This Is the End


Markets, Risk and Human Interaction

August 23, 2012

Will the Unemployed Really Find Jobs Making Robots?

There is a recent story in the New York Times on the growing use of labor-saving robots to increase production efficiency and, by replacing low-cost overseas labor, to return production to our shores. But the operative term here is “labor saving.” They return production to our shores, but given that they do so by replacing the low-cost foreign labor with machines, it opens up the question of the implications for employment once the production returns. If the robotic revolution is successful, will all the unskilled laborers that are being replaced move up the chain into more skilled and higher paying jobs? Or will they simply be replaced?

This is a critical question right now, because it is at the center of whether the high level of unemployment is structural rather than cyclical. By the time the dust settles on the cyclical component, we may discover we are looking into a growing chasm of labor-lite production.

In some cases, replacing human labor with robots may be a good thing all around. Take the development of robotic warehouses. Warehouse packing is the sweatshop job of our time. The article “I Was a Warehouse Slave” gives a day-in-the-life view of these workers, effectively paid for piece-work, without benefits, with one-day notice job security, in physically grueling conditions. (The warehouse workers are usually employed by temp agencies that act as what I would call “labor launderers”, a buffer between the sub-par conditions of the workers and the image of the company that uses them).

There are a number of companies now that provide robotic solutions for many of these jobs. One of them, recently acquired by Amazon, is Kiva Systems. I first saw what their robots can do at a Wired Conference a few years ago. Check out this video from that conference, or any number of other ones on their robots. It is amazing and entertaining. Another company in the same space is the start-up Symbotic, but they don't seem to have any cool videos out yet.

The problem, of course, is that a sweatshop job might be better than no job at all. So what do these workers do next. This is where the “Well, someone will have to make all those robots” sort of refrains begin. From the New York Times article: “Robotics executives argue that even though blue-collar jobs will be lost, more efficient manufacturing will create skilled jobs in designing, operating and servicing the assembly lines, as well as significant numbers of other kinds of jobs in the communities where factories are. And robot makers point out that their industry itself creates jobs. A report commissioned by the International Federation of Robotics last year found that 150,000 people are already employed by robotics manufacturers worldwide in engineering and assembly jobs.”

Well, common sense tells you that you don't replace five $30K-a-year workers with a $250K robot only to reemploy those five workers in other, higher-paying jobs to build and maintain the robots that just replaced them. There will be skilled jobs in designing, operating and servicing the assembly lines. But obviously not as many jobs as the robots replace, and, taking nothing away from the potential for retraining, most likely not to be filled by the unskilled workers who just lost their jobs.

We have a ingrained view that when one door for labor demand closes, another one opens, that the march of economic progress pushes the workers along with it. It has happened in the past, and in a spectacular way. For example, the industrial revolution came about by the efficiencies that reduced the need for labor in agriculture, freeing up labor for industry. The push of the unemployed and disenfranchised from the farms into the factories was critical for the industrial revolution because at the outset the industrial jobs were not attractive enough for those in agriculture to leave their land and move into the factory system voluntarily. The same has continued over the course of the industrial age. As industry after industry developed efficiencies of production that reduced the need for unskilled labor, new jobs opened up either because of new skills being required to deal with new manufacturing methods, because the raw demand for consumption expanded the labor demand, or because new products, even new industries arose.

But it doesn't always have to happen that way. Where do the displaced workers go this time around? To say that they will move up the chain and go into more skilled jobs building the robots is glib. The entire point is that the robots are labor saving. It certainly is not a good business proposition if they save on the cheap labor but pay out more for more skilled labor.

Whatever analogue there is to the Industrial Revolution, workers do not play much of a role in it. It is interesting that u to this point much of the displacement from computers has been in the mid-level jobs, like bookkeepers. These medium skill jobs that focus on rote but quantitive tasks are the easiest for a computer to do. Replacing workers doing relatively unskilled, manual tasks is actually more difficult. But the rubicon is being crossed. For example, Meyakawa Manufacturing is shipping robots that can debone chickens at the rate of 1,500 per hour, replacing ten human workers. As one commentator put it, “if you can do that, you can do most anything.”


  1. I do believe that we are entering into a post-labor world -- a la Jeremy Rifkin in "The End of Work."

    I supposed it is an inconvenient truth -- if there's little need for labor and work, how do we organize our lives? Does money have a place in a post-labor world? Is it a smooth transition or a horrific one?

    Big questions converging quickly.

  2. Put the same per hour taxes on the robots that were collected from the workers (adjusted upward for any increased productivity) and let the robots finance the government.

