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  • About Those Job-Killing Robots

    Posted by David Foster on July 30th, 2016 (All posts by )

    Every day, there are articles and blog posts about how quickly robots are replacing jobs, particularly in manufacturing.  These often include assertions along the lines of “robots are replacing human labor so rapidly and so completely that it doesn’t really matter whether the factories are in the US or somewhere else.” There are also many assertions that robotics and artificial intelligence will triumph so completely that we must accept that we will permanently have a huge unemployed population who will need to be paid a “basic income” of some sort from the government.

    This May, there were breathless headlines about how Foxconn, which is Apple’s primary contract manufacturer, was replacing 60,000 workers with robots–indeed, in some tellings, had already replaced them.  If you google “foxconn 60000 workers”, you will get about 130,000 hits.

    But the story, however, is false; indeed, it did not even originate with Foxconn but rather with some local Chinese government officials who wanted to promote their area as “innovative.”

    There has also been a lot of coverage of robotics at Adidas, which is trying to use automation to improve the labor productivity of shoe-making to the point that it can be done economically in high-wage countries such as Germany.  This article on Adidas also cites the Foxconn “60,000 jobs” assertion.

    One key pair of numbers is missing from the stories I’ve seen on the Adidas project:  the ratio of human workers to shoes produced, with and without the addition of the robotics. You can’t really judge the labor-reducing impact of the project without these numbers.  In this Financial Times article, Adidas is quoted as saying, entirely reasonably, that they will need to get further into production with their new factory before developing meaningful productivity numbers.  The article also cites Boston Consulting Group as estimating that by “2025 advanced robots will boost productivity by as much as 30 per cent in many industries.”  Thirty percent is a very significant number, but it’s a long, long way from a productivity increase that would imply that factory jobs don’t matter, or that we’re going to inevitably have a very large permanently-unemployed population.

    There are a lot of very significant innovations taking place in robotics and AI, but the hype level is getting a little out of hand.  And it’s important to remember that automation is not a new phenomenon.  For example, a CNC (computer numerically  controlled) machine tool is a robot, albeit it might not look like the popular conception of one, and these machines, together with their predecessor NC (numerically controlled) machines, have been common in industry since the 1970s. One thing that articles and blog posts on the topic of robotics/AI/jobs could benefit from is a little historical perspective: do today’s innovations really represent a sharp break upwards in labor productivity, or are they more of a continuation of a long-term trend?  And how, if it all,  is the effect of these technologies appearing in the productivity statistics?

     

    28 Responses to “About Those Job-Killing Robots”

    1. Abelard Lindsey Says:

      There is another reason why the notion of robots making us all unemployed soon is a load of hype. There are two very predictable things that would be happening if this were true. One is that stocks in companies that make robots and other automation hardware and software would be booming. The second is that a lot more young people would be going into the hard engineering fields. Neither of these two things seem to be occurring. You get lots of hand waving from people who argue about the “robot takeover” when you point out these facts to them.

    2. David Foster Says:

      Federal Reserve productivity data certainly doesn’t appear to show any sharp upward break in manufacturing productivity in the last 5-10 years

      https://fred.stlouisfed.org/graph/?g=4zQ5&utm_source=direct&utm_medium=exported-chart&utm_campaign=myfred_referrer

    3. David Foster Says:

      More charts: BLS data here (Chart 1) indicates that the *rate* of US manufacturing productivity increase has indeed grown over the 3 time intervals between 1950 and the present.

      http://www.bls.gov/opub/mlr/2002/06/art4full.pdf

      If you’re interested in these numbers/trends, though, be sure to read Mike Mandel’s comments on the possible effect of ‘import price bias’ in screwing up the productivity figures:

      “And indeed, some recent research suggests that the size of the mismeasurement problem is huge. To cite just one example, a 2011 paper by Houseman and three coauthors from the Federal Reserve found that non-high-tech manufacturing growth from 1997 to 2007 may have been overestimated by as much as one-half because of import price bias. Similarly, ongoing research from a new policy brief from the Progressive Policy Institute shows that the official statistics have significantly overstated GDP and productivity growth since 2007—implying that the recovery has been even weaker than we thought.”

      http://washingtonmonthly.com/magazine/janfeb-2012/the-myth-of-american-productivity-2/

    4. Grurray Says:

      I saw this robot a few months ago by ABB (based out of Germany) called YuMi

      https://www.youtube.com/shared?ci=8EZ0qo5IvWM

      It’s impressive. A company in Boston called Rethink Robotics makes a similar sort of robot, but this one looks better.

