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OM in the News: Robots Aren’t Destroying Enough Jobs

May 15, 2017

Robots, like the welders at a Nissan plant in Mississippi, are growing increasingly sophisticated

Will millions of individuals be thrown out of work by the rapid advance of automation and artificial intelligence? This idea is certainly chilling, but is also misguided. “Robots aren’t destroying enough jobs,” writes The Wall Street Journal (May 11, 2017). “Too many sectors, such as health care or personal services, are so resistant to automation that they are holding back the entire country’s standard of living.”

By enabling society to produce more with the same workers, automation is a major driver of rising standards of living. Is it different now that technological change is so fast? Will millions of workers will end up consigned to menial, minimum-wage jobs? Monthly job creation averaged 185,000 this year. This has driven unemployment down to 4.4%, a 10-year low and below most estimates of “full employment.” If automation were rapidly displacing workers, the productivity of the remaining workers ought to be growing rapidly. Instead, growth in productivity—worker output per hour—has been dismal in almost every sector, including manufacturing.

Technology is still destroying jobs—just more slowly. In part, that’s because American consumption is gravitating toward goods and services whose production isn’t easily automated. Medical breakthroughs have mostly gone toward new and more expensive treatments, not to making existing treatments less expensive. Children may sit in front of better screens than they did in the 1950s, but they are watched by child-care workers, who doubled to almost 2 million between 1990 and 2010.

Since 2007, low productivity sectors such as education, health care, social assistance, leisure and hospitality have added nearly 7 million jobs. Meantime, information and finance, where value added per worker is 5 to 10 times higher, have cut or barely added jobs. So instead of worrying about robots destroying jobs, says The Journal, we need to figure out how to use them more, especially in low-productivity sectors.

Classroom discussion questions:

  1. Are robots replacing truck drivers in 10 years an issue for OM managers?
  2. Why don’t robots replace a lot more things that go into the GDP?
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