Written 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 USA 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 experience 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.
Other Economic News this Week:
The Econintersect economic forecast for August 2012 shows continues to show moderate growth. Overall, trend lines seem to be stable even with the fireworks in Europe, and emotionally cannot help thinking this is the calm before the storm. There are no recession flags showing in any of the indicators Econintersect follows which have been shown to be economically intuitive. There is no whiff of recession in the hard data – even though certain surveys are at recession levels.
ECRI stated in September 2011 a recession was coming, and now says a recession is already underway. The size and depth is unknown. A positive result is this pronouncement has caused much debate in economic cyberspace.
The ECRI WLI growth index value remains in negative territory – but this week is less bad. The index is indicating the economy six month from today will be slightly worse than it is today. As shown on the graph below, this is not the first time since the end of the Great Recession that the WLI has been in negative territory, however the improvement from the troughs has been growing less good.
Current ECRI WLI Growth Index
Initial unemployment claims rose from 366,000 (reported last week) to 372,000 this week. Historically, claims exceeding 400,000 per week usually occur when employment gains are less than the workforce growth, resulting in an increasing unemployment rate (background here and here). The real gauge – the 4 week moving average – declined from 363,750 (reported last week) to 368,000. Because of the noise (week-to-week movements from abnormal events AND the backward revisions to previous weeks releases), the 4-week average remains the reliable gauge.
Weekly Initial Unemployment Claims – 4 Week Average – Seasonally Adjusted – 2010 (blue line), 2011 (red line), 2012 (green line)
Data released this week which contained economically intuitive components (forward looking) were
- Rail movements (where the economic intuitive components continue to be indicating a moderately expanding economy).
- Container counts which showed a contraction year-over-year indicating the economy is struggling with forward momentum.
- The Federal Reserves August meeting minutes still provide a whiff of QE.
All other data released this week does not have enough historical correlation to the economy to be considered intuitive, or is simply a coincident indicator to the economy.
Weekly Economic Release Scorecard:
American Presidents: Three Best and Three Worst
Durable Goods Picture Mixed in July 2012
Why Hedge Funds Destroy Investor Wealth
China: Flash PMI Down Sharply
Rail Week Ending 18August2012: Carloads Down but Still Shows Economic Growth
July 2012 New Home Sales Shows Improving Growth
18August2012 Unemployment Claims: Claims Up Slightly
The Great Debate©: Are There Really Any Choices for the Euro?
Warning Bells, Are You Listening?
One Simple Measure That Would Save Social Security and More
Analyst: Solar Equipment Market to Shrink 50% in 2012
Health Care Costs, Uncertainty Are Top Issues for Small Business
Existing Home Sales Continue to Expand in July 2012
CBO Forecasts Economic Contraction in 2013
Gold and Silver Shine on Weaker U.S. Dollar
A Most Dangerous Concept: Relative Truth in the Age of Cheats
Summary for Two Weeks Ending 21 August 2012
Bloomberg: Misleading on Banks Buying Treasuries
Japan: Exports Collapse
India: CPI ‘Eases’ to 9.9% in July
Corporate Earnings: Are They Waving Warning Flags?
August 2012 FOMC Meeting Minutes Really Little Changed from the Previous Meeting
Rate Of Improvement on Coincident Index Remains Flat
Labor Costs: A Smaller Factor in Globalization
July 2012 Sea Container Counts Show the Economy is Struggling
Mexicoâs Strategy Begins With Economics
The Great DebateÂ©: Is More Financial Regulation Needed?
What is Needed? Less Confidence in Stability
What the $VIX Telling Us Now
Bank Goes Against the Tide: Borrows Long and Lends Short
CFNAI Super Index Shows Economy Just Muddling Along In July 2012
Insider Trading 17 August 2012: Google Insiders Big Seller’s this Week
What are Buffett and Soros Up To?
The Great Debate©: Is Healthcare a Right?
The Dual Mandate Trap
China: Gu Kailai Convicted of Murder
Japan Feuds with Neighbors Over Islands
Is Gold Really About to Break Out?
The End of Credit as We Know It?
The Week Ahead: Should We Be Suspicious of Lulls?
U.S., Canada and Mexico: After the Great Recession
Mexican Consumption Patterns
Climate Change: Mega-Drought or Mega-Rain
Trefis: Highlights Week Ending 17 August 2012
Home Equity Lines of Credit Problems Are Not Over
Gold Demand at Two Year Low
How Safe Are Money Market Mutual Funds?
China: Hard Landing and Rebalancing
Finances Worry Canadian College Students More than Grades or Jobs
Roth is Now the Big IRA
Forexpros Weekly Wrap-Up 17 August 2012
Preliminary August 2012 Michigan Consumer Sentiment Slight Rebound
July 2012 Leading Economic Index Recovers Projecting Economic Growth
Bankruptcies this Week: ATP Oil & Gas, FirstBMank Financial Services, Trident Microsystems