US businesses battling low-cost foreign competition have a seemingly difficult choice to make: either send production offshore to save labor costs, or increase domestic efficiency through implementation of automation and robotics. Opponents of automation argue that this amounts to a “lose-lose situation” for workers – they get replaced by a person making a fraction of their wage or they get replaced by a hyper-productive robot.
However, these worries are mistaken. Productivity growth through automation is actually the best way to grow our economy, and a competitive, growing economy is our best hope to provide new jobs and opportunity to more people.
Robots get a bad name because it is assumed they replace human labor, but the claim that “robots steal jobs” is both simplistic and inaccurate.
First, robots and other technologies often complement workers instead of simply replacing them. For example, new robots added to an assembly line may replace only a small part of a human worker’s responsibilities, leaving them free to do other work more efficiently. In addition, the lower costs and prices that can be gained from increased productivity lead to increased sales growth, thereby increasing employment. A recent World Bank study of 26,000 firms showed that the majority of firms that increased productivity also created jobs, while firms that decreased productivity shrank their workforce. In fact, nations with a higher share of robots in manufacturing actually see better manufacturing job performance, for precisely this reason.
The “robots steal jobs” myth also focuses too closely on the micro level while ignoring the broader picture. Studies have shown conclusively that neither automation nor productivity gains more broadly defined lead to decreases in overall employment. In fact, in the three postwar decades with above-average productivity growth, unemployment was a full 1.5 percentage points lower than in the three decades with low productivity growth. International comparisons show similar employment benefits from robots. This is why across 15 major industrial countries, the nations with more robot adoption had lower unemployment rates and better international trade balances.
What makes contemporary worries about automation particularly odd is that productivity has increased slowly in the past 10 years. If automation was making large changes to the economy and actually replacing large amounts of workers, we would expect productivity to be increasing more quickly. However, productivity in the last decade has grown at half the rate it did between 1994 and 2003. At least since the Great Recession, record sales of industrial robots have helped manufacturing-sector productivity exceed growth in the broader economy while manufacturing employment has also increased. Still, these gains may not be enough to keep the United States competitive on the world stage: China surpassed the United States as a the leading buyer of robots in 2012 and the United States ranks just 6th in the world in terms of robot density (the number of employees per robot).
The overall low productivity growth in the economy is a continuing concern and is a key reason why wages have not grown faster. US manufacturing is also far from out of the woods. But automation and robotics are a key way forward, not the boogie man so often presented. To grow our economy, enhance overall employment and keep pace with international competitors, the US needs all business sectors to follow manufacturing’s lead and embrace new technologies, increased automation, and, yes, robots.
Robert Atkinson is president of the Information Technology and Innovation Foundation. Jeff Burnstein is president of the Association for Advancing Automation.