      They call it a collaborative robot. It’s not precise enough to replace people. It’s designed to operate alongside workers and to be programmed on the fly by workers. In that sense it’s just another incremental step in the automation of tools.

      As the technology advances I can imagine scenarios where it might actually put more programmers out of work but cause hiring of more assemblers/laborers/line workers, which would be a real reversal of what we have now. Eventually factory workers would be designers and programmers all in one.

      Under the right favorable, decentralized free market economic conditions, of course.

      If we continue down the path of To-Big-To-Fail Socialism then we’ll continue to see manufacturing employ fewer people.

    5. Whitehall Says:

      A key factor in the replacement of human workers by robots is the cost of capital. Right now, capital is really, really, cheap (buy a robot at 0% interest!)

      Go back to the era of recovery from Carter and it could be 20%.

      And robots require setup and maintenance. The humans who do that are well-trained and well-paid. How productive they are is another factor. Could one human service 20 robots? 100?

    6. Bill Brandt Says:

      Back in the 1980s when HP had the fantastic HP3000 mini computer that relied on terminals (this was before micro processor networks) – because of automation they moved production back from overseas to Roseville, CA to make the terminals.

      I can remember from the 1960s that having an expensive car that was nearly “hand made” was a huge plus – but with robotics no human can produce the uniform precision of a robot.

      Up through the early 1990s, Daimler employed a huge percentage of its work force just to take apart and reassemble cars that a small army of inspectors deemed flawed.

      Now take a look at E Class production …

      https://www.youtube.com/watch?v=IOz2d6Bt2qI

      Given inflation an equivalent E Class is significantly less expensive today to the mid -late 1980s…

    7. David Foster Says:

      Interview with the founder of Rethink Robotics, at the GE blog:

      http://www.gereports.com/rethink-robotics-founder-rodney-brooks-explains-why-robots-arent-a-real-threat-to-jobs/

      …a couple of examples of how the robots are actually being used.

      But he pretty much skates over the fact that robots, including his nice friendly worker-programmable robot, *will* have an effect on manufacturing employment.

    8. Anonymous Says:

      An increasing rate of change of physical capital also argues that high tech employment will continue to expand with increased specialization. The market for the illiterate and indolent will decline. On balance the standard of living/productivity will increase, unless we continue to subsidize illiteracy, dead weight loss government employment, artificial barriers to entry/regulation, crime and protest/community organizing.

      Great thoughts, David et al.

      Death6

    9. TMLutas Says:

      If you want to slay the mistaken talk about the end of human employment, hold a contest. Come up with labor demand boosting ideas that we do not engage in today because we either don’t have enough people or don’t have enough money to do it. Weigh jobs that don’t require much intelligence or education as more valuable than those requiring high education/intelligence. Within a year I predict enough entries to be submitted to put the entire world to work multiple times over.

      It is a bit embarrassing to think about things we are too poor to do. This makes these jobs invisible to us today. By creating a contest and an artificial market for these ideas, they become visible and we turn from despair at the jobless future to wondering how we can become efficient enough to afford to do all these wonderful things.

    10. PenGun Says:

      It’s obvious that we already have an unemployment problem associated with automation. This will just get worse over time as it become economic to automate.

      I used to run servers, and after I had spent some time setting everything up, I pretty well eliminated all my work. This is doing it properly, writing scripts and creating UIs that do most of the actual work. This is a small example of what will happen to almost everything as we go forward.

      It’s dishonest to sit around saying it’s not happening, and we need to seriously think about the consequences, and do something about what’s going to happen.

    11. Mike K Says:

      “we either don’t have enough people or don’t have enough money to do it. Weigh jobs that don’t require much intelligence or education as more valuable than those requiring high education/intelligence.”

      We are in Oregon visiting my stepson who has a construction business and is running three crews all the time. We drove around yesterday looking at some of his projects under construction and those he has completed. Some are commercial buildings. His big problem, he says, is getting good workers. He now has two of his sons working for him. His other son is working for his brother-in-law who rebuilds antique Porsches. The brother-in-law is the only college graduate among them.

    12. Bill Brandt Says:

      The politicians are helping with this too. Not days after our governor Brown signs legislation for a $15 minimum wage are we seeing Prototypes of robotic machines in the fast food industry designed to eliminate the humans.

