Will Automation Make us Poor?
Automation has become a huge concern in recent years. With computer algorithms getting more and more sophisticated, machines are becoming increasingly able to do jobs that are many people’s bread and butter.
Driverless cars have been tested on our roads for years. Although they aren’t commercially available yet, they eventually will be. Once that happens, they’ll replace cab drivers, as well as people currently contracted by rideshare companies like Uber and Lyft. After all, if employers can remove the expense of paying drivers, they can provide their services for much cheaper while still retaining a greater net profit. Automated vehicles will also replace commercial freight drivers.
That’s not the only place automation might shift the job market. We’ve already seen integration of self-checkout registers in large grocery chains. Even fast food restaurants are getting behind the trend. McDonald’s currently has kiosks at various locations that allow customers to order and receive their food without any human interaction. Carl’s Jr. and Hardees intend to test out kiosks at some of their locations as well.
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Back in 2012 a robotics startup company Momentum Machines developed a prototype of a fully autonomous machine that takes orders, cooks the burger, slices the toppings, assembles the burger, wraps it all up, and gives it to the customer. This machine was shown to be able to prepare 400 burgers in an hour, and the company has already purchased a building in the San Francisco Bay Area and intends to open a fully autonomous restaurant very soon. The restaurant will still require a few humans to ensure the machines run smoothly and to empty out the cash and perform other small tasks.
Obviously if this new robo burger joint proves itself profitable, we can expect large chains to follow suit.
The question on a lot of people’s minds has been, if machines can taxi people around and take orders and flip burgers, where does that leave the millions of individuals currently employed to fill these jobs?
Markets Change — It’s Been Happening Since the Beginning of Markets
This isn’t really anything new. Printing presses eliminated the need for scribes, and more recently online media has reduced the need for printing presses. Vending machines took the job of venders a long time ago. And don’t forget that elevator operators use to be a thing.
But, we don't hear many complaints about the lacks of jobs for scribes or elevator operators nowadays. We realize that those jobs went away because their jobs can be done much more quickly and economically through other means. The same thing is happening now, just with different jobs.
Businesses have always been innovating in ways to make themselves more efficient, thus more profitable and more satisfying to the consumer.
A common response is to point out that these innovations, and others like them, create jobs for more skilled laborers, such as the engineers who build these machines, the computer scientists who develop the algorithms for these machines, and the IT workers who will fix software and hardware issues when they happen.
But what happens to the lower-skilled laborers? Surely not everyone has the privilege (or the time, given that plenty of families are forced to work multiple jobs to feed their families) to become robot builders and coders. And even if every fast-food worker obtained a new skill, then other markets would just become flooded with overqualified job seekers.
Automation: Reducing the Cost of Living
The benefit of automation today, as always, has been that it reduces the cost of living and makes work more productive. This has been true since the invention of the wheel and all other labor-saving devices.
In cases such as these, the complaint is repeatedly made that even cheaper goods will not be affordable when no one has jobs. The more realistic scenario, however, is that fewer jobs and fewer hours will be needed to support households when the prices of goods are lower.
This can be seen to have been the case during the twentieth century when the work week became shorter, and workers began to work fewer hours. Simultaneously, the standards of living increased.
We have to consider all the facts here: business innovation may remove obsolete jobs, but with the added efficiency, goods and services are able to go down in price.
Take, for instance, autonomous cars. While it’s unfortunate that this will bring temporary unemployment to many drivers, the decline in prices for transport will be a boon to many others.
This could be especially beneficial to many low-income households who spend a large portion of their incomes on owning, insuring, and maintaining a vehicle. For many families who may only need automobiles on occasion, this will be especially beneficial.
Indeed, many households report they have no means of paying for an emergency auto repair. For many families, a broken down automobile is a looming economic risk, and the rise of plentiful automated transportation could greatly reduce these risks to family budgets.
More families also may realize that it’s no longer economical to keep up with a vehicle and opt instead for cheaper automated transportation. They then will find they have extra money to spend on other things, or more money to save.
So while technological innovation may eliminate some people’s jobs, other folks may see many benefits. If the prices of enough goods and services go down, lower wages will become sufficient enough for many people to live comfortably on lower nominal wages. This is what is known as an increase in “real income,” and it’s a good thing.