  3. Indeed we might face the dilemma of either keeping full employment by making up jobs that are uneconomical like MInsky proposed, or let the devil take the hindmost. If I had to guess I would think Europe in the vain of Bismarck will keep supplying a form a social security through "qualitative" jobs while the U.S. will not. The difference between the late 1800s and today is that large parts of the labor pool may no longer retain any value in the market, and so we're left with ugly politics.

    A flat world is ironicly a world ruled by power laws. Ownership becomes far more valuable and our political systems can neither articulate these power law issues nor how to separate the interest of owners from the body public.

    I hate to sound melodramatic but the times we live in are interesting, even if that is the wisdom of a fortune cookie company.

  4. The idea that workers will be hired by robot-building plants is somewhat ridiculous--why not have other robots build them!

  5. What happens when the robots are the only ones building other robots? I agree with Mark Smith, we are getting a disconnect between production and the need for human labor. We then need a guaranteed annual income paid for by those who control the means of production.

  6. "Where do the displaced workers go this time around?" Well, nowhere. The remaining designers, engineers, managers, idle rentier rich etc. can take up the slack in consumption. As for the unskilled jobless there will other kinds of robots to take care of them (eg: Predator, reaper, Skynet etc.)

  7. Double everyone's pay and cut hours in half? Time for the 20 hour week? Enforced inefficiency? Maybe that "tax the robots" idea and create a pool of non-productive "art and hobby" jobs. People could be paid for fishing or making whats-it's at home. Future shocks are really starting to pile up and in some cases, multiply their effects outwards in unanticipated ways.

  8. Exactly! I can never understand why everyone is so glib about this, saying "oh we'll just carry on the same way as always, I'm sure the same societal model that worked in the 1800s will continue working just fine in the 21st century! If someone looses their job as a chicken deboner they'll just get a new job as a robot designer!" Yeah, right. There are solutions- I favor the citizens' income, where all citizen's receive an automatic stipend that's enough to live on- but they won't be easy to implement. I think the shoe is really going to drop when the Google car becomes approved for mass use, and millions of truck, bus, and taxi drivers lose their jobs overnight.

  9. The idea is not that robotics will create more jobs than are supplanted; the idea is progress lowers prices, raising the standard of living for all, while freeing up labor to be deployed for something that will actually help society elsewhere. Naturally, there is a period of retraining for those supplanted. If these people do not choose to boost their skill level to help society in other ways, then they choose a lower standard of living, which entirely one's right.

    1. As a robot builder/operator I have witnessed exactly what you said. I travel around the world implementing a labor saving, cost effective solution which is also "green" to the environment. People cannot just go on doing the same old thing or expect the gubment to supplant their lost income.

  10. Labor saving technology and increased efficiency is nothing new, it's been happening a long time. In fact, all of human history consists of almost nothing but the gradual improvement of the human condition as the results of improvements of technology.

    What's new (or actually repeating after an absence) is the concentration of the BENEFITS of increased efficiency into the hands of very few people. CEO and C office income have risen explosively in the last decade despite the clear evidence that these same people had little to nothing to do with creating or implementing this very same technology i.e. the pay of those people actually creating increased efficiency has been frozen since the late seventies. Indeed, it's quite common now that CEOs and C office income increases while the company is going bust.

    This complete argument about "robots" displacing workers is a SHAM meant to distract from the real problems of de-regulation, lax or no enforcement of existing regulations, the complete failure of corporate "governance" and the greed of a few which has resulted in the destruction of the American and the world economy. Workers are, and have always been very good about learning the skill sets required to get the work done. History has shown us that for every worker displaced by technology other opportunities quickly take the place of the older job. This is not about robots any more than ancient workers were displaced by the invention of the wheel, it's about greed, fraud, corruption used to increased the concentration of wealth into the hands of very few ultra rich crooks.

  11. With the increased focus on robotics and the rise of companies like Kiva, it does seem that there are a lot of jobs that will be displaced over time by them. The rise of technology is seemingly an unstoppable wave so it does make sense to focus on what jobs will be left. The idea is that standards of living will increase overall with the rise of such innovation but it is possible that there is a higher level of long-term unemployment as referenced in this article. I think one other question to address is beyond the question of jobs is also the question of what will technology/robots change that may increase our standard of living on an individual basis. Fingers crossed. Hope everyone has a great weekend!

  12. It seems like a self-limiting process: Insofar as robots take away jobs for good, you are also removing demand from the market. An unemployed person with no source of income can't buy as many widgets.

