Automation: the Joker in the Deck
Because of the hostility toward (and ignorance about) business that permeates the Obama administration and the Far Left, they are overlooking an element that could have the effect of accelerating unemployment among low-skilled workers to exponential levels. That “joker in the deck” is automation.
In their rush to increase the minimum wage and offer amnesty (or something like it) to an ever-increasing number of illegal immigrants, the administration and the Left are ignoring a reality that will compound the problems inherent in both goals.
The recent increase in the federal minimum wage (and presumably the wage that federal contractors will be required to pay) to $10.10 per hour will, if adopted nationally, immediately result in the loss of some 500,000 jobs and possibly affect employment of up to a million workers, according to the report from the Congressional Budget Office (CBO). In reality, the long-term effect will be much more significant.
Because the minimum wage affects the lowest end of the employment spectrum, its impact will be felt largely on low-skilled, transient, and part-time workers, including young people, students, and others. The effect would be especially distressing among those who find themselves underemployed as a result of the ObamaCare mandate and forced to seek second jobs. It would also contribute to inflation in those retail businesses and industries, such as fast-food restaurants, that employ part-time or minimally skilled workers. The resultant price increases would, of course, be felt most keenly by those in the lower income groups.
At the same time that the political Left is agitating for the minimum wage increase, it is seeking legalization, or normalization, of millions of illegal aliens, most of whom fall into the low-skilled category. In effect, they are promoting one measure that would reduce low-skilled employment while at the same time increasing the number of people seeking those jobs.
Few outside the manufacturing community can appreciate the advances that have been made in automated systems in the last two decades. Mention the assembly line to the public, and they are likely to visualize mental images of the original Ford assembly line circa 1914. Mention automation, and the mental newsreel plays images of industrial robots performing welding operations on a later automotive line. The robots are still there, but they have been succeeded by a later generation that is more agile, easier to program, and much less expensive.
Further, automation doesn’t have to involve “robots,” nor does it have to be total. The technology that brought about the original “pick and place” (Selective Compliance Assembly Robot Arm or SCARA) systems that assemble printed circuit boards has grown to include multiple forms of assembly, as well as material handling. The fact is that the same technology that places a diode on a circuit board or a box on a pallet could easily be made to assemble a hamburger, a sub sandwich, or a pizza in a restaurant, as is currently being done by manufacturers of prepared foods.
The stark reality is that, once labor costs reach a tipping point, automation becomes a practical, efficient, and economical alternative, especially for low-skilled jobs. Once implemented, there is no going back, and today automation is more accessible than ever.
The public, and the government, may not realize it, but we are surrounded by multiple aspects of automation. Ordering a meal, specifying parts, or selecting clothing via the Internet is, in reality, a form of programming, and the user doesn’t care whether an order is packaged and filled by a human or by an automated system.
“Smart” vending machines, personal checkout stations actuated by cards or mobile devices, and ATMs are already revolutionizing shopping (and reducing human involvement) in numerous areas.
Further, automation does not have to be total in order to exert a catastrophic impact on the lower end of the labor pool. Although the technology exists to create factories that operate in total darkness and without human intervention, even those operations employ a supervisory and maintenance staff. These individuals, however, are extremely well educated and are at far above the minimum-wage scale.
Previous administrations, including Democratic ones, have recruited between 40% to 50% of their people from the private sector. In Obama’s case, that figure has hovered below 10%. This lack of individuals with current experience in business disciplines, including and especially manufacturing, has resulted in a fatal blind spot in such matters as energy policy, labor relations, transportation, and the environment. It has also affected foreign policy with regards to the creation and perpetuation of advantageous trading relationships with our international business partners and, in any number of cases, the extension of aid to our competitors. The two-billion-dollar commitment to Petrobras, Latin America’s largest energy company, to finance offshore oil drilling in Brazil (while closing off multiple offshore and inland sites in the United States and repeatedly delaying the Keystone Pipeline) is a particularly salient example. Obama’s comment to Petrobras, “We want to be one of your best customers,” underscores his ignorance of or disdain for the particularly critical energy sector of American business. It likewise impacts international policy, as it hampers our ability to wean European and other allies from their dependency on oil and gas fuels from the Soviet Union -- a circumstance that has lately achieved critical prominence.
At the time of the first economic stimulus, Barack Obama referenced “shovel-ready jobs.” He has since made repeated comments about stimulating the economy through infrastructure projects. What he, and those around him, do not realize is that technology has completely changed the picture. The Depression-era images that his phrase calls to mind no longer exist. Shovels have been supplanted by multi-million-dollar machines that are run by operating engineers who are required to have years of training and experience before obtaining their licenses. New methods and materials are available to supplant the obsolete infrastructure, but they do not involve unskilled labor.
Until and unless the administration realizes the interlocking impact of its actions in light of modern technology, economic impact, and international relations, it is doomed to create poorly conceived policies capable of devouring each other and, in the end, the American economy.