Unemployment In A World Without Jobs

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by: Steven Hansen

This has been robot week, seemingly precipitated by a New York Times article Skilled Work, Without the Worker.

Rapid improvement in vision and touch technologies is putting a wide array of manual jobs within the abilities of robots. ....in many applications, robots are already more cost-effective than humans.

Mish jumped on board with Robots to Rule the World? Taking All Jobs? Replace Women? adding more detail to the discussion.

A large banner at Flextronics plant near San Francisco proudly proclaims "Bringing Jobs & Manufacturing Back to California!" but the assembly line runs 24 hours a day, seven days a week with nearly all robots and few human workers.

Automation and productivity improvements have been my concern to achieve full employment. Pundits continue to spout about weak or moderate jobs growth, but the population in the U.S. is not static. Comparing just the difference in the number of jobs in between various periods gives you a very misleading view of the overall jobs situation.

The above graph comparing the ratio between employment and the population clearly show no real jobs growth. We inflation adjust GDP (calling it "Real" GDP), but ignore population adjusted employment. The above graph is "real" employment growth - or should we say "lack" of employment growth.

Poor employment growth is blamed on the government, emerging economies, poor economic conditions ..... Could it be employment itself - manifesting with the elimination of jobs - is a major reason for poor economic growth, and not the other way around? After all, robots are not very good consumers.

Historically, gains in technology have opened more employment opportunities than those eliminated. But if a jobs elimination machine is invented - then technology only eliminates jobs. This is a very serious issue for employment going forward, as I stated in another post this past week:

In a 24 hour / seven day a week environment, the robot would be advantageous in any environment where the cost of labor exceeded $1 per hour. Robots hardly get sick, do not sue their employer, and will work in terrible / hazardous conditions. Robots literally are making the cost of manufacturing labor $1 per hour around the world.

Fellow Econintersect Contributor, Sig Silber, mused what would the effect of robots be?

  • The robots do not need to be fed so people will not be food for the robots. What role would humans perform for robots that they would be unable to perform for themselves? Perhaps robots might find a zoo with humans in it entertaining?
  • Perhaps the robots would find fishing for humans amusing. Catch and release hopefully.

Some of Sig's random thoughts:

  • Will robots have prejudice against humans because of our inferior skills? Will humans revolt - maybe there will be anti-robot laws.
  • Who will inform the robots of their share of the National Debt?
  • Will Obamacare speed up the replacement of workers with machines?

Half a century ago, futurists predicted a world to come where automation would eliminate the need for humans to do many jobs. This was proclaimed to be a great thing for future generations, freeing them from drudgery tasks and enabling the growth of the human experience beyond the mundane of 9-5 jobs. Somewhere between that time and the present, someone forgot to plan how these "liberated" people would get enough money to be able to afford to "grow the human experience."

Things may not work out as well for people going forward. The estimates of population growth may also prove to be way overstated - if people are not valuable, maybe there will be less of them. In the meantime, robotic technology will relentlessly eliminate jobs.

My normal weekly economic release summary has been posted in my instablog. Does Ben Bernanke have any weapons to display at Jackson Hole?

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.