Automation is the biggest threat to job creation efforts. Technology can displace humanity.
Employers must consider the most economical method of providing the goods and services they exist to supply. Yes, human talent remains more versatile than any machine, but people can be the most expensive resource, even when you can find ones whose abilities match your work needs. At present, America has an excess supply of unskilled labor but suffers a shortage of skilled workers.
In our current service economy environment, unskilled laborers will not find many jobs that pay well, especially when simple repetitive tasks can be handled better and more cheaply by machines. Think about it. To be hired, the new workers’ productivity must immediately cover their wage cost, the value of their benefits, the burden rate (including costs for infrastructure, supervisors, the administrative costs of processing payroll, customizing deductions, filing government reports and such), plus a profit margin. As minimum wage levels increase, employers find more economic incentives to automate or transfer work out of the country.
Shortages of skilled workers in America can drive labor prices sky-high, particularly if the right talent is not available locally. Rather than consciously lose global competitive advantage by making “uneconomic decisions,” organizations may instead decide to offshore or apply technology to automate.
You can’t blame employers for turning to metallic minions. Consider a few more advantages of Robby over Ronnie besides immediate availability: robots don’t take time off, get sick, talk back, require constant attention or file lawsuits. Error-prone humans can be replaced by automated technical equipment that works around the clock and earns more favorable tax treatments, too.
Massive capitalistic corporations are not the only ones benefiting from automation. Rather than automatically demonizing big companies for mechanization of the workplace, think of a small mom and pop homegrown operation run by a single family … should they refuse to operate in the 21st Century? Should a family farm be operated by manual laborers, without tractors, pickup trucks or milking machines? Should all planting and harvesting be done by hand, employing scores of laborers to do piece-work stoop labor? How many farms like that still exist today?
Automation is the salvation of the typical small business. Tiny shops sanctified in Hollywood hype (big corporations are always villains) simply don’t make economic sense in modern society. The corner bakery can only survive if its higher-priced home-made hand-crafted goods produced in necessarily limited quantities at higher unit costs are purchased as luxury goods by buyers totally insensitive to price considerations. Every other kind of enterprise struggles to stay in business by relying on the most cost-efficient production resource … and that is not always a person who receives a payroll check. Only rich people can afford handmade products today, unless the crafted materials were created as a hobby without any intention of economic justification.
Even the politically correct CEOs bragging of their intention to “create new jobs” clarify that they expect automation and electronic technology to provide most of the innovation. Inhuman resources give a better return on investment than the more troublesome human resources. Instead of more people earning money, the future may involve fewer workers but more technical equipment earning tax credits. THAT is scary.
E. James (Jim) Brennan is an independent total rewards advisor with extensive multi-industry corporate HR and consulting experience. Past Compensation Editor of the Personnel Journal and Senior Associate of pay surveyor ERI, he returned to consulting in 2015. Author of the Performance Management Workbook, popular speaker and frequent expert witness in reasonable executive compensation court cases, Jim also serves on the Advisory Board of the Compensation and Benefits Review..
Image: “Twilight Zone – Robby the Robot by Hytam2” courtesy of Creative Commons
This post originally appeared on Compensation Cafe
Author: E. James (Jim) Brennan