While there’s a lot of commentary on the loss of high-paying jobs in manufacturing due to globalization and unfair trade practices, the reality is quite different. Looking at manufacturing as an example, since 1990, the value of US manufactured goods exported to other countries grew from $350B to $1.2T. If you look at total production, not just exported goods, the value has risen to $1.9T.
Globalization and Job Loss
Interestingly up until 1990, there was a strong correlation between the value of manufactured goods and the number of workers in manufacturing. Not so much anymore. Research shows that globalization only accounts for 13 percent of job loss in US manufacturing while 88 percent of losses were from automation including robotic manufacturing. In fact, availability of ever-cheaper automation options combined with uncertainty in the global supply chain has led to a resurgence in “onshoring” manufacturing.
Automation and Job Loss
Automation is not about job loss; it provides cost reduction, risk reduction and an increase in overall output. There is an even more interesting point: countries that have the highest levels of automation, do not necessarily have a corresponding increase in job loss. A common illustration is Germany, which has three times as many manufacturing robots as the United States, but manufacturing jobs declined by less than half of what we encountered in the U.S. While automation is key to continued economic growth and competitiveness, it doesn’t necessarily translate into job loss. That’s good news to any organization that is looking to improve through automation.
Big Force Behind Labor
Today, the U.S. is the second-largest manufacturer behind China, but its share of GDP is dwarfed by the services sector, which has not been affected by robots or other automation until recently. A meta study conducted by PwC concluded that some countries’ service-oriented industries will be impacted more than others, primarily based upon the nature of tasks and the percentage that are repetitive or are rule-based.
These types of jobs typically represent lower-value activities that are often off-shored, but will potentially be seen again in the U.S. as hybrid human-machine processes—enabled by automation. That said, the number of jobs involving these types of tasks will never be in the same number as before any automation. Rather automation will allow fewer workers to process more while opening-up the opportunity to assign staff to higher-value human-centric duties. Automation is now the big force behind labor and where it exists. The positive result is that it means more jobs here in the U.S. that traditionally would be lost forever.
If you found this article interesting, you might find this video on automation useful: data extraction automation video.