    Okay, for a while they burn through their savings, and then they take out loans, and then eventually, default, and adjust to a lower standard of living. Whatever their field of expertise was before, labor prices fall, as well as in related fields and in unskilled labor. This is the story of the US in the last few decades, as jobs moved overseas or were automated, and it's particularly the story of the last 5 years.

    The process goes in stages:
    1) With mild outsourcing or automation, people may find gainful employment elsewhere, and we go through a time of booming productivity without much pain (late '90s).
    2) If the job loss continues or accelerates, people tap into savings or take out loans to maintain their lifestyle. Profit margins increase more, as the loss of jobs hasn't yet caught up to consumer demand: the factory owners are paying less to produce each widget, but are still able to charge the same amount. Notably, wealth inequality is also increasing, as a result of the loss of jobs on the low end, and higher profits accruing to the high end.
    3) Eventually, the consumer is tapped out.

    What happens next?
    On the one hand, if the profits from outsourcing or automation are still high enough, the trend will continue, and #2 and #3 will keep repeating in a deflationary cycle. For instance, say the cost to build and use a robot continues to drop quite rapidly, or even speeds up. In this case, new people are being put out of jobs (or newly created jobs are being destroyed again), and the "average" consumer is driven lower and lower. Profit margins and wealth inequality keep climbing.

    On the other hand, eventually the profit gains will slow. Maybe the consumer is too tapped out, and can no longer afford the products, and the factory owners are forced to lower prices in order to maintain sales. Or maybe the rate of technological progress slows, and it becomes cheaper to use local labor than to use robots. Most likely, some combination of the two.
    The important thing is that the benefits of the increased productivity are now starting to accrue to the average worker. Congratulations, you're pulling out of the latest Industrial Revolution, and life will be better from here on out.

  13. What if we just turn the unemployed into robots? Think of the health care savings.

    Problem, opportunity.

  14. I think there is a mix of problems. In general yes, people should go into different areas, like robots building, servicing, green or even dirty energy (remember, robots will consume much more power now). Nobody complains now when machines works underground to get the ore or build a tunnel. But they actually replaced thousands of workers around the world! Still other thousands were employed to create these machines and maintain them now.

    The reason, why CEO and other top managers income skyrocketed is a little bit different. Normal capital cycle goes like: pay salary (invest) -> produce -> sell back to people -> get income. But in last several decades, when production moved to the outsourcing, corporations literally "pumped" money out of developed countries, and paid a very tiny part of it in developing countries. Most cash flow is accumulated on companies bank accounts. It actually gave us all this economic crap today. People can't buy anymore, as they got no salary, or very low salary (in developing countries especially). US government started a program about 20 years ago to credit people, so they can buy more goods and support industries. It helped for a while. But now even government has no money for more credits, and people have no money to buy as well, plus tons of unpaid loans.

    The long story short. Labor saving technologies are good. They define progress. Current economic dis-balance is a different story and will be fixed. Either by significant price dropping (less profits for corporations), or by some other means. Robots may play important role in this process for sure.

  15. People want their robot cake and eat it too. Everyone wants cheap products in the market made by robots but--- do not want people to lose their jobs. I do believe that some people will make and fix the robots for a while at least but --- we assume that --- that labor market will grow in the US only. High Skilled labor is cheaper in China and India and with global supply chain as good as it is today --- robots can be made outside the US.

    The point that needs to made it that Henry Ford paid his workers $5 dollars a day so they could buy his cars. If robots are making products who will be able to buy all the things robots make if people have no income to buy anything in the store

  16. maybe the world will divide itself the robot high tech side run by a few and where only a few can live and the traditional human manufactured products side run by humans and where the rest of the world lives...

  17. If politicians are going to spend our money, and say it's best for us, they should spend it on something we actually want. Lot's a people want to cheer every time a robot put's someone out of work. I'm for a fully automated robotics factory, with self replicating robotic arms. Highly automated renewable energy, windmills or underwater water mills. Highly automated steel production. Highly automated chip manufacturing, and Linux. I've seen some automated building manufacturing companies starting up as well. Other prerequisite products can eventually be manufactured as well. All source code and blueprints have to be fully owned with rights to an infinite amount of use. All owned by the citizens of the country concerned. Small factories at first, with all of the bugs worked out, so that it largely builds itself in the end. It should be affordable, I'm an economic conservative. Eventually the complex can produce consumer goods besides steel, energy, chips, buildings, and robotics. Charities and the open source community can help as well. I'll license source code in myself, with a liberal model that allows infinite replication without cost and resale(one time fee model).

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