WSJ Columnist: Robots Aren't Destroying Enough Jobs (foxbusiness.com)

An anonymous reader writes: Will millions be unemployed after a job-destroying robot apocalypse? That's "starkly at odds with the evidence," argues a Wall Street Journal columnist, who says the real problem is robots aren't destroying enough jobs. "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." Noting that "churn relative to total employment" is the lowest it's ever been, he writes that "The pessimism would be more plausible if the evidence weren't moving in exactly the opposite direction...

"In April, nonfarm private employment rose for the 86th straight month, the longest such streak on record. Monthly job creation has averaged 185,000 this year, more than double what the U.S. can sustain given its demographics. This has driven unemployment down to 4.4%, a 10-year low and below most estimates of 'full employment.' Growing labor shortages have boosted the typical worker's annual wage gain to more than 3% now from 2% in 2012, according to the Federal Reserve Bank of Atlanta. Instead of worrying about robots destroying jobs, business leaders need to figure out how to use them more, especially in low-productivity sectors... The alternative is a tightening labor market that forces companies to pay ever higher wages that must be passed on as inflation, which usually ends with recession.

"That is a more imminent threat than an army of androids."

Comments

Ha

[Zxern]

Ahh yes must keep those wages low so we can pass on the cost savings to you, the shareholder.

Re:Ha

[king neckbeard]

No, the economy not being a zero sum game is a key component to functioning markets. We trade and specialize because utilizing comparative advantages results in a higher yield.

Zero-sum doesn't mean that everybody benefits. It just means that gains for one party don't perfectly correspond with losses for other parties.

Land ownership is practically a zero sum game, at least in terms of area. We can't create new land (with a few specific exceptions), so in order for you to have more land, someone else has to have less. But if I build my cars on a moving assembly line, then the efficiency gains can mean that I can sell the car for less, make more profit, and pay my workers more.

Re:Ha

[modmans2ndcoming]

No, Righties are the idiots who think the solution to poverty is lower taxes and more opportunity..."if poor people would just work harder no one would be poor!!"

Re:Because unemployment is the road to riches

[ooloorie]

One car plant employs a lot fewer workers than it used to 30 years ago. Why? Automation. Where did the people go?

Yet, our U3 unemployment rate is actually lower than it was at the beginning of the 1980's: http://tinyurl.com/lz9qfas

Our labor force participation rate is comparable to 1980: http://tinyurl.com/n4txkor

In fact, the biggest population dropping out of the labor force is (1) retiring baby boomers, and (2) young workers aged 16-25: http://tinyurl.com/jhrrhoz That's mainly the result of misguided economic policies keeping kids in school/college longer than it makes sense.

So, your analysis is strongly contradicted by facts. Automation clearly causes some jobs to go away, but they are obviously replaced by new jobs.

Re:There's a surprise...

[Ungrounded Lightning]

I'm totally shocked that the Wall Street Journal might hold this opinion.

They used to be useful. They tended to have real news, and lots of it because their subscriber base used it to make multi-million dollar business decisions.

Then in 2007 Rupert Murdoch bought it from the Bancroft family. And in 2008 he replaced the editor. (Newscorp has a history of letting acquisitions run for a year or so before starting to meddle.)

Actual wage levels are irrelevant

[Solandri]

For there to be a sale, there has to be a buyer. As Henry Ford inadvertently found when he paid his workers what was then considered an outlandishly high wage, if workers are being underpaid, then increasing their wages actually increases economic activity. His workers were paid enough to afford to buy the cars they were building. And the increased sales of his cars helped catapult Ford into one of the wealthiest men in the world.

Countries where the rich keep the masses in check (South/Central America, Middle East) have stagnated at a productivity level of around $10k-$20k per capita per year. To reach Western levels of productivity ($30k-$60k per capita per year), you have to pay workers much closer to the actual value of their productivity. If you don't pay the masses enough, they can't afford to buy stuff, economic activity suffers, and your per capita productivity drops.

So the doomsday scenario of automation taking away everyone's jobs is highly unlikely to happen in developed nations. If it did, the wealthy would actually start to lose wealth because the masses would be underemployed and no longer able to buy the products being produced in automated factories. Every sale needs a buyer. It would then become in the wealthy class' best interest to find ways to put the unemployed back to work - so they can earn money and once again start buying stuff the wealthy are producing in their automated factories. Everyone (wealthy, middle class, poor) will be on the same page, and government action to rectify the situation will pass effortlessly.