    13. Grurray Says:

      Automation doesn’t have to result in a decrease in employment.

      Yes, those robots will take work away from people at that particular location who were previously loading boxes. If we had an environment that fostered and encouraged entrepreneurship and new business growth those workers could find more meaningful work, either with their company or elsewhere with another one. Inventors and innovators and venture capitalists would build on that work that has been commoditized and create something different out of it that would employ even more people in new ways.

      The problem is we don’t do that. We have a system of crony capitalism and state welfare that encourages the opposite. It picks winners and favors incumbents that don’t care about creating new opportunities but only preserving their market share. It coddles displaced workers who might be good candidates for tackling the new wave of technology and puts them on welfare, convinces them their damaged victims, and supplies them with enough Northern Lights to drain any initiative left, such as Pengun up there.

    14. TMLutas Says:

      An hour and a half after I post a solution, PenGun complains that we’re ignoring the existence of the problem instead of working on solutions. I wonder if he just didn’t read my comment before he posted or he just entirely missed the point.

    15. PenGun Says:

      TM you are just biovating. Everything material, outside of art, will be made, and later on designed by machines. This is closer than anyone thinks. We just need to get that actual output to a slightly less costly place and this will take over.

      That will leave basically nothing for unskilled normal people to do. They can wait on tables for a little while, but that too will fall to the machines too, except in very expensive places. Creative work will still exist for creative people, but it’s very difficult to quantify that.

      So how do we get money into normal people’s hands if we have no work for them? There are billions out there who are, and will be affected by this, and we will have nothing for them to do.

      I like the Culture series myself:

      https://en.wikipedia.org/wiki/Culture_series

    16. Mike K Says:

      I’m still not convinced that PenGun is not a bot.

      After I posted my comment about my stepson yesterday, we spent the afternoon target shooting and then, after dinner, spent two hours with his brother-in-law who lives in the same 48 acre compound in Oregon and who has two careers. He became a certified John Deere mechanic and then became a winery equipment builder and repairer. This is the Oregon wine country and it looks like Napa Valley. Anyway, we were looking at his old car collection. He is rebuilding several Model A Fords. He has a 1931, a 1932 and a 1933 which was part of a shortened production run because of the Depression and is now very, very rare. He said only 20,000 were ever built and this is the only one he has been able to find.

      These young (50 and under) guys are thriving in occupations that require skill and training but not college degrees. If the US had rules like Germany that require mechanical engineers to do apprenticeships it would be helpful and if real craft apprenticeships were still common, much of the present middle class angst would disappear.

      This is the same family that rebuilds antique Porsches and the father-in-law and brother-in-law are finishing a rebuild of an antique Porsche that will be ready for the Pebble Beach Concours d’Elegance this month.

      The car is worth more than a million dollars.

      They have a barn that is full of thousands of Porsche parts from cars back to the first civilian models after the war. Now, they have a collection of Model A Fords and are rebuilding three that I saw. They are all mechanics and builders and the whole family is involved in projects. Rick built some of the houses and the whole area is family. The kids have cattle. There is a farm down the road that breeds Texas longhorn cattle.

      Everybody works.

    17. Stan Witherspoon Says:

      I was working at HP in Roseville (on the HP 3000:-) at the time.
      It wasn’t just “automation”.
      Due to HP politics (terminals were ‘boring’), the terminal division was on its own to sink or swim. They chose to go down fighting. They reexamined everything that HP and their competitors and related industries did to innovate and reduce costs and pushed hard to think outside the box ( sometimes literally, such as using shipping company trailers in the parking lot to store bulky shipping materials instead of costly warehouse space). Project names like Frontier, Pioneer, Renegade, and Maverick set the tone. Everyone from the director to the line workers were involved and knew their future was at stake. When they were done, they were making >10% net profit selling at their competitors cost and soon were the OEM provider for 80% of the (admittingly declining) market. The line was finally shutdown around 2005 after being moved to Malasia in the mid 90s.
      Due to HP political turf wars, the team and organization that created the Frontier terminal line were broken up in the early 90s while applying the lessons learned to the Personal Computer marketplace ….

      “Automation” doesn’t kill jobs, management/government making shortsighted decisions based on politics kills jobs.

