Retirement Blog by Franklin Retirement Solutions

Where Are The Jobs Going… And Why?

Category: Newsletter

Have more jobs been lost to production moving overseas, immigrant workers or automation?  While outsourcing and immigration make better talking points on the campaign trail, by most measures it looks like technology & automation are actually doing the most damage.  To that end, Bloomberg put together a phenomenal report this week, pulling data from multiple studies to analyze the true impact automation improvements—particularly robots—have had on jobs across the country.
For the record, they consider a robot “any device that is autonomous and capable of performing multiple tasks”.  The kid at Starbucks who lost their job because too many folks swapped daily trips in favor of a Keurig on a timer is not a job lost to automation.
The article relies heavily on figures from The Bureau of Labor Statistics which monitored capital expenditures, labor expenditures, and reported productivity across 20 or so industry sectors from 1987 to 2014.  The purpose was to see where an increase in capital expenditures led to an increase in output/productivity, which in turn would likely lead to fewer human laborers being needed. 

So what’d they find?  Computer manufacturers saw a 668% increase in capital expenses from the late ‘80s to now and apparel manufacturing saw a 327% increase.  On the low end, the paper and wood manufacturing sectors (aka mills) only had 9% and 4% upticks, respectively, in CapEx spending.
However, despite the common sense hypothesis, the analysis was quickly muddied.  Computer & electronics manufacturing behaved exactly as expected—CapEx up, productivity up and jobs down.  However, in most sectors, capital expenditures in automation are not a direct corollary to production improvements or layoffs.  While apparel manufacturing saw an uptick in CapEx spending and a decrease in jobs, output & productivity decreased.  Paper production had little technology introduced in the past 30 years but still saw large swaths of jobs disappear.  The synopsis? “Robots do replace workers… (but) some industries that don’t automate end up losing workers anyway because their costs are too high and their customers go elsewhere.”
The way they gathered and presented the data for the article is fascinating, and I have linked directly to the article so you can see exactly what I’m talking about (read here).  But its conflicted findings just go to show that there isn’t a single issue to blame for the growing labor issues in this country…or around the world.  There isn’t an easy answer. 

One article I read recently pointed out how a furniture manufacturer brought one production line back from China.  When the line was originally closed down 15 years ago there were 100 people that had to be laid off.  The line is back along with robots.  Yep… now it’s 20 employees… and production is up!
While a lot of voters are resting on the promise that their jobs will be brought back, it’s looking more and more like they will join the ranks of lamplighters, ice cutters and carriage drivers.