Scarce Skills, Not Scarce Jobs

My Comments: To some extent, this is an extension of the post I had last week about the riots in Baltimore. I’m convinced they happened more for economic reasons than for racial reasons. I accept both are present, but instead of focusing on race relations to effect a solution going forward, the emphasis should be economic.

This is not rocket science; Henry Ford set this in motion about a century ago, yet our politicians, both on left and right, are just now discovering it. To me the rallying cry of some on the right to “Take Back America” suggests that perhaps slavery was good. I’d much rather see Washington spend my tax dollars on education and rebuilding our roads and bridges than worrying what ISIS might or might not do. Time for that once we have our society back on track.

I doubt that few, if any, of the many who rioted in Baltimore would be hired to work in Saudi Arabia, especially without the job skills this ad requires. We complain about lack of jobs in this country and at the same time minimize the money spent on education. Someone is an idiot. Maybe several idiots.

What follows came from Atlantic Magazine and was written by James Bessen Apr 27, 2015

At a large distribution center located north of Boston, a robot lifts a shelf holding merchandise and navigates it through the warehouse to the workstation of an employee who then picks the item needed for an order and places it in a shipping box. Incoming orders are processed by a computer that sends picking requests to sixty-nine robots. Then, the robots deliver storage units to roughly a hundred workers, saving the workers the task of walking through the warehouse to find the items. In other distribution centers, this is work that warehouse workers do.

The distribution center, run by Quiet Logistics—a company that fills orders for sellers of premium-branded apparel, is featured in the 60 Minutes episode “Are Robots Hurting Job Growth?” In the segment, Steve Kroft poses the following question to Bruce Welty, the CEO of Quiet Logistics: “If you had to replace the robots with people, how many people would you have to hire?” Welty estimates that he would have to hire one and a half people for every robot, and that the robots are saving him a lot of money.

Robots have long been a staple of science fiction. “Now they’re finally here,” Kroft tells us, “but instead of serving us, we found that they are competing for our jobs. . . . If you’ve lost your white-collar job to downsizing, or to a worker in India or China, you’re most likely a victim of what economists have called technological unemployment. There is a lot of it going around, with more to come.”

The robots perform tasks that humans previously performed. The fear is that they are replacing human jobs, eliminating work in distribution centers and elsewhere in the economy. It is not hard to imagine that technology might be a major factor causing persistent unemployment today and threatening “more to come.”

Surprisingly, the managers of distribution centers and supply chains see things rather differently: in surveys they report that they can’t hire enough workers, at least not enough workers who have the necessary skills to deal with new technology. “Supply chain” is the term for the systems used to move products from suppliers to customers. Warehouse robots are not the first technology taking over some of the tasks of supply chain workers, nor are they even seen as the most important technology affecting the industry today.

Information technology has been transforming supply chains for decades, often taking over tasks previously performed by shipping clerks and other workers. Systems track items from source to customer, keeping inventories at optimal levels and minimizing shipping time and cost. RFID (radio frequency identification) tags allow items to be tracked automatically, eliminating much clerical work. These technologies allow today’s retail stores to offer a far more varied selection than in the past, often at lower prices, and to respond quickly to changes in demand. They have changed the retail landscape, for example, powering the growth of Walmart, a pioneer in adopting some of these technologies.

Yet although these technologies eliminated some jobs for clerks and warehouse laborers, they also created new jobs by creating new capabilities. However, these new jobs require specialized skills among both the managers and technicians, who typically have college degrees, as well as among the less educated operational occupations. Workers who have these skills, often learned on the job, are actually in short supply.
Moreover, industry experts see the need for skilled workers increasing in the short run and persisting for at least another decade. Working with industry trade associations, academic experts issued a “U.S. Roadmap for Material Handling and Logistics,” arguing that:
Despite the potential of dramatically improved processes and technology for material handling and logistics systems in the coming years, much of the work in the industry will continue to be done by a human workforce in the year 2025. Moreover, other aspects of this [technology], such as mass personalization, will require levels of operational flexibility that can only be handled by a skilled and creative workforce. In other words, people will continue to be vital to the industry in 2025.

As with weaving and other nineteenth-century technologies, automation of some tasks increases the value of the remaining tasks, even as new or deeper skills are needed. But workers with those skills are not readily available, nor do robust labor markets initially provide the right incentives for workers to acquire those skills. The supply chain industry experts contributing to the U.S. Roadmap report say that a key challenge is to “overcome a perception that joining [the industry] might not result in a career with suitable rewards.”