Business Growth: Job Losses Could Create Other Opportunities

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Dan Arens is an Indiana-based business growth advisor. Dan Arens is an Indiana-based business growth advisor.

The decade of the 60s were turbulent times, for many reasons. Computers were rapidly advancing in many sectors of the economy. They were replacing jobs. They were putting people out of work. They were going to be the downfall of the country. Some people even thought computers were a communist plot to destroy our economy.

Of all the issues stated in the previous paragraph, only a few were true. Computers were putting people out of work and they were eliminating jobs. In hindsight, however, for every job that was eliminated by computers, five jobs were created in the new and emerging technology sector. One of the biggest, if not THE biggest growth sectors for the next sixty years.

According to the United States Commerce Department, jobs in the manufacturing sector peaked in 1979. Since then, there have been over seven million jobs lost in manufacturing. Even so, the Commerce Department has reported factory production has more than doubled during similar timeframes. Howard Shatz, a senior economist from the Rand Corporation think tank, quantified the loss of jobs. A full eighty-eight percent of the jobs lost were due to overall automation, particularly robots. Shatz summarized the trend very succinctly when he said, “We’re making more with fewer people.” Two huge areas of our economy, seem to bear out Shatz’s position. Production in the United States steel industry has increased thirty-eight percent since 1997. Yet, more than 265,000 jobs have been lost. In the automotive industry, General Motors has reduced its workforce by two-thirds since the 70s, yet it is producing more vehicles than ever before.

Paul Wiseman of The Wall Street Journal, said the Center for Business and Economic Research at Ball State University indicated about thirteen percent of job losses were due to foreign trade. While workforce discussions continue to center around lost jobs, another perspective appears to be emerging. With close to ninety percent of domestic job losses being due to automation, many companies are taking a chapter out of the history books, with reference to the information age. They see opportunities presenting themselves in a new area of factory automation and realize those opportunities could be future areas of job growth. Many of them are seeing that with a little effort and some re-training, anything is possible. They are learning from the past and applying it to the present with an outlook for the future.  

For example, in the world of retail, self-checkout is becoming more and more popular. Home Depot has had it for a while, but more establishments are getting involved at an increased rate. More recently Wal-Mart has increased the number of self-checkout lanes in their stores. In the back office, Wal-Mart is also introducing automated counting machines that not only count the bills and coins faster than a human, they automatically deposit the money in the bank. This helps the company determine the amount of cash that is needed be on hand. Any excess money is immediately earning interest for Wal-Mart. According to Sarah Nassauer of The Wall Street Journal, this change alone will eliminate thousands of positions for the company. As overall shopping trends lean toward on-line venues, Wal-Mart is trying to re-position displaced employees into areas of improved customer service. The chief operating officer of Wal-Mart, Judith McKenna has underscored Wal-Mart’s position on the matter of automation and customer service when she said “The role of service and customer-facing associates will always be there but there are interesting developments in technology that mean those roles shift and change over time.”

And yet, in further support of jobs being created, even though others are being eliminated, Greg Ip of The Wall Street Journal has made a strong case that e-commerce growth has “created more jobs in the U.S. than traditional stores have cut.” Those jobs, in turn, pay better, because its workers are so much more productive.

Even though there is much angst about job losses as a result of robots, artificial intelligence and all the other forms of ‘automation’ you can think of, if we look at the history of it all, not only were more jobs created, they were much better paying ones, as well. Embracing the future of automation by seeing how it can help your company grow and benefit from the many new technologies that exist, becomes the challenge that many will face in the coming years.

Dan Arens is an Indiana-based business growth advisor.

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