    18. TMLutas Says:

      PenGun – Do you imagine that in a world with mass unemployment, we would not prioritize art and make art out of things that are currently cookie cutter utilitarian? One thing will remain constant is the human desire to seek status. In a world where a robotic line will cheaply ship to both rich and poor, the wealthy have the problem of differentiation. They want to rub our noses in it and art is the obvious way to do so. Handcrafts will expand because they create scarcity and scarcity itself is a good that the rich want to trade in.

      The rich will get what they want.

    19. David Foster Says:

      Stan Witherspoon….as Dr Johnson said, ‘the prospect of being hanged focuses the mind wonderfully.’ But in business, the phenomenon only works if management is clueful enough to organize in a way that clearly associates the results of the business with the fate of particular organizations and individual employees.

      “Due to HP political turf wars, the team and organization that created the Frontier terminal line were broken up in the early 90s while applying the lessons learned to the Personal Computer marketplace”…probably would have been a good idea to simply hand the PC business over to the Frontier crew, if they were that hungry and dedicated.

    20. David Foster Says:

      TML…I wonder how big the arts & crafts market it. (googles)

      http://www.chicagotribune.com/business/ct-handmade-arts-and-crafts-0501-biz-20160429-story.html

      $1.14 billon for the sale of coloring and art supplies, according to this article….but that has to be a small % of the total market, it doesn’t capture, for example, people who make things out of wood and sell them at local craft fairs.

    21. David Foster Says:

      It’s not just the rich who buy status goods, clothing & shoes with the logo du jour are much in demand among the poor.

    22. David Foster Says:

      STAYING AT HOME. There are a lot of women, and some men, who would very much like to stay at home while their children are very young. In some cases, they go to work out of social pressure, but in more cases, surely, they are working outside the home because of economic pressures.

    23. Sgt. Mom Says:

      David — my daughter is one of those taking up all kinds of crafts; embroidery and beading, and the Tiny Bidness of making paper jewelry, and selling at craft markets. She is building a small following, and is now making embroidered specialty patches for a local band to sell at their gigs. Not making a fortune at it – but hoping to make the business grow in time.

      http://paperblossomproductions.com/

    24. Mike K Says:

      “probably would have been a good idea to simply hand the PC business over to the Frontier crew, if they were that hungry and dedicated.”

      The story of Xerox PARC is a good example of the cluelessness of corporate management.

      Has anyone read Blue Magic, the story of the IBM PC ?

      The guy given the job moved the whole operation to Florida to get away from the IBM culture. They rolled out the first PC one year from the date they began.

    25. Bill Brandt Says:

      The story of Xerox PARC is a good example of the cluelessness of corporate management.

      If anything that is an understatement. Both Bill Gates and Steve Jobs got their idea of GUI – Graphical User Interface – from PARC. I thought that PARC also invented the mouse – it looked like 2 cigarette packs together – but that apparently came from a German fellow.

      If any of you find yourself in the Bay Area and have the slightest interest in computers, a visit to the Computer History Museum in Mtn View is a must. There were/are some brilliant scientists at PARC.

      http://www.computerhistory.org/

      Speaking of PARC and corporate cluelessness, just remember who invented the digital camera – Kodak – in the mid 70s. They didn’t want to push it and cut into their film sales.

      How quick the tech world moves –

    26. David Foster Says:

      Sgt Mom….nice-looking website!

    27. David Foster Says:

      Bill Brandt…if instead of organizing PARC as an R&D organization, if Xerox had set it up as a **business venture**, run by a general manager who had a revenue/profit mission and had direct control over a sales/business development resource—then I think the subsequent history of the industry would have been very different.

    28. Anonymous Says:

      David – No Doubt about that! I have a good friend who I would consider up in the top 2% of software programmers. He was self taught. I like to kid him saying that he could’ve been another Steve Wozniak because one of his jobs in the late 70s was programming a new microprocessor for one of xerox’s mainframe printers.

      He saw the early potential of this microprocessor and tried to convince xerox to offer what we now know as a PC.

      But then Wozniacki tried to do the same with HP. Took him working with a partner in a garage to bring out the Apple.

      Too much management in large American corporations work with blinders on and only see what is immediately around them.

      I remember in the early 60s xerox was one of those go go companies. People who invested in xerox in that time became very wealthy. In fact like Coke Xerox became a generic term for any copy machine. And of course today everybody and their brother is making them.

      Imagine Xerox today having utilized the technology they developed at PARC.