes, ATMs are Taking Our Jobs: How Technology Can Create Unemployment

By J. Samuel Cook

When President Obama recently remarked during an interview with the Today Show that “when you go to a bank and you use an ATM, you don’t go to a bank teller. Or you go to the airport and you’re using a kiosk instead of checking in at the gate,” his words became a running joke to conservatives, yet another exempli gratia that the community organizer-turned-president is blithely unaware of how the nation’s economy works. The chorus range out from conservative pundits ranging from Rush Limbaugh to Erick Erickson, accosting Obama for claiming, in a moment of stupor, that ATMs were responsible for the nation’s high unemployment (a quote Limbaugh claimed exemplified Obama’s “utter ignorance” and “insulting incompetence”; Phillip Klein of the Washington Examiner even suggested that “Obama doesn’t get ATMs or job creation”).

Indeed, Obama’s “ATM” remark, in which he suggested that structural issues with respect to the United States economy were responsible for slower-than-normal job growth, made for a good sound bite. And, properly spun, fit into the Right-Wing meme that the President lacks the business savvy to get the economy going again. Unfortunately for the Right, however, Obama’s remarks, to most economists, made perfect sense. Businesses are becoming much more efficient (and much more profitable) with fewer workers. And the advent of more sophisticated technology inadvertently results in greater efficiency for companies, which often results in fewer jobs for unskilled laborers. This effect is referred to as “creative destruction,” and for decades has been a rallying cry for conservatives.

Creative destruction, essentially, is what occurs when something new renders something old inefficient or ineffective. For example, the “assembly line” made famous in the manufacturing sector by Henry Ford, employed as many as 50 or 60 workers who each performed a specific task following its creation in 1913. Prior to the assembly line’s implementation, one worker took 20 minutes to assemble a single flywheel. Once Ford implemented the assembly line method, a Ford plant could assemble a flywheel in 5 minutes by breaking its creation down into 29 separate operations, thus employing 29 separate individuals for each task. By 1949, Ford had introduced the electric conveyer, which enabled production to increase its productivity from 429 cars in a nine-hour workday to more than 1,200 in a single day. Today, however, robots are largely used for welding and materials handling and assembly line workers, instead of focusing on a single function, are now responsible for multiple functions. Of course, these technological advances and increased manufacturing efficiency have resulted in fewer
manufacturing jobs for American workers. Today, manufacturing accounts for roughly 5% of American employment; a mere decade ago, it accounted for 10% of overall employment. For decades, American manufacturing provided a path to the middle class; today, it stands as a shell of its former self, an industry that while not dead is definitely on life support.
There are those who disagree with the President and correctly argue that new technologies naturally create employment opportunities for highly skilled workers. Indeed, in the manufacturing sector, there is a growing need for engineers and other individuals with advanced skills (such opportunities exist in sectors such as utilities, transportation, mining and agriculture, as well). As creative destruction has reduced the need for American workers in “blue collar” sectors, the new jobs borne of that process have required skills beyond those possessed by the workforce. When the automobile industry laid off thousands of factory workers at the height of the 2009 financial crisis, many of those workers lacked job skills which could transfer to other industries. Often, this is the quandary blue collar worker (workers who typically perform manual labor and earn an hourly wage) in an economic downturn. So while ATMs are not taking American jobs in a literal sense, the technological advances that often improve productivity and make labor conditions better for American workers often simultaneously result in less need for workers.

In an op-ed in the Wall Street Journal, General Electric CEO Jeff Immelt and American Express CEO Ken Chenault estimated there are some 2 million jobs available in the United States manufacturing sector that are unfilled today because many American workers lack the advanced skills to fill them. A projected 3 million more such jobs are expected to become available as growing numbers of baby boomers retire in the next decade. This creates a significant void in the job market, and while younger workers (recent high school and college graduates) may be able to transition into the industry, baby boomers who find themselves out of work are faced with a difficult decision: acquire the skills necessary to return to the workforce or retire.

Politics is a contact sport, a rough-and-tumble scuffle whose participants expect to absorb their fair share of jabs. President Obama is no exception. But the structural issues of the American economy are so severe, so complex, they require putting aside the scorched earth politics that have come to define our political system and a level of intellectual honesty and serious unprecedented since the days of the Great Depression. If we’re going to win the future, it’s going to take a common sense of purpose and belief in American exceptionalism to put Americans back to work and get our economy moving again. Let’s hope Rush Limbaugh and Eric Erickson got the memo.

J. Samuel Cook is director of the 7th Ward Neighborhood Center. He is pursuing a Ph.D.
in public policy at the Nelson Mandela School of Public Policy and Urban Affairs at Southern University.

1 comment:

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