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June 2014

Article Series: Addressing the Concerns of the Displaced (Part Five)

This is the fifth article in our series on the positives and negatives of automation. As a manufacturer of automation machinery, we feel that it is our responsibility to be forthright about the controversies and questions that are a part of the industry. We provide these articles in an attempt to have a more informed customer and partner base, and in so doing, we hope to encourage a healthy dialogue on many of these topics. Rachel Greenberg writes marketing and technical content for Automation GT.

The Problems with Relying on the Compensation Theory

Traditionally, when technology grows in such a way that it starts to change the job market, people train in order to become competitive in new ways so that their skill sets will not become irrelevant as technology develops. But today, many people wonder if technology is evolving so quickly that it isn’t realistic to expect people to be able to grow, train, and adapt to keep up effectively.

This is true even for people with higher levels of training in “knowledge careers.” For example, according to some, the half-life of an engineering degree decreased from 35 years in 1920 to ten years in 1960, and by 2008, Philippe Kurchten estimated that a software engineer’s degree half-life was just five years. That is, only five years will pass from the date of graduation before a graduate’s knowledge base will be markedly outdated.

If even those degree-holding engineers who work in automation need to put in hours of studying and adapting each year to stay relevant, one can imagine how difficult it would be for someone without a technology degree to do as those proponents of the compensation theory suggest and move into higher-tech jobs as they are replaced in their lower-skill jobs by machines.

Further, it is not necessarily fair to ask of people that they move into careers that they did not choose and are not interested in. Not everyone is suited for jobs that require higher levels of training and technical ability, and as much as we encourage people to seek out higher levels of education and training, some people are really best suited to these jobs that are most vulnerable to automation.

Supplying a Living Wage

Intuitively, it seems that we would always want to provide people with wages that are better suited to their actual cost of living. But in practice, it can be very tricky to be sure that we are raising wages in a way that does not threaten their jobs in the first place.

Recently, Steve Jobs cautioned that a raised federal minimum wage would encourage manufacturers to choose automation over people. Accordingly, 81% of polled industrial manufacturers said that a minimum wage raised to $10 would cause them to slow hiring.

In the past, this raise in minimum wage might have caused manufacturers to take their factories overseas, but in fact in recent years, manufacturers have begun to move operations back to America from Chinese locations largely because of the steady wage increases in recent years in China. In this case, then, at least we can happily say that manufacturers are choosing automation over the alternative of sending labor to countries with lax or nonexistent labor laws and employees working in dangerous or even deadly situations.

What happens to people who are displaced?

When people lose their jobs, they have a few options open to them based on their circumstances:

  1. Sometimes factories will offer training to their employees so that they have the option to move into other jobs within the company. Some cities even offer incentives to local businesses to encourage them to offer training as an alternative to unemployment. However, employees should not rely on this being an option as many companies are more likely to simply cut employees without offering an alternative.
  2. If displaced people live in urban areas or areas with lots of manufacturing, they may be able to quickly find new employment. However, because much of American manufacturing occurs in suburbs and rural areas, any loss of large numbers of jobs in one company is likely to have a ripple effect in the community and may present serious fiscal challenges for the area that is unable to supply replacement jobs and unable to sustain the companies that depend on those factories like nearby gas stations, restaurants, and hotels that are dependent on the business of those factory employees.
  3. Displaced people can collect unemployment. In most states, the maximum time that a person can collect unemployment is 26 weeks (though this may be extended to as many as 99 weeks). Unemployment benefits only cover a percentage of what a person may have been earning, and can be as low as $150 per week. Unemployed people can find some assistance from COBRA in sustaining their benefits for a limited period of time. If they are unfit for other types of work due to health problems or disabilities, they may qualify for social security.
  4. People can pursue their own training through community colleges, universities, certification programs, night schools, etc. However, this may require taking out a loan for some people and may not be feasible for those supporting family.
  5. People can move to a new area to search for work. This can involve some difficult steps and for some, the associated costs, both professional and personal, will be prohibitive. Some companies will help their employees relocate if they company has changed their location, but this is usually only an option for higher-level employees.
  6. If people are unable to meet their basic living needs and find they are exhausting their financial supports and benefits, they can get support from social workers who may be able to help them secure temporary housing or monetary support through grants and donations until they can find other work or to help them pursue schooling and training or start-up costs for a new career. However, temporary housing is a last resort for most people as most programs are very restrictive and have intense requirements for those living in the program that may or may not be appropriate for a displaced person. Many programs focus on other problems including drug and alcohol abuse, mental illness, domestic violence, and veterans’ needs, or may be limited to people with families (usually meaning dependent children). Historically, homeless non-veteran single adult men have the fewest resources available to them in shelter and support services, regardless of their abilities and readiness for work. In fact, in the San Diego area, as many as 25% of the area homeless have completed some trade school or college, and as many as 7.7% have completed college or some post graduate work.

In Part Six:

It’s evident that, though automation has the potential to provide us with ways to restructure our economy, we as a society are not yet at a point where our culture matches the reality of our changing job market. In Part Six, we take a look at how manufacturers can automate responsibly to decrease the amount of displacement in their factories.

Part 1: Why automate in the first place?

Part 2: Who’s afraid of a little automation?

Part 3: How far up the ladder can automation go?

Part 4: How do we keep people employed? Or shouldn’t we?

Part 5: Addressing the concerns of the displaced

Part 6: How can we automate responsibly?