Wednesday, October 19, 2011

The Automation Issue

From Reuters

For decades, American workers and their machines advanced in tandem. As companies invested in technology, more workers were needed to operate machines.

That relationship is now looking unsteady.

Since 1999, business investment in equipment and software has surged 33 percent while the total number of people employed by private firms has changed little.

The gap between man and machine widened even further after the 2008-09 recession, helping explain why the United States is struggling to bring down an unemployment rate stuck above 9 percent.

The revolution in information technologies is taking a deeper and deeper hold in the U.S. economy.

Throughout history, technology revolutions have paved the way to forms of employment: Britain's 19th century industrial revolution threw artisans out of work but eventually created mass employment in factories.

But a decade-long drought in jobs in the United States is raising questions whether there is a fundamental shift in the structure of the labor market.

"Labor and capital are out of sync," said Tyler Cowen, an economist at George Mason University in Fairfax, Virginia. "It seems be a growing and strengthening trend... (and) suggests there is this longer-term structural change."

This is something I've commented on before, especially when talking about manufacturing employment.  It's actually a very big issue going forward.