The notion that technology, automation and productivity lead to fewer jobs and higher unemployment is simply wrong. There is no logical relationship between job growth and productivity. From a macro perspective, a nation could have high productivity but if they also have a declining workforce, the employment rate will rise. Or, in a micro example, if a firm uses the profits gained from higher productivity to hire more workers, employment will also increase.
Are Robots Taking Our Jobs, or Making Them?
With U.S. unemployment remaining stubbornly above 7 percent and job growth anemic, many have latched on to a compelling explanation: “the robots are taking our jobs.” In other words, a “neo-Luddite” narrative has taken hold. According to this line of thinking, high productivity driven by increasingly powerful IT-enabled machines is the cause of U.S. labor market problems, and accelerating technological change will only make those problems worse. There’s only one flaw in this narrative: it is completely wrong and not supported by data, scholarly evidence or logic. This report analyzes the “robots are killing our jobs” arguments, shows how they are constructed on faulty analysis, examines the extensive economic literature on the relationship between employment and productivity, and explains the logic of how higher productivity leads to more jobs. We show that more technology benefits not just the economy overall, but workers: more and better technology is essential to U.S. competitiveness and higher living standards. The claim that increased productivity eliminates jobs is misguided speculation.
Legislation to Revitalize American Manufacturing on Congress’s Docket this Fall
While two new pieces of legislation deserve Congress’s full and bipartisan support to revitalize American manufacturing, they will also need to be complemented by a serious reauthorization of the America COMPETES Act.
Waiting for Onshoring
To listen to most discussions of U.S. manufacturing these days one would not be faulted for believing that we have turned the ship of decline around, that production jobs are coming back and that the on-shoring good times are finally here. Unfortunately this storyline does not hold up to critical analysis.