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Many automation technologies take over boring and dangerous tasks.
In 1885 William Burroughs, for instance, didn't wipe out accountants' jobs with his calculating machine. The new inventions eliminated the long hours of tedious addition. He innovated the machine because he was tired of the long hours it took to do his job. The resulting commercial entity based on this innovation is the multi-billion dollar IBM company.
Economic downturns bring about increased levels of automation. And a coronavirus recession, due to its breadth and scale, could cause even more automation.
A firm that might have been thinking about automating is under a whole lot of pressure to do that, especially in the first two years of a new downturn. And that's what a lot of research over the last few recessions has shown. People are more expensive, including with their benefits. Meanwhile, you can restructure your business using new technology that increases productivity. So the typical move is to replace less-skilled workers with a fewer number of more-skilled workers or retain higher-skilled workers but then to bring in new technology.
The other thing is that new technology, meaning automation but also enterprise software, is no longer nearly as expensive as it was a decade ago. The cost curve has been declining. There's a lot of new high-quality technology on the shelves waiting for deployment, including a more "turnkey" standard offering, often from the big tech companies.
What can be automated, likely will be. And machines don't get sick or stay home when there's a pandemic.
What's the connection between recessions and automation? On its face, the transition to automation may appear to be a steady, long-term trend. Unfortunately for the workers poised to be affected by automation, this is not the case.
Several economists have outlined this cyclical nature of automation. Nir Jaimovich of the University of Zurich and Henry E. Siu of the University of British Columbia reported that over three recessions in the last 30 years, a whopping 88% of job losses (of the jobs lost in the crises) took place in routine, automatable occupations.
Brad J. Hershbein of the W.E. Upjohn Institute and Lisa B. Kahn of the University of Rochester looked at almost 100 million online job postings before and after the Great Recession and found that firms in hard-hit metro areas were steadily replacing workers who performed automatable "routine" tasks with a mix of technology and more skilled workers. So, even as robots replace workers during boom times at places such as Amazon and Walmart, their influx surges during recessions is not great news for the nation's jittery workers.
As for what all of this means for the future, the potential of an automation surge reinforces the fact that any coming recession won't only bring an end to the nation's plentiful supply of jobs. Any downturn is likely to bring a new bout of structural change in the labor market and its demand for skills.
If it extends for a while, the downturn could induce firms in food service, retail, and administrative work to restructure their operations toward greater use of technology and higher-skilled workers. For America's beleaguered lower-skill workers, these changes will complicate the return to normalcy.
The robots are wiped down between every delivery; upon food delivery, customers can open the 5-foot tall robot's door by phone instead of keypad; and the company has installed UV lights - a coronavirus killer - in the interior to disinfect the compartment and food.
The COVID-19 pandemic has halted economic activity globally. Factories and warehouses are forced to shut down to protect their workers, while those that are essential struggle with preventing outbreaks.
Could a more automated workforce have alleviated the economic damage COVID-19 has caused?
A 2019 report by Oxford Economics predicted 12.5 million manufacturing jobs will be automated in China by 2030. In the aftermath of the pandemic, it could be many more.
The question is now "How can automation accelerate our recovery and protect us from future pandemics?"
McKinsey projected up to 30% of jobs in the US will be automated by 2030, and "automation and AI will lift productivity and economic growth.
We have yet to see how the global pandemic will impact jobs in the long term, but it's safe to assume that we will see acceleration in automation where it keeps human workers, and consumers, safer.
In light of the pandemic, we can expect to see supply chains existing closer to home. To achieve the replacement of cheap labor found in foreign markets, automation will be a critical component in this trend.
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